Sam Sherwood-Hale sat down with Dr Ruth Banomyong, an expert in logistics and advisor to various agencies such as the Asian Development Bank, World Bank and ASEAN
What is your current involvement in the rail industry?
I started off in maritime but my PhD was in multimodal transportation and I worked a lot on performance issues and measuring performance in rail. Of late I’ve been working a lot on policy perspectives looking at how countries should develop logistics policies.
There’s been renewed interest in redeveloping rules and regulations and looking at how to support service providers and help users gain access to services. We call this macro level and it’s relatively new but in Southeast Asia it’s very popular. Foreign investors complain a lot about the cost of logistics here in Thailand and talk about how critical the infrastructure is.
The problem is we always complain too much, when colleagues from Cambodia come they are shocked by how good our infrastructure is. Looking at rail, it hasn’t been supported and developed so something needs to be done, the challenge is that the State Railway of Thailand (SRT) is a stateowned enterprise and because they are losing money they can’t access new funds. Right now, I sit on a committee with the SRT and I’m advising them about a bid for the logistics centre at Lat Krabang.
I was nominated by the Ministry of Finance as an expert and this project at Lat Krabang is under Public Private Partnership law, so it is going to be different because it’s a tendering process and not put up as a concession bid as it has been in the past. The difference between the two is that a concession bid is who will give the Government the most money whereas the tendering bid is about who will charge the customers the least.
We consider that SRT has enough money so they will just receive a fixed amount which has been approved so how much will the person who comes in charge the users so modal shift can occur.
Do you think a franchising system could work here?
Franchising has never been done in ASEAN, there is monopoly control in every country, but the Government here in Thailand has been toying with the idea of creating a Department of Railways. This would replace the SRT and then the Government would regulate the sector but allow private companies to come in and operate. It’s easier now with the current political climate but there must be a desire from all parties to implement such a change.
There has been some change to the climate around railway projects what with what’s happening in Laos with the Chinese funded high-speed railway there and then the long discussions about a similar project here in Thailand. Do you think high-speed rail can be a success in Thailand?
Before we can talk about HSR we have to talk about how rail in Thailand is not functioning as it should. Double tracking the railways is more important because you can already increase the average speed from 30 kph to 60 kph just by doing that. HSR is on the other end of the spectrum, its more for passengers and not freight, I am not saying we shouldn’t do it but we need to improve on the basics first.
Geopolitics plays a big part in the game with China, Laos doesn’t have the bargaining power and they’ve ended up giving structural integrity away to another sovereign power. In Thailand we have the bargaining power. The technocrats that go to negotiate all graduated from the UK or USA and they know financial models so there is a level playing field where they can discuss it in an equal manner.
There was a Japanese report recently about a proposed high-speed route from Bangkok to Rayong on Thailand’s southeast cost. Apparently to make it feasible it would have to leave every nine minutes.
Haha, that was my quote! I told them competing with the motorway in Thailand is hard right now because that’s already so convenient. Thailand has really high quality roads, compare this to Laos or Cambodia and other countries where the roads are so poor they can’t compete with rail. In Cambodia they don’t have enough money to invest in the railways, they can’t do it on their own so money comes in the form of aid which is often insufficient and too late.
I said earlier that every party has to have the desire to see a project through, this is most important in the case of the Kunming to Singapore high-speed railway. The problem is nobody will want to sit all the way from Kunming to Singapore and there are no goods that will travel that distance either.
What will happen is the Singapore to Malaysia route will be busy and then maybe that same route can continue up to the south of Thailand, then a different route could go from Malaysia to Thailand and then on to Cambodia and Vietnam, finally you could see some traffic within Vietnam and up to Kunming, but nothing will actually go door to door.
So, you can romanticise it and call it a Kunming to Singapore railway but in reality, that’s not the case.
Tell me about the logistics park being planned on the Laos-Thai border.
There have been a number of studies looking at inland container depots and logistics plans for that region. The truth is there’s not much activity because a lot of goods in that part of the country are not high in value, so they don’t bring in a sufficient amount of money. The type of commodities being produced are agricultural, so they can’t pay all the costs involved. If they can find a way to add value, then a logistics and industrial estate would make sense.
How can they add enough value to make these plans viable?
Rail is a public service, so you shouldn’t complain that it runs a deficit, but then freight should not lose money, to create a chance for cross subsidisation. If freight can’t make enough to cover the loss from passenger transport, the owners could become property developers to maximise value from their land, but then they would need different expertise for that.
