Push for rail concessions

Push for rail concessions

The Transport Ministry's proposal to grant the private sector concessions to operate and improve the country's rail system has been well-received by the public. Unsurprising, perhaps, considering the State Railway of Thailand's accumulated debt exceeds 100 billion baht -- a record no one is proud of.

That said, the long concession periods of 99 years, as suggested by Transport Minister Saksayam Chidchob, needs to be discussed further, along with other issues pertaining to SRT's land assets.

From the day the SRT was established, it had a monopoly on the sector. So its current position -- especially its accumulated debt -- really isn't impressive, and plans to privatise the agency or grant concessions to the private sector have been raised time and time again.

Attempts by previous governments to give the private sector a bigger role in the sector were long put off by strong resistance from the SRT's workers union. This time, the union has agreed to be more flexible, albeit with reservations on the length of the concession.

As he floated the idea, Mr Saksayam said the country's railways have yet to be developed to reach their full capacity, before adding that dual-track upgrades and high-speed rail projects are currently underway to improve domestic and regional connectivity.

The minister said those concerned have to be "brave enough to give the private sector a concession to invest for as long as 99 years, as in other countries". It shouldn't be seen as favouring private enterprises over public interests, he said.

According to the minister, the initial plan is to lease train slots to companies, which would then run freight and passenger services on sections which aren't being used by the SRT.

Several countries, including Russia, Czech Republic, South Korea and the US, had expressed interest in investing in Thailand's rail system through their diplomats, said the minister.

Currently, the Department of Rail Transport (DRT) is gathering opinions from private companies and inviting them to co-invest in Thailand's rail system. These concessions, however, require certain legal amendments to be passed -- and the key to passing them is public participation and consultation.

The DRT, when asked about co-investments with the private sector, said that since the bill on rail transport has yet to be passed, this project would have to be undertaken under the Public-Private Partnership Act.

Economist Decharut Sukkumnoed argues that as a way out of debt, concessions are acceptable. Full-scale privatisation, however, is a no-no.

Rail tracks should belong to the SRT, he said, so the agency should collect fees for its use from the concessionaires instead. In addition, if the SRT is open to private investments, then its assets should be managed by the Finance Ministry, he said.

While the proposal is aimed at bringing the debt-ridden agency out of the red, its success should be measured in terms of improved management and efficiency, areas in which the SRT is not doing very well. The rail system is part of a mass transit network, so SRT should put public interests over revenues. With better management, they can better ensure safety, punctuality, and convenience of travellers, thus generating more revenues.


Bangkok Post editorial column

These editorials represent Bangkok Post thoughts about current issues and situations.

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