Thailand's state railway navigates the rocky straits of restructuring
By Jon Fernquest
The
State
Railway Thailand (SRT) is a big organization with impressive statistics. The SRT:-
Employs a huge number of people (17,600)
- Owns countless rai of commercial land (36,000 rai)
- Has millions of customers (47 million)
- Loses monstrous amounts of money every year (4 billion baht)
- Owns countless rai of commercial land (36,000 rai)
- Has millions of customers (47 million)
- Loses monstrous amounts of money every year (4 billion baht)
Sunday's article in the Bangkok Post has an article on restructuring the state railway.
The article taps just about everyone's opinion on this controversial subject.
The state railway union invokes nationalism (which they seem to feel requires no further explanation).
Why is state enterprise privatisation like "selling the country" ? Other countries have done it and not "sold the country."
In fact, as today's Bangkok Post article on public-private partnerships (PPP) shows there is a lot of variety between outright private and public ownership of a new transportation project (Read article).
At least there is the experience of other countries like Great Britain that Thailand can learn from and improve upon.
Today's Article begins after vocabulary:
State Railway Thailand (SRT) - the
state-owned rail operator of Thailand, การรถไฟแห่งประเทศไทย (See Wikipedia)
straits - 1. a difficult situation, 2. a narrow strip of sea connecting two large bodies of water
impressive - makes you feel it is great, makes you admire
taps - uses
controversial subject - a subject that people argue and even fight about
a union, a labour union - an organization of workers that works to improve their pay and conditions of work
nationalism - love of one's country (in reasonable amounts ok, but if it makes enemies with other countries not good)
invokes nationalism - use nationalism as a reason for action and decision
public-private partnerships (PPP) - a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies (See Wikipedia)
straits - 1. a difficult situation, 2. a narrow strip of sea connecting two large bodies of water
impressive - makes you feel it is great, makes you admire
taps - uses
controversial subject - a subject that people argue and even fight about
a union, a labour union - an organization of workers that works to improve their pay and conditions of work
nationalism - love of one's country (in reasonable amounts ok, but if it makes enemies with other countries not good)
invokes nationalism - use nationalism as a reason for action and decision
public-private partnerships (PPP) - a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies (See Wikipedia)
Local News
Getting the rail network back on track
Government takes on tricky task of reforming debt-ridden SRT, with unions opposed to giving the private sector a bigger say8/11/2009
Piyaporn Wongruang
Since train No 84 derailed near the southern resort town of Hua Hin leaving seven dead and more than 80 injured early last month, calls to overhaul the rail system have been growing.
But the big question is how to overhaul it. Heated debate is likely next week when the government considers a new plan to accomplish this task.
The State Railway Workers Union of Thailand (SRUT), which opposes privatisation of the rail network, is likely to adopt tough tactics in the next 15 days if the government pushes ahead with its plans.
Selling state enterprises is like selling the country, major state enterprise unions claimed at a seminar for unions on state enterprise privatisation on Thursday.
get back on track -
start achieving what the plan says we should achieve again
a tricky task - a difficult thing to do
reforming - improving
debt-ridden - has lots of debt, money it has to pay back
pivate sectors - all the businesses and companies in an economy
giving a bigger say - allowing their opinion to have more influence over decisions
giving the private sector a bigger say - allowing the opinions of companies and business people to have greater influence over decisions
take on a task - decide to do (and finish) a difficult task
takes on tricky task of reforming debt-ridden SRT - decides to solve the problem of changing state railway so that it is profitable
derailed - when a train falls off the track it travels on
overhaul - repairs that almost rebuild the whole machine
heated debate - a very active, energetic, and perhaps angry debate
State Railway Workers Union of Thailand (SRUT) - the union for the State Railway of Thailand (SRT)
privatisation, state enterprise privatisation - the process of making a company owned by the government into a company owned by private stockholders (See Wikipedia)
adopt tough tactics - start doing things that will make it really difficult to win for the opponent (play dirty)
a tricky task - a difficult thing to do
reforming - improving
debt-ridden - has lots of debt, money it has to pay back
pivate sectors - all the businesses and companies in an economy
giving a bigger say - allowing their opinion to have more influence over decisions
giving the private sector a bigger say - allowing the opinions of companies and business people to have greater influence over decisions
take on a task - decide to do (and finish) a difficult task
takes on tricky task of reforming debt-ridden SRT - decides to solve the problem of changing state railway so that it is profitable
derailed - when a train falls off the track it travels on
overhaul - repairs that almost rebuild the whole machine
heated debate - a very active, energetic, and perhaps angry debate
State Railway Workers Union of Thailand (SRUT) - the union for the State Railway of Thailand (SRT)
privatisation, state enterprise privatisation - the process of making a company owned by the government into a company owned by private stockholders (See Wikipedia)
adopt tough tactics - start doing things that will make it really difficult to win for the opponent (play dirty)
Prime Minister Abhisit Vejjajiva held talks with railway union leader Sawit Kaewwan last week.
