SRT should mimic Indian Railways

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Thai national railway worst performing SOE

WICHIT CHANTANUSORNSIRI

The State Railway of Thailand should look to its Indian counterpart for an example of how to return to profitability, Finance Minister Surapong Suebwonglee said yesterday.

''Indian Railways is a large state enterprise, one larger than our own SRT. But it took just three years to turn around. [The SRT] should be able to do the same in less time,'' Dr Surapong said.

He told executives of local state enterprises yesterday that Indian Railways was a ''good model'' of a government-controlled agency that was able to transform its management practices and vision.

From a loss-making operation that was near bankruptcy due to high debt, Indian Railways turned to make a profit of 70 billion baht over the past two years, Dr Surapong said. At the same time, passenger tariffs fell by 18%.

The SRT has long been one of the country's worst-performing state enterprises, with accumulated losses of more than 40 billion baht and losses in 2007 alone of 6.27 billion baht.

Of Thailand's nearly five dozen state enterprises, four accounted for 95% of all losses: the SRT, the Bangkok Mass Transit Authority, the SME Bank and the National Housing Authority.

Dr Surapong said Indian Railways reversed its fortunes only after successful talks between management and staff about the need to co-operate together to rehabilitate the organisation.

He told state enterprise executives that the government wanted their agencies to fulfil six tasks, starting with helping to improve the fortunes of the poor.

The nine state-owned financial institutions in the country, which include the Government Savings Bank, the Government Housing Bank and the Bank for Agriculture and Agricultural Co-operatives, are responsible for 37% of total lending in Thailand, Dr Surapong noted.

Of this, 457 billion baht in loans this year were targetted to be lent to the poor, he said. State enterprises also played a key role in improving the country's logistics networks, including mass transit systems in Greater Bangkok.

The government has already announced plans to invest more than 700 billion baht in mass transit systems in Bangkok over the next several years, and is planning to invest hundreds of billions of baht in more funds to improve the country's rail networks. The investments are aimed at reducing logistics costs for the country to 8% to 9% of gross domestic product from 18% of GDP now.

Dr Surapong urged state enterprises to accelerate their investment plans, with a disbursal target of 90% of the 341 billion baht budgeted for the fiscal year ending September. Spending last year was just 64% of the 336 billion baht allocated for the year.

He urged state enterprises to also improve profitability and better leverage their assets as well as strengthen their commitments to principles of good corporate social responsibility.

http://www.bangkokpost.com/010508_Business/01May2008_biz35.php