Since the Taroko Express No. 408 derailment on April 2, there have once again been calls for the corporatization and privatization of the Taiwan Railways Administration (TRA).
Other countries have taken two approaches to the corporatization and privatization of state-owned railroads: vertical separation, such as in the EU and South Korea, and horizontal separation, such as in Japan, although part of the Japanese process involved vertical separation.
Vertical separation splits the trains from the railways. Using this approach, Taiwan’s railways would remain state-owned and maintained by the TRA, which would be responsible for construction safety, while the transportation services would be run by another state-run company or a private firm — it might even be opened up to competition.
STRATEGIC DIVISION
For example, when South Korea’s state-owned railways were reformed in 2005, the Korea National Railway, a government agency, became responsible for the hardware, while the state-run Korea Railroad Corp (Korail) became responsible for transportation services.
Korail is the Korea National Railway’s main client, while Korail’s customers are the train passengers. Since the reforms, operating profit has increased and the accident rate has declined sharply.
In the EU, the government remains responsible for maintaining the hardware, while transportation services are open to private operation.
This approach has been adopted in Taiwan’s communications industry. While the country’s communications networks and lines remain in the hands of Chunghwa Telecom, the state-run company has turned over equipment installations and service operations to network operators.
The TRA could also continue to maintain Taiwan’s railway hardware and a company could be formed to handle the nation’s transportation services, or services could be run by private companies, as the communications sector is doing.
BUNDLED APPROACH
The Japan Railways Group is a good example of horizontal separation. It owns several private railway companies and even some local railways. Railway ownership and operations remain bundled together, but several companies run the same routes.
Horizontal separation includes separation between passengers and cargo.
If the TRA adopted this approach, it could start by opening some of its routes to private companies, and once private operations proceeded smoothly, it could apply the approach nationwide.
Because labor unions react to the introduction of rail corporatization and privatization in many countries with weaponized strikes, the government should develop relevant measures in advance.
Public opinion also puts pressure on reform, and without public support, it is likely to fall short of success.
OPPORTUNE MOMENT
The government should use public calls for reform after the Taroko derailment as an opportunity to communicate that the corporatization and privatization of the TRA are inevitable.
The TRA this year is likely to add more than NT$3 billion (US$105.4 million) in losses to its overall deficit of NT$130 billion.
This puts into question its ability to add and improve services, and to increase construction and transportation safety.
Corporatization and privatization might not be a cure-all, but they would keep the TRA traveling toward the light at the end of the tunnel.
Shen Chen-lan is a physician.
Translated by Eddy Chang
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