Taiwan has announced a multi-billion dollar deal to build a copy of Japan's famous bullet trains.

It expects the train to begin running in 2005.

The bullet train will operate on a line linking Taiwan's capital and it's second city Kaohsiung. Travelling at speeds of up to 300 kilometres an hour it will complete the 345 kilometre journey in 90 minutes.

Taiwan's High-Speed Rail Corporation, which will construct and operate the line says the deal will fall within its budget of US$3.1bn.

The Corporation has signed a memorandum of understanding with the Japanese Shinkansen Corporation, and says it expects to complete the deal by the end of July.

The link will also serve 10 major cities along what's known as Taiwan's 'western corridor'.

About 95% of Taiwan's population and the majority of it's businesses and industries are found in the corridor.

It's the most significant single infrastructure project ever under taken by Taiwan and will cost a total of US$14.3bn.

Controversial train

However the scheme has been the subject of much controversy. A rival consortium from Europe claims Taiwan should be buying its train.

The joint French, German and British Eurotrain group says Taiwan signed an understanding in 1997 which obliges it to buy the European train provided the price is reasonable.

Eurotrain sought an injunction in Taiwan's courts to prevent the Japanese clinching the deal. But the legal challenge was thrown out in February

In addition Taiwanese newspapers have claimed that Taiwan's former President Lee Teng-hui gave priority to the Japanese bid in return for a political favours. They claimed he was given a promise he would be allowed to visit Japan despite objections from China.