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Analysts divided over TRA privatization

Even as labor unions and the government fight tooth and nail over the proposed privatization of the Taiwan Railway Administration (TRA, 台鐵), many observers are also divided on how to shake up the debt-ridden railway while simultaneously providing proper public rail service.

"Incorporation is a global trend, and we must ultimately privatize state-owned companies to enhance their competitiveness," Wang Shaw-er (王小娥), a transportation and communication management professor at National Cheng Kung University, said yesterday.

"Under inflexible state administration, the daily operation and financial situation of the TRA will only get worse," Wang said, adding that the TRA will face more severe competition once the north-south high-speed railway is finished in 2005.

The state-run rail system transported 175.34 million passengers last year, down from 186.07 million passengers in 2001 and 191.48 million in 2000, according to the TRA's annual report. The agency attributed the reduced traffic to the partial completion of the nation's second freeway and decreased traffic due to the economic downturn.

The TRA reported a NT$171 million loss last year, after it incurred a NT$373 million loss in 2001 and a NT$294 million loss the previous year, the report said. Together with its long-term loans and its annual allocation for pensions, the TRA's debt totals around NT$10 billion per year, according to Liu Chih-cheng (劉志正), director of Planning Department at the TRA.

To help stop the agency's fiscal hemorrhaging, the government planned to incorporate the TRA by next June and complete privatization by June 2007.

While the Taiwan Railway Labor Union said it is concerned about losing jobs following the proposed privatization, Wang said the plan will not conflict with interests of the employees if appropriate supporting measures are in place.

"The Japanese government provided a secure pension program and employment guarantees for workers when it privatized Japan's national railway in 1987," Wang said.

As to unprofitable routes or stations that could be closed after privatization, Wang said the central or local governments should finance a portion of the operations as a way of providing public service.

Of the 214 stations in the nation, 60 smaller stations could expect to be shut down, while spur lines will be canceled, Liu said.

Another transportation analyst said privatization is not a panacea.

"Reforming the management of the TRA to provide better service, rather than pushing it toward a private sector, is a better solution," Chen Dun-ji (陳敦基), a transportation management professor at Tamkang University, said yesterday.

Using the Japanese and British railway systems' privatization experiences as an example, Chen said that rail service in both countries is actually much worse after privatization.

"Railroads are simply unsuited for privatization," Chen said. "They are doomed to be unprofitable businesses that governments should undertake."
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