SRT : free trains but no money left to… pay wages in october

Here is a perfect illustration of the total non sense of the gvt’s policies.

In july, the government decided, among a pack of tax cuts on fuels, to offer “free” rides on all trains (3rd class) for 6 months

Nothing is free. People do not understand this very basic idea.

And SRT is not a regular… company. It’s a public black hole, with debts, poor infrastructures, trains from the past century, insanely over staffed, etc.

Anyway. A few weeks later… some ugly figures are coming out. The SRT won’t be able to pay salaries in october, unless the government provides a massive money injection (another one, after 4 billions) !

Employees of the State Railway of Thailand may not receive their salaries in October if the government does not speed up the allocation of an emergency liquidity injection of Bt4.2 billion this month.

“Our cash flow is enough to cover expenses for September,” said SRT chief financial officer Arak Ratboriharn. “If the government delays a decision on the emergency injection, we will have no money left for salary payments, starting in October.”

SRT has to pay Bt500 million to Bt600 million in salaries monthly. The agency hopes that the Cabinet will speed up its consideration of the emergency liquidity injection. The matter was submitted for Cabinet consideration two months ago, but so far the Cabinet has delayed making a decision.

Besides the emergency injection of Bt4.2 billion, SRT also requires the Cabinet’s approval to increase its overdraft loan limit by approximately Bt800 million.

The agency believes that the emergency funding as well as the overdraft increase would be enough to cover expenses in the 2008 fiscal year including employees’ salaries and interest expenses, said Arak.

Early this year, the Cabinet approved an injection of Bt4 billion for SRT. If the Cabinet approves the additional Bt4.2 billion, emergency funding this year will total more than Bt8 billion.

Arak said SRT faced losses due mainly to the increase in diesel prices, as the agency has not been able to adjust fares because that would affect the public. SRT expects to post losses of Bt9 billion this fiscal year, which will end in September.

SRT also provides a free rail service as one of the six government measures to help people cut living costs. However, the agency does not know how the government will subsidise the policy. SRT expects the government to pay the agency Bt40 million to Bt50 million per month. This service will not affect SRT’s liquidity, Arak said. (Nation)

10 Responses to “SRT : free trains but no money left to… pay wages in october”

  1. 1 Bob 15 August 2008 at 1:24 am

    Yesterday I stoped at 3 gas-stations (two PTT and one Shell), none of them had 91 or 95 gasoline, just 91 gasohol (E10).
    Seem a bit odd, but it could be the first sign of a fuel shortage in Thailand.

  2. 2 ThaiCrisis 15 August 2008 at 1:35 am

    Well for 95 I’m not surprised. PTT stopped to sell it in july (it was too expensive).

    As for the 91, it’s odd indeed.

  3. 3 MSB 15 August 2008 at 4:24 am

    any comment on the consumer confidence numbers? now going up….

  4. 4 thaichris 15 August 2008 at 4:48 am

    Little remark regarding your sentence

    … Nothing is free. People do not understand this very basic idea…

    The ordenary people in Thailand do very well understand that there are no free meals. There have been statements in interviews and if I talk to our neighbors, they do understand this very well. But they say: If the governement give things away for “free” and at the end of the day I have to pay it via tax anyhow, why not to make use of.

  5. 5 ThaiCrisis 15 August 2008 at 6:06 am

    You’re talking about the Thai Chamber of Commerce survey ?
    From 70,8 in june to 71,8 ?

    I need more to get excited ! πŸ˜‰

    I love the highly humorous justification given by Thanawat Polvichai : “He said the main reason behind the improvement was a continued fall in local pump prices.

    The tax cuts started… end of july.

    For the moment, I’m more interested in the first report on cars sales for july… going down for passengers cars, and sharply down (again, after june) for commercial cars.

    On a broader scale, the news currently coming from Japan, EuroZone, US, Australia… should alert us : the worst is ahead, not behind.

    It’s rather foolish to think that Thailand could escape the fallouts of the global environment.

    Even if Thaksin would decide to go in exile on the moon. πŸ˜‰

  6. 6 Rockderk the Great 15 August 2008 at 7:52 am

    Re. SRT running out of cash: I remember reading something about the SRT paying some phenomenal amount each year for retired board members (no prizes for guessing who they might also be) via some kind of golden parachute endless- nose-in-the-trough scheme. Might be worth looking into exactly how many of these ex-rail transport experts are still on the payroll.

  7. 7 ThaiCrisis 15 August 2008 at 8:09 am

    Mai pen rai…

    The government will pay. Like always.

    SRT ? Too big to fail.

    What is true in the US for some financial institutions… is of course true in Thailand.

  8. 8 Bangkok Pundit 15 August 2008 at 10:15 am

    Thai Crisis : Isn’t the free train thing a red herring? The free tickets of 40-50 million baht a month are already funded separately by the government, but in addition the SRT are losing 9 billion a year (around 750 million a month). Given they already have competition with buses, is privatisation, with price controls if necessary to pacify the NGO and PAD crowd, the answer? I really can’t see how you can reform a state enterprise.

  9. 9 ThaiCrisis 15 August 2008 at 12:16 pm

    You’re right BP : the amounts are not really related. And it would be dishonest to say that the “6 months free rides” are causing the financial troubles (damned i use euphemism now πŸ˜‰ ) of SRT…

    To hear Samak (today) speaking about his wish to have modern high speed trains in Thailand, is nothing but surreal.

    It’s just another hole and another Rabbit in Wonderland.

    SRT is probably the public “company” that would be the most difficult to reform.

    And even impossible in my humble opinion.

    Think about TOT (telecoms ! modern stuff, yeah !)… so… trains…

  10. 10 fall 15 August 2008 at 5:09 pm

    Oh, let me tell you a little side gossip.
    Most SRT employee usually slept on the job in day time, then clock their work as OT. And in time of electric BTS and MRT, the SRT still focus on diesel.

    If that’s level of state-own efficiency. Spare me all the wonderful plans of how getting PTT and THAIS back to state-own would lower price and miraculously increase profit…

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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