OECD Review of the Corporate Governance of State‑Owned Enterprises in Thailand

Annex B. Description of selected economically important SOEs in Thailand

PTT Public Company Limited (PTT)

PTT Public Company Limited, commonly referred to as PTT, is a state-owned enterprise with the Ministry of Finance as its major shareholder and operates under the supervision of the Ministry of Energy. Formerly named the Petroleum Authority of Thailand, the company is listed on the SET stock exchange, and engages in various operations including natural gas, gas transmission, international trading, and infrastructure. PTT subsidiaries also engage in related activities, exploration and production, liquefied natural gas, petrochemical and refining, oil, power and utilities, coal, and other services. Moreover, PTT is engaged in investment in renewable energy and EV value chain, logistics and infrastructure businesses and life sciences.

The company oversees oil and gas fields, petrochemical plants, and markets its products through service stations and diverse retail outlets, both domestically and internationally. The majority of PTT's operations are conducted through its subsidiary companies across various sectors, as illustrated in Table A B.1

The establishment of the Petroleum Authority of Thailand took place on 29 December 1978, coinciding with the global petroleum shortages of the Second World Crisis with a primary mission of securing sufficient oil reserves for domestic consumption. The government considers that PTT has played a key role in ensuring Thailand’s energy security while simultaneously reducing vulnerabilities.

Following the privatisation of the state-owned enterprise "Petroleum Authority of Thailand", the objective was to transform this state-owned enterprise into a leading institution capable of revitalizing the economy and generating revenue for the nation. PTT Public Company Limited or "PTT" was registered on 1 October,2001, under Corporatisation Act B.E. 2542 (1999).

Table A B.1. PTT Group subsidiary companies

	Name	Main sector of operation
Subsidiaries in Thailand	PTT Exploration and Production Public Co., Ltd.	Petroleum
	PTT LNG Co., Ltd.	Natural Gas
	PTT Natural Gas Distribution Co., Ltd.	Natural Gas
	PTT Oil and Retail Business Public Co., Ltd.	Contracting and Marketing of Oil Management
	PTT Tank Terminal Co., Ltd.	Port and Product Storage Facilities
	PTT Energy Resources Co., Ltd.	Consulting on Energy and Mining Business Investments
	PTT Treasury Center Co., Ltd.	Financial Services
	PTT Global Management Co., Ltd.	Domestic and International Investments
	Energy Complex Co., Ltd.	Real Estate Development for Leasing
	PTT Global LNG Co., Ltd.	Investment in the Natural Gas Business
	Thai Oil Public Co., Ltd.	Oil Refining
	PTT Global Chemical Public Co., Ltd.	Petrochemicals and Refining
	IRPC Public Co., Ltd.	Petrochemicals and Refining
	Global Power Synergy Public Co., Ltd.	Production and Distribution of Steam and Industrial Water
	PTT Energy Solutions Co., Ltd.	Technical Services and Operations
Subsidiaries abroad	PTT International Trading Pte. Ltd.	International Trade
	PTT International Trading London Ltd.	International Trade
	PTT International Trading USA Inc.	International Trade
	PTT Green Energy Pte. Ltd.	Investment in the Oil Palm Business

Source: PTT Financial Report 2022.

PTT Group is ranked in the top three companies on the Stock Exchange of Thailand by the market capital size. The company employs 33 781 persons in total (comprising 3 153 persons from parent companies and 30 628 persons from subsidiary companies) as of 2022. Moreover, it ranks second in terms of dividends (the SOE’s profit transfer to the government's revenue), which contributes to the state, following the Government Lottery Office by sending around 900 million USD to the state, accounting for 20.32% of the total dividends sent to the state by all SOEs. PTT’s overall operational performance and financial position are provided in Table A B.2.

Table A B.2. Financial indicators for PTT Group

		2018	2019	2020	2021	2022
Return	USD mil.	69 717.24	66 243.06	48 215.84	67 409.31	100 486.52
EBITDA	USD mil	10 486.62	8 623.71	6 734.67	12 771.37	14 661.37
Net Profit	USD mil	4 935.20	3 643.55	1 192.21	4 538.11	3 643.79
Assets	USD mil	70 240.30	74 217.82	75 925.36	91 658.48	101 931.79
Equity	USD mil	39 319.75	38 826.57	38 373.13	43 956.54	45 769.58
Provisions	USD mil	12 186.25	11 333.83	8 893.92	14 731.88	17 683.02
Long-term debt	USD mil	18 734.30	24 057.42	28 658.32	32 970.06	38 479.19
ROA	%	7.03%	4.91%	1.57%	4.95%	3.57%
ROE	%	12.55%	9.38%	3.11%	10.32%	7.96%

Note: USD 1 = 33.509 THB on 22 September 2023

Source: PTT Financial Report 2018-2022

It can be observed that PTT is a consistently profitable company. However, in 2020, the company experienced a noticeable decrease in revenue and profit due to the decline in the prices of natural gas and crude oil, as well as reduced demand for oil and petrochemical products caused by the economic impact of the COVID-19 pandemic. Nonetheless, a recovery was achieved in 2021, with revenue and profit levels approaching those of 2018-2019. This rebound was attributed to price adjustments and increased demand for crude oil. Meanwhile, is notable that PTT does not incur adverse financial effects from government policies related to public service obligation (PSO). For instance, during recent oil price crises, the government stabilised prices using the oil fund, rather than PTT's budget. In 2022, PTT supported the Oil Fuel Fund to help stabilise energy prices in Thailand during the period of fluctuating global energy prices.

