Troubled Thai rail operator targets 600b baht in land projects

Bangkok

THE State Railway of Thailand (SRT) has set up a company to manage and monetise its most valuable properties in an effort to reverse decades of losses.

While the idea of generating income from SRT assets has been around for years, the plans are only now taking shape, with prime real estate being transferred to an asset-management unit, Transport Minister Saksayam Chidchob said.

Set up in 1890 to provide not-for-profit transport services, the rail operator has accumulated about 44,000 hectares of land across Thailand - and racked up billions in liabilities through money-losing operations.

The SRT is among the most-indebted state agencies and country's largest property owners. The asset agency should deliver at least 600 billion baht (S$24.2 billion) in additional revenue over the next 30 years, offsetting nearly all accumulated and operational losses, Mr Saksayam said.

Several trophy properties, especially in central Bangkok, are probably more valuable than current appraisals if they can be developed into high-rise, mixed-use projects, he added.

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The SRT had a combined loss from operations of nearly 40 billion baht in the three years leading up to the pandemic, according to figures from its annual reports.

And this past July, the prime minister ordered a panel to probe bidding on two rail projects worth about US$4 billion after complaints by the Anti-Corruption Organization of Thailand and politicians.

"Given SRT's track record of inefficiency, it's difficult to see how plans on non-core operations could sustainably reverse losses in core activities," said Pavida Pananond, professor at Thammasat University's Department of International Business, Logistics and Transport.

Focus should be on managing its transport services for people and freight, not property development, she noted.

According to Mr Saksayam, establishment of the asset division is just part of a programme to modernise the rail enterprise. Other plans include allowing private companies to use SRT lines to transport freight and people, and adding battery-powered trains to supplement diesel-powered services, he said. BLOOMBERG