Bangkok to Buy More Rail Coaches to Beat the Traffic Jams

Bangkok Mass Transit System Pcl. Chief Executive Officer Surapong Laoha-Unya Interview And The Company's Train Operations

A sky train travels on an elevated track above Chong Nonsi intersection in central Bangkok.

Photographer: Dario Pignatelli/Bloomberg
  • Deal could be Thailand's largest train purchase to date
  • BTS also to bid for cargo train line to deep-sea port

Bangkok Mass Transit System Pcl, the operator of the Thai capital’s elevated railway network, has opened bidding to buy as many as 43 trains valued at 10 billion baht ($283 million) for its current route and two planned ones.

“We’re considering whether to buy all of them at once or buy only the first lot of seven trains for the current network,” Surapong Laoha-Unya, chief executive officer of Bangkok Mass Transit, or BTS, said in an Oct. 14 interview in Bangkok. “If we decide to buy them all, this may be the biggest train purchase ever for Thailand.”

Traffic jams, street protests, bombs and floods have helped drive people to use Bangkok’s mass-transit system as the city’s population approaches 10 million people. Prime Minister Prayuth Chan-Ocha has vowed to upgrade Thailand’s infrastructure, including by adding almost 300 kilometers (185 miles) of electric train lines in the capital.

Eight companies have joined the bidding so far, including past BTS suppliers Siemens AG and China CNR Corp. BTS is expected to award the contract early next year, Surapong said.

Crowded Market

Bangkok now has three rail operators, including BTS with its 36-kilometer sky train; Bangkok Metro Pcl, which runs a 20-kilometer underground rail line; and the government, which operates a 29-kilometer rail link to the airport. Still, only 6 percent of Bangkok’s mass-transit users use the city’s rail systems, compared to 51 percent in Seoul, 46 percent in Hong Kong and 40 percent in Singapore, according to BTS. 

It took seven years for BTS to open the elevated rail line in 1999, even though construction took only three years. Political turmoil and personnel changes contributed to the delay.

Surapong Laoha-Unya, chief executive officer of Bangkok Mass Transit System.
Surapong Laoha-Unya, chief executive officer of Bangkok Mass Transit System.
Photographer: Dario Pignatelli/Bloomberg

“Political problems and normal obstacles for big projects have dragged us behind” schedule in the past, Surapong said. “We’re quite confident that all will go as planned this time, as many big obstacles have been cleared already.” 

The government is pushing ahead with almost 300 kilometers of train lines linking Bangkok and its suburbs as a way to stimulate the economy, which is expected to grow less than 3 percent this year for the third straight year. More than 100 kilometers of track already are under construction and will open in stages from 2015 to 2021. 

Economic Boost

Tim Leelahaphan, an economist at Maybank Kim Eng Securities Thailand Pcl, said the project should help make the capital more livable.

“The ongoing mass-transit expansion will make Bangkok’s outskirts more interesting and will make the financial center less crowded,” he said. “It will definitely help boost the economy, given Thailand’s lack of public investment.”

BTS is waiting to sign contracts to operate two lines next year and has a good chance to win the bids for four more lines over the next few years, as they’re extensions of its current network, Surapong said. 

The company also plans to enter the logistics business. It will join the government’s bid for a 500-kilometer cargo rail line linking the northeastern province of Khon Kaen with the deep-sea port of Laem Chabang in the east of the country. The government is expected to open bids for the project early next year.

“We see high demand to ship agricultural products from the northeastern plantation fields to the port,” Surapong said. “The cost for rail shipment is much lower than by car. That will help the nation increase its competitiveness.” 

Surapong, who is executive director of listed BTS Group Holdings, said BTS Group’s profit in the fiscal year ending March 2016 is expected to equal or exceed the 2.94 billion baht the company earned last fiscal year. The company is on track to pay a dividend of 8 billion baht or more this year, compared with 7 billion baht last year, he said.

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