Legal changes needed to attract needed railway

The government should also firm up plans to attract investors to establish plants here to make parts and assemble trains to help reduce future costs.

The Senate transport committee had joined with the Krungthep Turakij newspaper and Nation Multimedia Group to host the seminar on the strategy for railway development.

Somsak Chotrattanasiri, deputy director of the Budget Bureau, said the government’s master plan for the development of more than 400 kilometres of railroads would require a lot of money.

The government’s mass-transport projects will need Bt900 billion, including Bt800 billion for 10 commuter lines, Bt60 billion for dual-track railroads and the rest for the high-speed rail routes.

The Budget Bureau will mainly focus on financing strategy and include regular annual expenditures, loans and private investment. The state will allocate funds for land expropriation and feasibility studies. The rest of the required funds will come from loans and private investment.

The bureau has to ensure that the budget can pay back the principal and interest of the loans for the State Railway of Thailand (SRT). This year the amount to be paid is estimated at Bt9 billion. Next year, it will be Bt11 billion plus between Bt4 billion and Bt5 billion for mass transit, which will increase in 2016 after the completion of the Purple Line.

Railway development is crucial to cutting logistics costs and raising the competitiveness of the country. About 2.2 per cent of all freight is transported by rail. This is very low compared with other countries and results in Thailand consuming more energy.

Somchai Sujjapongse, director-general of the Fiscal Policy Office, said the total investment for all transport systems, including road, rail, maritime and air, over the next 10 years would reach Bt3.6 trillion. Of that, 83 per cent will come from the annual budget and loans and 17 per cent from public-private partnerships (PPP).

The government will need to look for new fiscal innovations for financing, and not just rely on bank loans, Somchai said. It must speed up the creation of an infrastructure fund. It will need to amend the law on private investment to increase transparency and limit the obstacles that are sure to occur.

The State and Public Investment Act of 1992 needs to be amended, because it will take two or three years before the private sector will be required to invest. The Finance Ministry will propose a new bill concerning this matter or the PPP law to implement.

Prapat Chongsanguan, vice minister of the Transport Ministry, said the goal of developing commuter trains, rapid transit and parallel tracks had been discussed for 10 years, with little progress to date. This has caused Thailand to fall behind other countries in rail development.

Success depends on all parties agreeing that upgrading the rail network is beneficial for the economy and development of the country and that cooperating instead of raising objections is the way to go, Prapat said.

The private sector must be allowed to earn a return on its investments and must be reassured that the state would strictly honour its contracts.

The Transport and Energy ministers will invite the private sector to set up assembly and parts plants here so that the country can save on procurement costs, increase employment for local workers and gain from the transfer of key technologies.

Ronnachit Yamsaad, deputy governor of the Mass Rapid Transit Authority of Thailand, said that of the 10 rapid-transit routes, the SRT would take responsibility for managing six routes – the Purple, Blue, Green, Orange, Pink and Yellow lines. The Purple Line is 40 per cent complete and is expected to start running in 2015. Other lines are under construction and the remaining bids are estimated to be completed during this government’s term.

The government should allow the SRT to manage at least one route to gather experience to oversee the other routes, he said.