State Railway of Thailand reorganises to cut losses

Higher rents to be collected from state railway land & greater efficiency for railway operations but not until 2024 because of large number of staff.

RAILWAYS

State Railway of Thailand reorganises to cut losses

23/01/2017
Amornrat Mahitthirook

The State Railway of Thailand (SRT) is setting up three subsidiary companies in a drive to become more profitable and reduce its accumulated debt.

The plan focuses on the vast tracts of land owned by the SRT, rerouting train routes and streamlining maintenance work.

The companies are intended to free the SRT from inefficient bureaucratic routines, put the railway under more efficient corporate-style management with an aim to boost revenues and write off debts which are estimated at 100 billion baht.

This is according to SRT governor Wutthichart Kalayanamitr.

REAL ESTATE SUBSIDIARY BY MARCHTO COLLECT MORE RENT FROM LAND

The first new company will be to supervise SRT's assets, which include almost 40,000 rai of land, will be established in March.

The new SRT asset management company, which is hiring three high level managers to oversee operations, has as its goal to collect more rent from land, make better use of land, and invite private companies to undertake joint land development under the Public-Private Partnership Act.

These tasks are expected to help lead the SRT toward its goal of boosting annual revenue.

THE PROBLEM OF GETTING BETTER RENTS FROM SRT LAND 

"Within five years, the SRT should see revenues surge from three billion baht to five billion baht a year," Mr Wuthichart said.

"And in 10 years the figures must increase to at least 10 billion baht yearly."

He admitted it may not be easy to pull in good rents from all SRT-owned land, which is mainly located along rail tracks, because the lease value in some areas is determined by long-term contracts it has already entered into with leaseholders.

COMMERCIAL REAL ESTATE DEVELOPMENT ON PRIME LAND

Brighter prospects may lie with new commercial real estate developments on prime commercial land including areas in the vicinity of Bang Sue railway station, which is to undergo future expansion and become the main railway hub for Bangkok replacing the Hua Lampong rail station downtown, and near Mae Nam railway station in Bangkok's Klong Toey district.

"We've conducted a feasibility study of land use to pave the way for joint investment with private companies," Mr Wuthichart said.

TWO MORE COMPANIES BY 2024

Two more companies will be created by 2024.

One company will take charge of rail routes and another of maintenance related jobs.

Setting up these companies will take time as the restructuring involves a large number of staff.

The SRT will start by first taking a closer look at the financial management of its units overseeing rail routes and maintenance work.

Their asset accounts would be "separated" for evaluation in preparation for turning the units into companies. This will allow the SRT to better identify any problems, he said.

WILL RAIL TICKET PRICES INCREASE?

No indication was given as to what will happen to the price of rail tickets.

Rail travel is popular with tourists, cheap and also booked out weeks ahead of time.

Yet paradoxically rail tickets are heavily subsidized and sold below market price, as the excess demand clearly shows. 

The state railway is always referred to disparagingly as the "debt - ridden state railway of Thailand" but since ticket prices are essentially subsidized and sold at below market prices, the question arises of why these losses from subsidies are not written off in each year's financial statements. 

http://www.bangkokpost.com/news/general/1184949/srt-in-a-new-bid-to-tackle-money-woes

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