He said that one possible solution acknowledged by the union was that railway functions be separated and turned into business units.
Mr Abhisit said railway functions such as track maintenance, services and land property development should be separated into their own units, to make them more economically efficient.
When asked if this would mean setting up new subsidiary companies to run them, Mr Abhisit declined to elaborate, saying details would be released next week.
X acknowledged by Y -
situation or truth X accepted as true by person Y
functions - the special activity or purpose that a person or thing does
railway functions - the special things that the railway business does (not just railway, also manage property along railway)
business units - a part of a company that produces certain products (for the example: the automotive business unit)
efficient - do a task very without wasting resources (time, energy, money)
subsidiary companies - smaller companies owned by larger companies
declined to elaborate - did not give more details now (maybe later)
details would be released - details would be given to the public
functions - the special activity or purpose that a person or thing does
railway functions - the special things that the railway business does (not just railway, also manage property along railway)
business units - a part of a company that produces certain products (for the example: the automotive business unit)
efficient - do a task very without wasting resources (time, energy, money)
subsidiary companies - smaller companies owned by larger companies
declined to elaborate - did not give more details now (maybe later)
details would be released - details would be given to the public
The union and some rail experts believe that setting up business units to run railway functions could bring privatisation of the network closer.
Splitting off functions into business units could help determine the business potential of those sections, said one manager at the State Railway of Thailand (SRT). Once this potential is known, those units could eventually be privatised. But governments have been down this track in the past, without success.
On June 3, the cabinet approved a restructuring plan for the SRT. Two subsidiary companies would be set up to handle railway services and land property development. Development of the track network would be left to the SRT and the government.
The union worries that restructuring could allow the private sector to take a bigger role in running the SRT.
business potential -
the possibility that a business activity could make a profit (and
therefore be self-sustaining)
privatised - when a government owned and operated company is made into a company owned by stockholders
restructuring plan - plan for changing a business so that it becomes profitable
land property development - process of improving and building on land
role - a position or function in some task or activity
take a bigger role in running the SRT - have a more important position or function in running the state railway
privatised - when a government owned and operated company is made into a company owned by stockholders
restructuring plan - plan for changing a business so that it becomes profitable
land property development - process of improving and building on land
role - a position or function in some task or activity
take a bigger role in running the SRT - have a more important position or function in running the state railway
The government's plan is based on a business model adopted in many places in Europe.
The core business of a state entity is split into network development, maintenance and operations.
In England, for instance, the railway was privatised and the companies running it were listed on the stock market.
However, the British government later discovered that separating network development and maintenance caused problems.
As both the maintenance and operation sections tried to make profits, their operations were compromised.
When network maintenance was limited by the constraints of privatisation, trains slowed as a result. When accidents occurred, getting those responsible to own up became tougher.
The British government fixed the loophole by setting up an agency to work between the units.
An SRT source said the government should not rush its plan, and should stick to basics. Development of the rail network had lagged behind the road network for years.
adopted - people started using
it
core business - the most important business that a company does (among several businesses that the company does)
listed on the stock market - the stocks of the company are traded by the public on the stock exchange (which means that financial information must be made publicly available too)
operations were compromised - business performance suffered (did not do as well as it could)
constraints - something that limits or controls what you can do
constraints of privatisation - the ways that making rail companies private limit what can be done (everything must make a profit in the end)
own up - say and admit that they did something wrong
getting those responsible to own up - get the people who did something wrong to say and admit that they did something wrong
loophole - a small mistake in a law that allows people to go around the law (and do something that should be illegal)
fixed the loophole - repair the law so that people cannot go around the law
the basics - the simple and most important elements (not too complicated or detailed)
stick to basics - focus on the simple and most important elements (don't get too complicated or detailed)
X lagged behind Y - X was slower than Y
core business - the most important business that a company does (among several businesses that the company does)
listed on the stock market - the stocks of the company are traded by the public on the stock exchange (which means that financial information must be made publicly available too)
operations were compromised - business performance suffered (did not do as well as it could)
constraints - something that limits or controls what you can do
constraints of privatisation - the ways that making rail companies private limit what can be done (everything must make a profit in the end)
own up - say and admit that they did something wrong
getting those responsible to own up - get the people who did something wrong to say and admit that they did something wrong
loophole - a small mistake in a law that allows people to go around the law (and do something that should be illegal)
fixed the loophole - repair the law so that people cannot go around the law
the basics - the simple and most important elements (not too complicated or detailed)
stick to basics - focus on the simple and most important elements (don't get too complicated or detailed)
X lagged behind Y - X was slower than Y
Narong Petprasert, director of the Political Economy Programme at Chulalongkorn University and also a labour issue specialist, said the biggest problem in overhauling the railway system is a lack of understanding that the railway is also a public service.
