Bus concessions and rent-seeking
- Published: 19/11/2010 at 12:25 PM
- Online news:
Middle men with political influence profit from bus concessions without doing much, leaving consumers with inferior service and bus operators with bills higher than they should be.
The phrase "rent seeking" describes the situation when powerful people "seek to earn income by capturing economic rent through manipulation or exploitation of the economic or political environment" rather than competing fairly with other people.
Bus concessions in Thailand seem to meet this definition pretty closely: "most concession holders do not operate the services themselves but make a profit by subcontracting them to other bus companies...of the 800 concessionaires of public bus services across the country, 80% do not operate services themselves and some have only a few buses of their own," doing anything about it is difficult because "some bus operators wield influence over policy-makers."
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Call to revamp public buses contracting, FEW CONCESSIONAIRES RUN OWN SERVICES by Apiradee Treerutkuarkul
...a study ...found most concession holders do not operate the services themselves but make a profit by subcontracting them to other bus companies
The study found that of the 800 concessionaires of public bus services across the country, 80% do not operate services themselves and some have only a few buses of their own.
Sumet Ongkittkul, a researcher at the Thailand Development Research Institute Foundation, said companies that subcontract their operations may not care much about improving services or carrying out vehicle maintenance.
Speaking at a seminar on development of public transportation safety yesterday, he said subcontracting concessions could generate about 2.8 billion baht each year.
He said the ultimate operators had to save on costs after paying subcontracting fees and this affected the quality of bus maintenance
According to the study, the Bangkok Mass Transit Authority and the Transport Company Limited are the major holders of bus operating licences nationwide.
BMTA holds licences to operate more than 200 bus routes in the city and surrounding areas, while the Transport Co Ltd has licences to operate more than 300 bus routes nationwide.
Mr Sumet said the department should seek ways to end the subcontracting of bus routes, and one solution was to suspend the extension of a licence after its seven-year term expired. However, he said putting this into practice might be difficult because some bus operators wield influence over policy-makers.
Somprasong Suttyaamully, an independent expert on traffic engineering, agreed the subcontracting of routes leads to poor bus services, especially those provided by public vans.
(Source: Bangkok Post, Call to revamp public buses contracting, FEW CONCESSIONAIRES RUN OWN SERVICES, 14/11/2010, Apiradee Treerutkuarkul, link)
rent seeking - seeks to earn income by capturing economic rent through manipulation or exploitation of the economic or political environment, rather than by earning profits through economic transactions and the production of added wealth, when people use their power to make money illegally and secretly, instead of competing fairly with other businesses in the market place (See Wikipedia)
rent seeker - a person who uses their power to make money illegally
economic rents - excess returns above normal levels associated with a lack of competition in markets, a return in excess of the resource owner's opportunity cost (See Wikipedia, also see Economist Glossary)
opportunity cost - a difficult but central idea in economics, here are some defintions: 1. cost in terms of foregoing alternatives, 2. the cost of doing an activity instead of doing something else - applied to the time involved in unproductive activities, 3. the value of the use of resources in an alternative way that is not obtained when the resources are used in the current way, 4. the cost of an economic activity foregone by the choice of another activity (See Google Definitions and Wikipedia)
manipulation - 1. behaviour that influences someone or controls something in a clever or dishonest way, 2. the process of skilfully handling, controlling, or using something 1. behaviour that influences someone or controls something in a clever or dishonest way, 2. the process of skilfully handling, controlling, or using something
exploitation (noun) - 1. unfair treatment of someone, or the use of a situation in a way that is wrong, in order to get some benefit for yourself, 2. the process of making use of something so that you gain as much as possible from it การใช้เพื่อประโยชน์ส่วนตัว, การใช้หาประโยชน์อย่างไม่ถูกต้อง, การหาประโยชน์ใส่ตัว
revamp - to make a major change or revision to something ปรับปรุงใหม่
contracting - hiring people or companies to do work for another person, organisation, company, etc
concession - official permission from the government to do a certain type of business, a right that is given to a person or group to do a particular activity สัมปทาน
concession holder - owner of a concession
concessionaire - owner of a concession
profit - money that you make from selling goods and services after all your costs have been paid กำไร
contract out - an arrangement to have someone outside your organization (outside vendor) provide a service, outsource
subcontract - when an outside vendor or company makes an arrangement for another company to do the work (they have been contracted to do)
vehicle - a machine that you travel in or on, especially one with an engine that travels on roads, e.g., a car, bus, van, truck, etc. ยานพาหนะ
maintenance - work that is done to keep something such as a building, machine, or piece of equipment repaired and in good condition การซ่อมบำรุง
public transportation - transportation that everyone can use (often provided by the government, driving your own car would be private transportation)
development - taking actions over time to improve and make something better
concessions - permission from the government to do some kind business (search for oil in an area, build a phone network, for example)
generate - create สร้าง กระตุ้นให้เิกิด
ultimate - the last or final one, the one at the long chain of ownership
operators - businesses doing this business
fees - money that you pay to be allowed to do something ค่าธรรมเนียม
Bangkok Mass Transit Authority (BMTA) - the government agency that runs the public buses in Bangkok
holders - owners
operating licences - official permission from the government to do some activity (example: driver's licence, business license)
nationwide - including the whole country ทั่วประเทศ
surrounding - all around a place บริเวณรอบๆ
suspend - to stop for a period of time ยกเลิกชั่วคราว, ระงับชั่วคราว
extension - increasing the time that something exists or is active
licence - an official document that gives someone permission to do or use something ใบอนุญาต
term - a period of time ช่วงเวลา
expired - ended, finished, no longer valid หมดอายุ สิ้นสุด
term expired - a period of time ended (here: period of time that they have to operate a business)
put into practice - start using an idea, making an idea work (in a real-life complicated situation)
wield - to use ใช้ประโยชน์, to have and be able to use power or influence ใช้อำนาจ
influence - the power to have an effect on people or things อิทธิพล, to affect or change how someone or something develops, behaves or thinks มีอิทธิพลต่อ, ชักจูง อำนาจบังคับ
policy - a plan of action to guide decisions and achieveoutcomes (See Wikipedia) นโยบาย
independent - separate and not connected, not influenced or affected by others พึ่งตนเอง
traffic - the number traveling to a place during a period of time (people, aircraft, ships, trains, cars, trucks, etc.) ความหนาแน่นของจำนวนคน หรือยานพาหนะในช่วงเวลาใดช่วงเวลาหนึ่ง
traffic engineering - "a branch of civil engineering that uses engineering techniques to achieve the safe and efficient movement of people and goods. It focuses mainly on research and construction of the infrastructure necessary for safe and efficient traffic flow, such as road geometry, sidewalks and crosswalks, traffic signs, road surface markings and traffic lights" (See Wikipedia)
About the author
- Writer: Jon Fernquest
Position: Assistent Manager Educational services