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On the right track in
Bangkok
By Gary LaMoshi
BANGKOK - Bangkok's Skytrain has
transformed life in the Thai capital. Opened for
business in late 1999 and built completely with
private money, Skytrain reintroduced fast,
efficient transportation to a city choking on auto
traffic. Commuters, students, tourists,
trendsetters, and even Thai royal family members
ride Skytrain's sleek rails.
Skytrain's
parent company, the Bangkok Mass Transit System
(known as BTS), claims an operating profit for the
past three years and may list on the Stock
Exchange of Thailand this year. However, BTS
remains hamstrung by an estimated 39 billion baht
(US$1 billion) debt from construction of the
system, deepened by its first two unprofitable
years, and needs restructuring in order to attract
new investment for system expansion.
Chief
operating officer Paul Anderson, an Australian
with 20 years' experience in Asian urban rail,
believes that BTS illustrates how privately owned
transit systems and similar major infrastructure
projects can succeed, and highlights mistakes to
avoid. As governments in Asia and around the globe
turn increasingly to private investors to build
and operate new infrastructure projects and to
privatize existing public services, the BTS story
shows what works and what doesn't.
Sans
sanouk
By the 1990s, Bangkok was as
renowned for its traffic as its temples. On my
first visit in 1992, my taxi took 20 minutes to go
around a block to cross Sukhumvit Road, a major
thoroughfare. I found getting around so trying -
due to the traffic, the indecipherable bus system,
and the need to negotiate fares with drivers
(metered taxis weren't common until 1994) - that I
walked, no solution given Bangkok's heat and
pollution. More importantly, despite the city's
sights and spirit imbued with the Thai core value
of sanouk (having fun), I didn't ever want
to come back.
But I did return, and over
the past five years Skytrain has changed
everything. I now visit Bangkok annually and use
the Skytrain - with 23.5 kilometers of track and
23 stations - for errands, sightseeing and meeting
friends. I'm not alone. Tourist stays in Bangkok
have lengthened from an average of two days to
three since the advent of Skytrain. Anderson says,
"Much of that is attributable to BTS restoring
mobility to tourists." Longer visits translate
into hundreds of millions of dollars in added
revenue for the city's hotels, retailers,
restaurants and tax collectors.
Skytrain
has also transformed Bangkok's cityscape.
Development patterns have followed the train line,
with more than 150 projects covering over 50,000
square meters along Skytrain's L-shaped main line
connecting downtown to residential areas in
northwest and southeastern Bangkok, and its
southern and western spur. In addition to downtown
commercial developments - Bangkok has more, bigger
malls than any city I know - outlying areas along
the Skytrain such as Thong Lo on eastern Sukhumvit
Road have become desirable areas for what Anderson
terms "yuppies", adding chic restaurants and
Internet bars (not cafes, bars) catering to them.
Most importantly, Skytrain has taken
commuters off the roads. Skytrain logs 380,000
trips daily, showing an annual growth of 50,000
trips per day in recent years. With the new MRT
(mass rail transit) subway system opened last
July, mass transit rail accounts for more than
500,000 trips daily, trips that keep cars off
Bangkok's roads. When the subway shut down for two
weeks due to an accident in January, city
officials reported daily downtown traffic counts
rose by 100,000.
It's no secret why people
choose trains. "Mobility is five kilometers per
hour at rush hour on the surface, 35 kilometers
per hour on our system," Anderson says. But he
emphasizes that profitable urban rail entails more
than just keeping the trains running on time.
Branded
"We try to give people
a feeling that riding the train is part of city
life, not just getting from A to B," Anderson
explains. "Our strategy was to create the
excitement of the city in the system as part of
our brand image." Yes, even a mass transit system
needs a brand image. Skytrain's brand image
extends far beyond a jazzy logo, cool tickets, and
hip advertisements in the trains.
Customer
service and safety are keys. "From overseas, we've
seen that mass transit systems have a reputation
of not being safe," Anderson says. "Maybe we've
overreacted, but I don't think so." Security
personnel are posted on each platform, in part to
deter riders from the countryside from crossing
the tracks as they would at a railroad station
back home. Guards are also trained in customer
service tasks, such as giving directions. The
system has carried passengers on more than 424
million trips covering 18 million kilometers
(around the earth 475 times) without an accident.