The best example is the Japanese, their stations are all about urban development, you have shopping malls, hotels and restaurants. They don’t look at rail as just rail itself, they look at it in terms of how to develop the country, which areas and industries need focus.
In Southeast Asia this could be done to help grow catchment areas and set up satellite cities, but the discussion here just stops at rail. In the case of Taiwan, the highspeed rail companies there make money from leasing out offices and retail space to subsidise it, here there is just a unimodal perspective, there’s no coordination. Apart from Singapore everywhere is struggling with this.
How about the Kra Isthmus canal? Could a canal spanning the peninsula really work and would a railway make more sense?
It’s like the world cup, it comes back every four years. I’ve seen some plans for a railway along the whole route but currently the way it’s being seen is that it’s better to have pipelines, some of the studies have shown that it’s not very wide. For railway to compete you need a certain distance, 500 or 600 kilometres combined with the right type of produce.
I did a study for white goods – fridges and washing machines, that sort of thing – for them to be competitive by rail, the route would have to be 900 kilometres. With these huge distances in mind there needs to be more bilateral thinking but the story always plays out differently in each country in Southeast Asia.
I was working in Hanoi with a Japanese consultancy firm that was doing a feasibility study for a high-speed railway. So, I would see this big team of Japanese engineers applying their knowledge based on Japan and of course the cost is as high as it would be in Japan. The same way the frequency of the train would have to be the same as it is in Japan as we discussed in the case of eastern Thailand that’s not workable.
Cambodia is more liberalised so it’s more interesting. Now they have freight and passengers which creates a cross-subsidy situation. I was on a research trip looking at a link between Hanoi and Kunming. I took the train from Hanoi to Lào Cai on the Chinese border and then crossed into China on the overnight train, I had to walk across the border with all the tourists. It reminded me of Hong Kong, I lived there the 1970s and I would take the train into China and you had to get off the train at the border, pass through customs and immigration and then get back onto the same train.
You mentioned cooperation between countries. ERTMS (European Railway Traffic Management System) was legislated in Europe and then each Government helped the companies to roll out the system, do you think it’s possible for ASEAN or the AEC to achieve something similar?
I think they have the intention but whether they can apply it I don’t know. At ASEAN meetings normally they sign something but then the actual implementation is left to the member country.
ASEAN can never force any policy through, the countries have not given up their sovereignty so there’s no jurisdiction, it is very different to the European Union, I think maybe the UK would have preferred it the way ASEAN does it! Each member of ASEAN is left to just do what they can. There’s no fixed deadline, everyone knows the benefit, but each country faces different challenges, so it ends up just being a neverending process.
ASEAN started as a group of countries that were against communism whereas the EU started as a trading area for coal and steel, so they have different starting points.
At a seminar in Jakarta the representative from the EU was saying we need to open up so they can invest more and I said that the EU should open up more to ASEAN. There’s ASEAN+three which is basically just a free trade area that is being negotiated, that’s the first level and then you go to a customs union then a single market harmonises between the members.
Define economic corridors
There’s a southern economic corridor and an eastern economic corridor, it’s a buzzword used by a consultant so now we all run with it but what it actually is, even the ADB don’t really know. Every country in the Greater Mekong Subregion (GMS) thinks they are central and so each corridor must run through them – it all depends on how you cut the map.
For what you could call the southern corridor, they are trying to revive the route from Port Klang in peninsula Malaysia up to Bangkok but there are issues with the infrastructure. The Thai side has more problems than the Malaysian side, that region has security concerns.
Sometimes I get asked why we can’t be like the EU or the Schengen area, we have smuggling concerns and facilitating these checks to make it seamless is a struggle. In France the immigration officers just walk around the train and stamp the passenger’s passport.
Dr Banomyong is currently an Associate Professor at the Department of International Business, Logistics and Transport Management at the Faculty of Commerce & Accountancy (Thammasat Business School), Thammasat University in Thailand.
He received his PhD in 2001, in the field of International Logistics within the Logistics & Operations Management Section (LOMS) at Cardiff Business School (UK). He was the winner of the James Cooper Cup in 2001 for the best PhD dissertation in logistics from the Chartered Institute of Logistics & Transport (CILT) in the United Kingdom.
In 2016, Supply Chain Asia (Singapore) awarded the prize of supply chain educator of the year to Ruth.
Since 1995, Ruth has been a consultant for international agencies such as the United Nations Conference on Trade & Development (UNCTAD), the United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP), The World Bank, The Asian Development Bank (ADB), The Association of South East Asian Nations (ASEAN). He can be reached at [email protected].