State enterprises poised for shake-up

Status change, closures among options mulled

The Finance Ministry will review the country's state enterprises for possible closure or status changes, says Chakkrit Parapuntakul, the finance deputy permanent secretary.

He said several of Thailand's 52 state enterprises could either be closed or lose their state-enterprise status if their primary duties are no longer needed.

State enterprises were created to support public development policies or provide goods and services otherwise unavailable from the private sector.

Mr Chakkrit said the ministry will review whether there remains a need to continue operations at certain state enterprises.

Loss-making enterprises would also have to provide a clear restructuring plan to the government on how they would turn around their operations and minimise the financial burden on taxpayers.

He said operations may continue for some agencies, but their state-enterprise status may change, with a majority shareholding sold off to private investors.

Executives of state enterprises with high financial losses would be tasked with overhauling their balance sheets, with losses incurred as a result of government policies separated into public service obligation accounts to allow a clear accounting from normal operating losses.

The two state enterprises with the worst financial performance are the Bangkok Mass Transit Authority (BMTA), which oversees bus routes in Greater Bangkok, and the State Railway of Thailand (SRT), which manages the country's rail network.

The BMTA is in the process of replacing its existing fleet with 3,000 NGV-powered buses as part of a plan to save on fuel costs.

The agency currently has liabilities of 76 billion baht against assets of just 6.6 billion, with most of the accumulated losses stemming from repair and fuel expenses.

For fiscal 2012's first half ending March 31, the agency posted a net loss of 2.47 billion baht, a 16% increase from the same period in the previous fiscal year.

Over the same period, the BMTA had to borrow 2.56 billion baht to repay existing debt obligations, with the new loans guaranteed by the Finance Ministry.

For the BMTA's outstanding losses, officials are considering several options including transferring assets to the Treasury Department for commercial development and asset swaps against the outstanding debt.

The agency will also likely introduce an early retirement scheme to cut back on its current workforce of 14,700.

Mr Chakkrit said the ministry is dubious about a proposal to clear the accumulated losses through a cash infusion from the government budget.

This has been tried in the past, but the agency continued to post losses, he said.

For the SRT, new governor Prapat Chongsanguan will also be tasked with preparing a restructuring plan.

At the end of last year, the agency had assets of 86.2 billion baht and liabilities of 125 billion.

The state enterprise posted a net loss of 11.3 billion baht last year.

About the author

Writer: Wichit Chantanusornsiri
Position: Business Reporter