(1999-2009) Bangkok and BTS skytrain: Driven by economic development and foreign investment

 

Since the beginning of 1980s, Thailand has been experiencing strong economic growth due to expanding manufacturing exports. Globalization was becoming dominant at that time, and the low labour cost of the country attract significant foreign investment and development. The economic prosperity and foreign investment improved lives of many, but also imposed a huge traffic problem to the city of Bangkok. Interestingly, the response of of such problem of the city , the mass transit systems, also depended on the heavy involvement of private financial sector and overseas companies, which dedicated significant amount of capital and expertise in the projects.

Strong economic growth from 1980s to 1990s
GDP per capita of Thailand (USD) indicates strong economic growth from 1980s to 1990s (source:World Bank)

The rapid economic growth of the country were reflected clearly in the capital, Bangkok. In 1990 , more than half of Thailand’s urban population lives in Bangkok. Over 70 percent of the countries passengers car were operating in the city area at that time. Also around the time of the early 1990s, because of rising income of the people, the Thai automobile market experienced a significant boom. There were a increase of around 300 000 vehicles every year on top of the existing 2 million. With only 10 percent of the city area being roads, compare to average 20 percent of Asia city, the traffic congestion within the city was notorious. The pressing issue was threatening the efficiency and further development of the city, and this is when the development of Mass Transits System became a major priority.

In fact, the plans for mass transit in Bangkok began in the early 1980s. The chaotic political conflict and heavy debate on whether to construct a elevated or underground transit made the delays of plan inevitable. The projects for underground and elevated railway was split and led by different parts of the government. At the same time, the government was determined in financing the projects by the private sector as it wanted to focus on its financial efforts on rural areas. of the government, which further prolonged the implementation of plans . It was until 1992, that the Bangkok Metropolitan Administration (BMA) under architect and military captain Kritsada Arunwong na Ayutthaya was finally succeeded in finding a private investor and turn the elevated skytrain system into a feasible project.

The project proceeded under a concession granted to Thanayong Public Company Limited led by Keeree Kanjanapas (黃創山). Keeree proceeded to found the Bangkok Transit System Corporation (BTSC) and this company successfully financed the system. The Skytrain system was officially opened on 5 December 1999.

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Keeree Kanjanapas (left) with his son (right) is the founder of the BTS group

The private funds and foreign investors were proven to be crucial in the project. The Bangkok Metropolitan Authority was to construct the project initially with land they own with no extra public funding to afford the total cost of  US$ 1.4 Billion. The scheme was under a full Built-Operate-Transfer model with almost no central government support. Keeree’s Hong Kong background attracted many experts from Hong Kong to provide technical skills and commercial acumen. His dedication to the project nearly sent him bankrupt during the Asian financial crisis in 1997. Financially, the project were mainly funded by International Finance Corporation and KfW german bank, both not originated from Thailand.

While it was a risky project in terms of investment, it brought about fruitful economic return. The BTS Group became the Asia’s biggest listing in 2013 and the largest private sector IPO in Thai history, generating more than $2 billion.The commercial empire under Keeree had huge gain from increased property price , fare return and even media service. Keeree himself  has a net worth now more than $1.4 Billion , being the 13th richest people in Thailand. One significant moment is that the emergence of the skytrain changed the property market structure, with more and more people favoured the high rise condominium as a way of living in a modern city.

 

 

 

Reference

Unger, Danny. Building Social Capital in Thailand: Fibers, Finance, and Infrastructure. Cambridge: Cambridge UP, 1998. Print.

Allport, Roger . Success and Failure in Urban Transport Infrastructure Projects. Imperial College London. 2008.

“Against All Odds, Keeree Kanjanapas Built Bangkok’s Mass Transit Systems.” Forbes Asia. November 29, 2016. http://www.forbes.com/sites/forbesasia/2016/11/29/against-all-odds-keeree-kanjanapas-built-bangkoks-mass-transit-systems/#41c7a5054658.

 

 

 

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