Rail rescue plan 'doomed to fail'

A new restructuring plan for the State Railway of Thailand, agreed in principle by the government last Tuesday, will not get the debt-ridden state enterprise out of the red, analysts say.

Sohpon: Old plan will be scrapped

The plan would divide the railway agency into three business units - operations, maintenance and asset management - and one subsidiary running the Airport Rail Link project.

It is a change from the previous version agreed by the cabinet on June 3 which would set up two subsidiaries to run the state enterprise.

The revision was made to take account of pressure by the railway union which feared the government would eventually sell the two subsidiaries to the private sector.

The business unit formula would ensure the SRT unions that the enterprise was still in full control of operations, analysts said.

Once the plan was endorsed by the government, the June 3 version would be scrapped, Transport Minister Sohpon Zarum said.

But Sakon Varanyuwatana, of Thammasat University's economics faculty, said the restructuring plan alone would not be enough to fix the agency's financial problems.

The SRT has run up debts of almost 73 billion baht. Last year it lost 9.8 billion baht.

Setting up business units would require the SRT to create separate accounting systems for each unit to find out how well it was doing financially.

It would help identify which areas were still in need of state subsidy, such as trains with a public service obligation.

"The urgent problem waiting for the government to tackle is a lack of qualifications among workers, and a lack of efficiency in administration," Mr Sakon said.

"If the SRT cannot get rid of those who are inefficient, attempts to improve the agency will go nowhere," he said.

The SRT has 12,047 staff, 15% at management level. Only 5% of staff have bachelor's degrees, according to union records.

The Thammasat economist proposed some train lines be given to private firms to run under an SRT concession. The agency should also let private investors build tracks.

Giving the private sector a bigger say in operations could boost revenues, Mr Sakon said.

Letting the private sector run some train lines is not a new proposal. The agency allowed private firms to run some express services about two decades ago.

But it faced fierce opposition from the union, culminating in a nationwide strike in 1988. The SRT scrapped the idea when the contracts expired in 1990.

SRT governor Yutthana Thapcharoen said a 1998 cabinet decision which caps new recruitments at 5% of the total number of staff who retire was an obstacle to bringing in new, qualified staff.

The union has long suspected the SRT of trying to sell its lucrative businesses particularly its real estate assets to private firms. Privatisation would lead to layoffs of railway staff, they say.

But SRT managers insist they have no plan to sell any parts of the agency.

Deunden Nikomborirak, a researcher at the Thailand Development Research Institute, said the government should step in to ensure job security for staff.

"Staff tend to oppose all plans to develop the SRT, even when they might benefit from them, because they lack security over their jobs," he said.

Sathaporn Opasanon, of the faculty of commerce and accountancy at Thammasat University, said the government should take a more hands-on role in solving SRT problems rather than leaving the future of the agency to SRT managers alone.

"If the government abandons SRT executives and the union to solve problems alone, it will never work out. Both sides look at problems from different viewpoints and refuse to yield," he said.