Profits cannot be counted first, but good services can, he said.
Overhauling the railway should not necessarily mean privatising it, he said.
If the private sector ended up running the railway, profit would come before the goal of serving the public.
[Comment: Companies don't have to serve their customers to remain in business?]
Setting up subsidiary companies could open the door to privatisation as companies would need their own management. Their shares could be prepared for sale.
"To overhaul the railway, you don't have to lose your ownership rights over it. You can do so by sharing your rights with others."
The SRT had to shoulder the cost of construction and the maintenance of railway tracks.
If the government stepped in to help, the SRT could improve its balance sheet, and better compete with other modes of transport.
With less debt, the SRT could run a better service. The government could further improve the service by inviting private entities to take part, in the form of joint investments or by granting concessions.
"Change is needed, but what we need is reform, not privatisation," said Mr Narong.
a labour issue
-
overhauling - repairing completely
shoulder costs - pay for costs ("bear burden of costs" like heavy weight on shoulder)
shoulder the cost of construction and the maintenance of railway tracks -
balance sheet - report showing financial state of a company at a point in time (assets + money owed (liabilities) + owner's equity (current value ot investors))
improve its balance sheet - make balance sheet stronger (reduce debt or increase assets)
other modes of transport - other forms of government
private entities - companies (private, not public government owned)
concession - officicial permission from government to run a business
granting concessions - giving concessions
overhauling - repairing completely
shoulder costs - pay for costs ("bear burden of costs" like heavy weight on shoulder)
shoulder the cost of construction and the maintenance of railway tracks -
balance sheet - report showing financial state of a company at a point in time (assets + money owed (liabilities) + owner's equity (current value ot investors))
improve its balance sheet - make balance sheet stronger (reduce debt or increase assets)
other modes of transport - other forms of government
private entities - companies (private, not public government owned)
concession - officicial permission from government to run a business
granting concessions - giving concessions
Somsak Kosaisuk, an adviser to the SRUT, said private entities were not needed to accomplish restructuring.
Poor management and services had hurt the railway's finances. Corruption in managing its land assets had made the problem worse, he said.
Membership of the SRT's board should be opened up to include representatives from the civil sector, to improve checks and balances.
"Having private companies involved does not mean we can get rid of corruption. What we need is transparency and people who dare speak the truth."
[Comment: Labour
unions are not another a possible source of corruption?]
In 2008, the SRT carried a debt of about 72 billion baht. Almost half stemmed from new investment, especially the Airport Rail Link project.
Over the past 50 years, the SRT has extended its track network to 600 kilometres, taking the length of the network to 4,400km, or 2% of the nation's road network.
The government had always supplied less money for construction of railway tracks than building roads. That year the railway took 47 million passengers, or only 6% of the number of passengers who travelled by road.
With low passenger and freight numbers, income has fallen as debts rose.
Service and maintenance have declined, which the union believes resulted in the derailment at Khao Tao.
SRT's board - the
high level group of people who decide on SRT policy and make high level
decisions
representatives from the civil sector - anything that is not government (or military)
checks and balances - when power is spread over different parts of government, by giving one part authority over and different parts of the government
transparency - when the public can see what is happening (so no corruption)
X stemmed from Y - X was caused by Y , Y caused X
Airport Rail Link, Suvarnabhumi Airport Rail Link (SARL) - a rapid transit line, provided as an airport rail link from Suvarnabhumi Airport to a City Air Terminal at Makkasan and urban area of Bangkok, Thailand. Most of the line is on viaduct over the main Eastern Railway. It is owned and operated by the State Railway of Thailand (SRT) รถไฟฟ้าเชื่อมท่าอากาศยานสุวรรณภูมิ, แอร์พอร์ตลิงก (See Wikipedia)
representatives from the civil sector - anything that is not government (or military)
checks and balances - when power is spread over different parts of government, by giving one part authority over and different parts of the government
transparency - when the public can see what is happening (so no corruption)
X stemmed from Y - X was caused by Y , Y caused X
Airport Rail Link, Suvarnabhumi Airport Rail Link (SARL) - a rapid transit line, provided as an airport rail link from Suvarnabhumi Airport to a City Air Terminal at Makkasan and urban area of Bangkok, Thailand. Most of the line is on viaduct over the main Eastern Railway. It is owned and operated by the State Railway of Thailand (SRT) รถไฟฟ้าเชื่อมท่าอากาศยานสุวรรณภูมิ, แอร์พอร์ตลิงก (See Wikipedia)
(Source: Getting the rail network back on track, Government takes on tricky task of reforming debt-ridden SRT, with unions opposed to giving the private sector a bigger say, 8/11/2009, Piyaporn Wongruang, link)
