MERCHANTS HOLDINGS (PACIFIC) LIMITED

(Incorporated in the Republic of Singapore)

Company Registration Number 198101278D

ANNOUNCEMENT

POTENTIAL INVESTMENT IN TOLL ROADS

The Board of Directors of China Merchants Holdings (Pacific) Limited (the “Company”) wishes to announce that the Company has today signed a heads of agreement (“Heads of Agreement”) with the Highway Bureau of (郑州市公路管理局) (the “Highway Bureau”) and Nanyuan Investment Company (广州南源投资有限公司) (“Nanyuan”) in connection with potential investments in the Zhengshao Expressway (as defined below) and the Denggong Expressway (as defined below) (together, the “Investments”).

The Zhengshao Expressway (河南省郑州市郑州至少林寺高速公路) is located in Zhengzhou City ( 郑州市) in province (河南省), the People’s Republic of China, linking Mazhai town (马寨 镇) with Zhongyue temple (登封中岳庙), covering a total distance of approximately 53.6 km. The Denggong Expressway (登封至巩义高速公路) is a new build, operate and transfer (BOT) project which has been approved by the Henan Development and Reform Commission (河 南省发展和改革委员会). It will link Dengfeng City (登封市) with City (巩义市) in Zhengzhou City in Henan province, covering a total distance of approximately 42.33 km. Feasibility tests have been concluded by the local authorities and preliminary design and other works on the Denggong Expressway have commenced.

The Company, the Highway Bureau and Nanyuan (together, the “Parties”) are in discussions to jointly acquire the rights to operate the Zhengshao Expressway through a special purpose vehicle in which the Company will hold an interest of approximately 70 per cent. The estimated total cost of the investment in the Zhengshao Expressway is approximately RMB2.46 billion (approximately HK$2.62 billion or S$487.1 million), of which the Company will contribute up to approximately RMB1.21 billion (approximately HK$1.29 billion or S$239.58. million) in the form of shareholders equity and loans. It is expected that the Company will fund its portion of the investment through a combination of internal resources and external borrowings.

The Parties are also in discussions to build and operate the Denggong Expressway through another special purpose vehicle in which the Company is expected to hold an interest of approximately 60 per cent. The estimated cost of constructing the Denggong Expressway is approximately RMB2.31 billion (approximately HK$2.46 billion or S$457.38 million). The special purpose vehicle will fund the cost of the construction of the Denggong Expressway through shareholders equity and external loans and it is expected that the Company will contribute up to approximately RMB600 million (approximately HK$639 million or S$118.8 million) in the form of shareholders equity through a combination of internal resources and external borrowings.

The Investments are subject to the Parties entering into definitive agreements. In connection with the signing of the Heads of Agreement, the Company will be making to the Highway Bureau a first pre-payment of RMB21 million (approximately HK$22.37 million or S$4.16 million) and a further pre-payment of RMB14 million (approximately HK$14.91 million or S$2.77 million) upon the signing of definitive agreements. The total amount payable by the Company in connection with the Investments upon completion will be reduced by the total pre- payment amounts of RMB35 million. In the event that all governmental approvals and consents required in connection with the Investments are not obtained within four months after 27 December 2007, the total pre-payment amounts of RMB35 million will be refunded in full to the Company pursuant to the Heads of Agreement.

The Parties will continue their discussions and negotiations and the Company will make an appropriate announcement in the event that it enters into any definitive agreements.

BY ORDER OF THE BOARD

Lim Lay Hoon Company Secretary 27 December 2007