Thailand's Railways: Wrong Track

Written by Philip Bowring

FRIDAY, 23 OCTOBER 2009

It isn't just rail that's a problem

Recent chaos on Thai railways is symptomatic of much bigger problems which are holding the whole country back. Just at a time when the nation needs strong, well-directed public sector investment to offset weak external demand and a cautious private sector, the woes of the railways are showing just how difficult this can be.

The recent rail chaos, which saw many delays and thousands of passengers temporarily stranded, was the doing of the disgruntled workers of the State Railway of Thailand (SRT). Actions by them in the south of the country were as near as possible to a strike, which would be illegal. All this followed recent incidents of derailments and other technical problems largely attributable to the poor condition of the system, its track, rolling stock and signaling despite being in receipt of massive annual government subsidies.

One hundred years ago the railway was the pride of the nation. But little has been invested in it since then as the SRT has become law unto itself and the government has followed the US pattern of massive investment in roads and car manufacturing at the expense of public transport which have produced waste and traffic jams. The SRT meanwhile has become an overstaffed enterprise noted for featherbedding and corruption. Although Thailand's size is well suited to railways, the SRT has lost passengers not just to the roads but even to flying relatively short distances which should be ideal for city center to city center railways.

The workers' leaders have been flexing their muscles partly to warn against any attempts to privatize any parts of the SRT. Their opposition may yet further delay the opening of the railway to connect the (relatively) new Suvarnabhumi airport with Bangkok. It is now supposed to start operation on the King's birthday in December, but who manages the operation of the line still seems shrouded in doubt.

Meanwhile some observers also see a political hand in recent events. The union leaders have been strong supporters of the anti-Thaksin PAD movement headed by Sondhi Limthongkul, now leader of the recently founded "Yellow Shirt" party, the New Politics Party. The rail problems could embarrass the Democrat party, which will soon face a by-election in its traditional stronghold in the south. For the first time it will probably find itself competing with Sondhi's party, which is close to the state enterprise unions. The NPP's first leader was Somsak Kosaisuuk who heads the Federation of Government Owned Enterprise employees and leads the opposition to electricity privatization. Now the unions' aim is to stop any rail privatization.

It also seems the new party was created to provide some ongoing vehicle for Sondhi who, like his union leader friends, is not much liked by their military and monarchist allies in the anti-Thaksin movement, though the NPP claims "royalism" as its ideology.

But if this is politics as usual it also illustrates how difficult the mix of corruption and politicization of public sector projects can be. Thailand has thrived as an open, small-enterprise economy helped along by large foreign investment. But growth is now much more difficult than in the past, a past when China and India were not global players, a past before Vietnam began to compete, and when the Thai workforce was young and fast growing.

Now it badly needs investment, public and private, to raise productivity and shift to higher value added industries. It needs a modern railways system to connect to its neighbors and eventually to China and relieve pressure on its often clogged road system and maintain the advantage of its central geographic position and deep water port to maintain its regional leadership. Likewise it needs to shake up an educational system little exposed to global competition and running on 100-year-old models.

But public investment faces several obstacles in addition to entrenched interests of bureaucrats, the military and others with deep roots in the established order. One is a deeply ingrained aversion to spending money. This may be creditable in many countries but partly accounts for the fact that much money allocated in budgets is never spent. Fears under Thaksin that "irresponsible" spending on health benefits and handouts to the poor would lead to debt and decline added to natural caution.

Secondly, endless political infighting over where projects should be located, and infighting over contract spoils induces further delays.

The net result of all this is that recurrent government expenditure has been continuing to grow, most recently enhanced by anti-recession measures introduced by the Democrat-led government. But the capital spendingneeded for the future remains weak. Among other things it is reflected in the sharp fall in imports, which have declined faster than exports and given Thailand a large, and un-needed, current account surplus. Nor is there much danger of excessive public sector debt which is now about 40 percent of GDP.

For sure, it is reasonable to worry if more and more government revenue goes on recurrent spending, leaving only a declining surplus for investment. But from a fiscal standpoint the government is in a position to invest more. A recent Asian Development Bank report says the public sector "bears a heavy responsibility in reviving investment" but notes that "the mediocre record of public investment in recent years underlines the risk of relying on it too much".

Unfortunately given the current state of the political and bureaucratic system it is neither able to do so quickly and effectively, nor to step aside and enable the private sector to do more. In the case of the SRT the net cost of modernization should not be too high. It owns vast tracts of land, much of which could be sold. It also owns land adjacent to it current single track, so double tracking the system, or even converting it to standard gauge, is not too big a task to contemplate.

Thailand does have examples of large-scale public sector projects which have been both well executed and well run after completion. But it badly needs more of them if it is to improve the quality as well as the size of the economy. Reform and revitalization of the SRT is crucial both for the sake of the nation's transport industry, and as signal that government is still capable of delivering sensible projects in the interests of the public rather than padded for politicians.

(www.asiasentinel.com/index.php?option=com_content&task=view&id=2113&Itemid=437)

Thailand : the future uncertain!!!

Thailand's Political Muddle

Written by JCK Lee

WEDNESDAY, 28 OCTOBER 2009

An ailing king, a feckless heir, political rivalries and conniving unions make the future uncertain

Thais were happy last week to see King Bhumibol Adulyadej out in the open after weeks on his sickbed. But the pictures of the thin, wan figure in a wheelchair were also a reminder of the uncertainties of Thailand without him.

That Thailand's politics are convoluted is hardly news but the twists and turns can still surprise. Take, for instance, another event earlier this month – former prime minister, retired General Chavalit Yongchaiyudh, announced he was joining the Pheu Thai (For Thais) Party, the successor to deposed prime minister and now fugitive Thaksin Shinawatra's outlawed Thai Rak Thai party. Other retired military types did the same. Chavalit earned a rebuke from his former colleague, ex-general, ex-prime minister Prem Tinsulanond, who now heads the Privy Council and is widely credited with leading the monarchist drive against Thaksin.

