Public-private partnership (PPP) in Thailand : a case study of Bangkok Mass Transit system (BTS)

Abstract

A basic administrative challenge in Thailand regarding basic transportation projects is the lack of sufficient funding. Since 1990, the public-private partnership (PPP) is an option for the government in developing basic transportation and maintaining economic growth in Thailand. Bangkok Mass Transit System (BTS) was the first successful mass transit system in Thailand and was originally funded totally by private parties, at 100% private investment. However, the project has faced many problems and obstacles caused by many factors and these have resulted in delays in project expansion.

The objectives of this study were as follow: 1) to explain the process of the PPP in the BTS project from the beginning of the project until 2014; 2) to analyze the determinants of the efficient and sustainable collaboration between the public and private sectors in the BTS case, including four different factors-the political factor, the economic factor, the managerial factor, and the social factor-during three different phases: the preparation phase, the construction phase, and the operation phase; 3) To analyze the situations that caused problems and obstacles of the PPP in the BTS case, including four different factors-the political factor, the economic factor, the managerial factor, and the social factor-during three different phases: the preparation phase, the construction phase, and the operation phase; and 4) to propose policy recommendations for Thailand’s future PPP projects.

This study is a qualitative research which collected data in form of the indepth interviews with key persons that were in charge of management or in entities related to the operation of the BTS project in the study time space of 1990-2014. The study also reviewed comprehensive data from related documents, concession contracts, and amendments in order to explain and analyze the factors affecting the project. The conceptual framework highlights four significant factors affecting the PPP project which were: 1) political factors; 2) economic factors; 3) managerial factors; and 4) social factors. The project management theory and the typology project phase models by Griffith-Jones were used as this study’s foundation. According to Griffith-Jones, BTS can be divided into 3 phases: 1) the preparation phase (1900- 1992); 2) the Construction Phase (1992-1999); and 3) the Operation Phase (1999- 2014). This study shows that each factor has had a different impact on the project during different phases, resulting in different consequences.

The results of the study indicate that those four factors have had differeennt impacts on the project in each phase. In the preparation phase the idea of harmony between the local and central government facilitated investment. Additionally, at that time the economy was booming due to Chatchai’s government policy, which made the private party have confidence in the investment in the BTS project. However, during the construction phase the project was major adjustment from a light rail system to a heavy rail system and suffered from the financial crisis in 1997. This adjustment and the crisis raised the debt that the project owed from 15,000 million to 50,000 million Baht. There were also some civil society movements against the construction plan during this phase. After that, the project was transformed from PPP to public procurement due to the political conflict between local and central governments and the lack of the financial capability of the private party to invest in a route extension project as a long-term consequence of the 1997 financial crisis.

The results of the study indicate that those four factors have had different impacts on the project in each phase. In the preparation phase the idea of harmony between the local and central government facilitated investment. Additionally, at that time the economy was booming due to Chatchai’s government policy, which made the private party have confidence in the investment in the BTS project. However, during the construction phase the project was major adjustment from a light rail system to a heavy rail system and suffered from the financial crisis in 1997. This adjustment and the crisis raised the debt that the project owed from 15,000 million to 50,000 million Baht. There were also some civil society movements against the construction plan during this phase. After that, the project was transformed from PPP to public procurement due to the political conflict between local and central governments and the lack of the financial capability of the private party to invest in a route extension project as a long-term consequence of the 1997 financial crisis.