Anderson adds this challenge: "If you can find a
piece of litter on BTS, let me know."
Because the system is user friendly,
efficient and fares are reasonable (10-40 baht),
30% of Skytrain rides are what Anderson calls "new
trips", discretionary travel. Relief from concerns
about traffic and parking encourages residents to
venture out for entertainment or shopping.
Tourist trade
With an average
of more than 15,000 foreigners arriving daily at
Don Muang International Airport, tourists are a
significant segment of the Bangkok market, and
Anderson makes sure BTS gets its share. "I
personally meet hotel managements regularly as
part of developing products to suit hotels'
needs." Those products include customized Skytrain
tickets for hotels to offer guests. BTS worked
with a boat company to create a special tourist
service along the Chao Phraya river to reach
Bangkok's riverside temples and museums in the old
royal quarter that neither train system
penetrates. Skytrain delivers visitors to the
pier.
All Skytrain and subway station
signs and maps are in English along with Thai.
Route maps also feature English, and guide books
distributed with the system's three-day pass, are
available in English and Japanese. "We haven't
done Chinese," Anderson explains, because
Chinese-language guidebooks and other publications
already include comprehensive Skytrain
information.
BTS has embraced the new
subway system as a partner, not a rival, expecting
the added rail reach to boost Skytrain traffic as
more commuters leave their cars at home. Unlike
Kuala Lumpur, where the subway (Bangkok's twin,
right down to the gray marble walls of train
platforms) and elevated monorail have no
interchanges, Bangkok's system includes three
transfer points where riders can switch directly
between the underground and elevated systems.
Common ticketing is under study to bring the
systems closer together.
Numbers
crunch
A privately held company, BTS
doesn't publish accounts, but Anderson boasts that
its operating profits last year exceeded 50%,
including revenues from fares, advertising and
rental of retail space in stations.
Back-of-the-envelope calculations suggest a profit
of more than 1 billion baht. Investors will get
full details of its finances if BTS carries out
its plan for a stock listing.
But these
glory days and a bright future can't cover the
overhang from debt accumulated when building the
system and the first year's daily traffic of
100,000, 60% below initial estimates, insufficient
to cover operating costs. Assuming BTS borrowed at
6% (a bargain rate back in the mid-1990s when
SkyTrain construction began), annual debt service
alone on $1 billion amounts to $60 million, more
than double the profit estimate. So BTS is now
working with an international consortium of banks
to restructure the debt. Anderson says they're
close to a deal, but won't say more.
The
BTS story holds key lessons for cities such as
Jakarta that are considering rail lines. Key
considerations, as Anderson outlines:
Build a system that's the right size and
scale. Don't overbuild, but give the system room
to grow.
Choose the right routes, in cooperation with
city authorities, the rail developer and other key
players.
Go elevated. Underground systems cost two to
three times as much to build and two to three
times as much to operate because of higher air
conditioning, lighting, security and safety costs.
Skytrain's tracks are clean, elegant concrete
structures, nothing like the "Victorian
construction" of elevated systems in New York or
Chicago.
Most important, get the right mix
of public and private financing, as opposed to
BTS's 100% private financing. "The general
thinking is that infrastructure should be the
government's responsibility, and the operator
handles the rail system," Anderson says. Under
that model, the government would pay for the
elevated structure while private money would buy
the rails, cars and station equipment. Public
money leverages private investment and
entrepreneurship.
The government is
listening. Just after Prime Minister Thaksin
Shinawatra's Thai Rak Thai was re-elected early
this month, the government announced plans to
reverse policy and invest 521 billion baht to
expand Bangkok's rail lines and express bus
services. That pledge fulfilled a campaign promise
to tackle Bangkok's traffic problems that helped
Thai Rak Thai win 35 of 37 parliamentary seats in
the capital, usually an opposition stronghold.
These mass transit improvements will save an
estimated 102 billion baht a year in
transportation and energy costs.
Gary LaMoshi has worked as a
broadcast producer and print writer and editor in
the US and Asia. Longtime editor of investor
rights advocate eRaider.com, he's also a
contributor to Slate and Salon.com.
(Copyright 2005 Asia Times Online Ltd.
All rights reserved. Please contact us for
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