Light Rail Transit: Triumph without govt funding?

Local authorities and civil groups in Khon Kaen have reached a consensus to build a light rail transit system as a starting point of a more ambitious goal of developing a “smart city”. They have set up companies as part of an effort to push the project ahead whether or not they get support from the central government in Bangkok.

With consent from the Interior Ministry, local authorities in Khon Kaen have created the Khon Kaen Transit System Co (KKTS) with capital of Bt5 million as a first step towards building the light rail system.

Meanwhile, 20 local companies have set up Khon Kaen City Development Co (KKTT) with the aim of investing in the rail system and other projects under the smart city vision.

Observers believe that local governments, private firms and civil groups in Khon Kaen have the ability to pursue the mass-transit project in their own urban area, but they will find it challenging due to bureaucracy at the Interior Ministry, as well as lack of financial resources.

“The challenge is there but the pressure would also be mounting on the Interior Ministry,” Deunden Nikomborirak, research director at the Thailand Development Research Institute (TDRI), said when asked how a light railway project worth Bt15 billion could get off the ground in Khon Kaen.

The project has been delayed by a year to wait for a complete feasibility study conducted by the Transport and Traffic Policy Plan Office.

“If local governments in Khon Kaen do not use a central government budget, I wonder how the Interior Ministry – which supervises local governments – would oppose their move,” added Deunden.

Supawatanakorn Wongthanavasu, dean of the college of local administration at Khon Kaen University, said that it took about 10 years before local governments, private companies, academics and civil groups managed to reach a consensus that they needed to build a mass transit system to solve traffic congestion.

But it is believed that local governments could collect tax of only Bt1 billion a year, falling far short of the large amount of investment needed.

“Participation is the key and we would also utilise local government mechanisms to run the project,” she said in regard to the funding issue.

The Khon Kaen model involves cost-sharing, where private companies have to bear investment costs and find new streams of revenue, she explained.

The revenue to finance the project may come from the development of property along the rail routes, which could generate a large income. However, public land in urban areas comes under the jurisdiction of the Treasury Department, meaning that the project must be approved by the Cabinet, she said.

Supasawad Chardchawarn, dean of the political science faculty at Thammasat University, was somewhat pessimistic about the project.

He said that bureaucrats at the Interior Ministry might oppose crucial actions of the KKTS, because they had previously opposed the Bangkok administration in its bid to raise funds by issuing bonds to finance mass transit projects.

Under the Khon Kaen model, it is not clear who would own the rail assets or how procurement would proceed. The status of KKTS remains questionable: is it a private company or a state enterprise? He said some officials might have different legal interpretations. “I want the Khon Kaen model to be a showcase for other local governments across the country, but they will find it very hard to get this project implemented,” he added.

Sumet Ongkittikul, research director at TDRI, said that the central government had invested in mass transit systems only in Bangkok. As a result, the other provinces did not have well-organised transport systems.

He said the local authorities and other parties in Khon Kaen might be able to mount the light rail project, but the challenge was where to source the funding to finance it.

This article is written by Wichit Chaitrong and first published in The Nation on January 29, 2018.