This could be dismissed as irrelevant. Chavalit and fellow retirees are yesterday's men and may be simply trying to find a way back into relevance. Nonetheless, it could also be seen as symptomatic of the fact that despite the apparent deep divisions in the country between the pro-Thaksin Reds and the anti-Thaksin Yellows there is still more than enough scope for opportunistic politics of the sort that brought about the current support for Prime Minister Abhisit Vejjajiva's Democrat Party from former Thaksin ally and rural power broker Newin Chidchob. Purchasing the support of Newin's northeast allies secured the government but added to general cynicism about politicians, not least those claiming to be cleaning up after the Thaksin era.

The Democrats now face a challenge from a different direction, Yellow Shirt leader Sondhi Limthongkul, the rabble-rouser behind the People's Alliance for Democracy (PAD) that led the charge against Thaksin, and his New Politics Party formed in July. The new party gives Sondhi a vehicle for his own continuing political involvement off the streets as well as, potentially, on. It may well draw more votes away from the Democrats than from other parties. Sondhi, a media baron, will continue to push his agenda through his newspapers, TV stations and websites.

The new party's* proximity to state enterprise unions is also a worry for a Democrat-led government. The party's first leader was Somsak Kosaisuk, who led the fight against privatization of the Electricity Generation Authority of Thailand and is viewed as behind recent labor problems at the State Railway of Thailand, a corrupt and over-manned entity that many in the government and bureaucracy would like to see at least partially privatized.

The monarchists need Sondhi, who proclaims monarchism as his party's ideology, but do not much like him. Abhisit makes a more credible leader than most of the alternatives but the Democrats could be hard-pressed on all sides when they face elections due in late 2011, assuming they take place on schedule.

Put this mess into the context of a possible royal succession and it is no surprise that no sensible person will provide a forecast of the future. A hundred and one different scenarios can be readily sketched.

In the more immediate future, there is the issue of what will happen to Thaksin's assets. Will they be seized or is it possible that there will be a deal to let him keep them so long as he stays out of the country and keeps his mouth shut? But can he just be an offshore businessman? It seems unlikely. But any kind of deal, such as the royal pardon sought by some Thaksin supporters, is also unlikely. Indeed he might fear for his own life if he did return home.

Monarchist fears of him and his supposed republican sentiments may be exaggerated but they are still very strong. Thaksin may be loathed by many, but he is likely to remain second only to the king in popularity. No other politician comes close. Even in absentia he is likely to be a shadow over Thai politics for years, just as Argentina's President Juan Peron was for decades after his overthrow and even after death.

Nor would the departure of Prem, now 89, likely make a difference. His probable successor is the like-minded retired General Surayud Chulanont, who served as prime minister after the military coup that removed Thaksin.

The problems for the monarchists and the army however go beyond the issue of Thaksin. Both of these institutions face storms. First, the death of King Bhumibol will be a huge blow. It is hard to measure how much loyalty is given to the king as an individual who has done much for the nation and how much to the institution of the monarchy as a keystone of Thailand. But it is clear that no one has the standing to fill the king's shoes.

As for the army, defending the monarchy against “republican threats” becomes another role. Its budget has been boosted by the Abhisit government but the raison d'être for a large military budget is none too obvious. Indeed, there are concerns that military desires to justify its existence lie behind contrived border spats with Cambodiaand stand in the way of any attempt to resolve the problems of a Muslim insurgency in the south by offering the provinces a degree of autonomy. In the short run the situation in the south may have improved slightly but the problem will linger.

But the army itself is not free of factions, nor are the courtiers who surround the monarchy. The monarchists need a credible monarch. Crown Prince Vajiralongkorn, who spends much of his time in Germany, and also may not be fully fit, may lack the popularity accorded to his father and sister Princess Maha Chakri Sirindhorn. But no one doubts his determination to succeed his father. Nor is there any obvious way, short of death, that he won't achieve that goal, however much some close to the palace might like to see Sirindhorn succeed or become Regent till the Crown Prince's male heir reaches maturity. He was anointed as heir back in 1972 when he was 20.

Will the successor need to do some political deals of his own to protect his back? And if so, which side will Thaksin be on?

Beyond the issue of Thaksin and the politics of patronage are real issues of income distribution and the metropolitan/rural divide. Income distribution may not have been getting any worse in recent years, but the media and the declining supply of cheap rural labor have all helped raise political awareness. Thaksin's populist policies, with handouts to farmers and cheap health care, were nothing very radical. Certainly they did not risk – as the pampered Bangkok middle class claims – massive wealth redistribution or a dangerous government debt burden.

In practice there has been little to choose between macro policies under Thaksin and those of his successors, both military and civilian. Abhisit has even expanded some Thaksin policies to try to win rural support at the next election.

But class tensions have increased and among the Red Shirts there are plenty of aspiring radicals who have been demonstrating against the Bangkok-elite system rather than in favor of Thaksin the man. The media may have become generally compliant, almost unanimously pro-establishment and hostile to Thaksin, but non-governmental organizations still flourish. Some critics still brave the lese majeste laws, and long prison terms or voluntary exile to foster anti-monarchy radicalism that is as yet more incipient than real but could develop into a threat if the prestige of the monarchy plummets and democratic aspirations are thwarted by the military.

On balance a muddle-through scenario looks more likely as ideological positions yield to the power of money and the cynicism of public and politicians alike. But any forecast may be foolish.

* Changed because of an editing error. We apologize.

(www.asiasentinel.com/index.php?option=com_content&task=view&id=2121&Itemid=185)