Gridlock - Regulatory Regimes in the Thai Passenger Transport Sector

The Thai passenger transport sector remains dominated by ailing state-owned enterprises (SOEs). Virtually untouched by post-1997 crisis liberalization and privatization schemes that would have revitalized these zombies1, the managerial and regulatory architecture of transport SOEs continue to be complicated. Departments under at least two ministries and three sectoral commissions with complex structures regulate the sector with unclear lines of responsibilities.Lacking regulatory expertise, public officials often make decisions on an ad hoc basis and abusively protect the status quo just as the financial performances of these SOEs, especially welfare bus and railway operations, deteriorate. As this paper will demonstrate, privatization, shock therapists knee-jerk response to this structural problem, may be inappropriate unless regulatory institutions are strong and independent, restraining conflict of interest and rent-seeking behavior of public officials. Because regulatory capture is prevalent, Thailand should first consider institutional remedies, most importantly separating regulatory function from operation and policy-making, whilst increasing public awareness and strengthening competition regime.