Government-Aligned Objective Setting: PTT has close collaboration with SEPO and the Ministry of Energy to formulate the five-Year Strategic Plan, Annual Business Plan, and State Enterprise Assessment Model (SE-AM) KPIs. The five-Year Strategic Plan and the Annual Business Plan are formulated according to the criteria set by SEPO such as alignment to the National Economic and Social Development Plan and the State Enterprise Development Plan, environmental scanning, PTT’s strategic directions. The Plans are subjected to approval by PTT Board and the Ministry of Energy before submitting to SEPO. The SE-AM KPIs are formulated with the alignment of the five-Year Strategic Plan and the Annual Business Plan. Each year, PTT works closely with SEPO and Ministry of Energy to prepare the detail of SE-AM KPIs for Memorandum of Understanding. After the completion of the MOU, PTT SEPO and Ministry of Energy will sign the MOU to commit SE-AM KPIs for the performance management.

Decision-Making Authority: For the commercial business decisions, such as investments in EV value chain, the PTT Board holds the authority. However, for the investments or activities within regulated sectors, like LNG terminal, the Board requires consent from the Ministry of Energy. Both government and corporate plans are considered still has the approval authority which must be aligned with the consent from the regulator/government.

Appointment process for CEO: In the process of selecting the CEO of PTT, it follows the Standard Qualifications for Directors and Employees Act B.E. 2518 (1975) (Amendment B.E. 2558 (2015)) by appointing a nominating committee of five members, as constituted by PTT's board of directors. This committee consists of individuals with qualifications and characteristics not prohibited by law. They are responsible for identifying individuals with the necessary knowledge, abilities, and suitability, and proposing them to PTT’s board of directors for consideration and appointment as the next CEO. Regarding the CEO's employment contract, it has a temporary duration of up to four years, during which PTT's board of directors can reappoint the same executive after the contract's expiration without initiating a new selection process. However, appointing the same person consecutively for more than two terms is not permissible.

Board Nomination and Composition: According to stock market regulations, at least one board member must possess knowledge in accounting and finance. The Board of Directors comprises five distinct committees, including the Audit Committee, which consists of board members well-versed in accounting and finance.

The minimum number of board members is five, with a maximum of fifteen, and more than half of the Board of Directors must be independent directors1. (PTT, n.d.[1]) In September 2023, the board consists of 14 members, of whom 13 are appointed by the shareholders, and one is the CEO of PTT. Among them, two are from academia and three are from the private sector. There is one former government official, one military official, one former military official, one representative from the Ministry of Natural Resources and Environment, and one representative from the Office of the National Economic and Social Development Council (NESDC). In addition, there are one representative from the Ministry of Finance, one representative from the Ministry of Energy, one who is the CEO of PTTEP (a subsidiary company), and one who is the CEO of PTT serving as secretary to the board. All 13 members appointed by shareholders are listed in the Director’s Pool of the Ministry of Finance. The composition of the boards at PTT is available for disclosure on the company’s website.

According to the government, PTT’s s board selection process prioritises diversity in board composition, without discriminating based on gender, race, ethnicity or nationality, cultural background, or religious beliefs. The Selection Committee is responsible for defining the required qualifications for replacement appointments when vacancies arise based on the PTT’s Board Skill Matrix and the Director’s Pool of the Ministry of Finance. The Selection Committee (the nominating committee) then compiles the results of the selection process and presents a list of qualified individuals to the PTT’s Board of Directors. The PTT’s Board of Directors, in turn, evaluates and proposes the names for approval at the shareholders’ general meeting (PTT, 2023[2]).

Board Evaluation: In 2022, PTT has set an annual performance appraisal of the Board of Directors according to the company’s corporate governance frameworks. There are five appraisal forms for the Board of Directors consisting of: 1) the entire Board of Directors appraisal form; 2) individual self-appraisal form; 3) individual appraisal form (assessed by other directors); 4) sub-committee appraisal form (directors appraise the performance of their own respective sub-committees); and 5) the Chairman of the Board and Ad-hoc Director appraisal form (appraised by all directors). The form will comprise evaluation aspects, including the composition and qualifications of the committee/directors, roles and responsibilities of the committee, preparation and conduct of meetings, training and self-development of the committee, and the relationship with the management. Additionally, the Board incorporated key performance indicators (KPIs) specific to the Board of Directors as part of the evaluation process, a factor that contributes to determining their bonus (PTT, 2022[3])

Non-Financial Expectations: Non-financial objectives encompass GHG reduction and energy security (global player, LNG). Goals for around a 15% reduction in GHG by 2030 compared to the 2020 emissions are established as corporate objective and delegated to subsidiaries. During AGMs, executives elucidate business growth and future plans, including GHG reduction, providing an avenue for minority shareholders to pose questions and offer comments. Minority shareholders are entitled to propose agenda items, submit questions and nominate director candidates for the AGM in advance. Risk management governance oversight is managed by the Corporate Governance and Sustainability Committee (CGSC), the Enterprise Risk Management Committee (ERMC), and the Audit Committee (AC), operating under the purview of the Board of Directors.

Figure A B.1. Business structure of PTT Group companies

Note: Information as of 31 December 2022. All figures presented by PTT’s portion. Thai Oil Plc. (TOP); Global Power Synergy Plc. (GPSC); PTT Oil and Retail Business Plc. (OR); and PTT Global Chemical Plc. (GC) are listed on the stock exchange of Thailand. BSA is a wholly owned subsidiary as PTT holds all common shares of BSA. Shareholding in these subsidies is a joint investment in other businesses.

Source: Information provided by State Enterprise Policy Office of Thailand

National Telecom Public Company Limited (NT)

National Telecom Public Company Limited, or NT, is a state-owned enterprise that offers nationwide fixed line, broadband, landline, mobile and 5G solutions which include hard infrastructure, digital structure and service, and international service. The company originated from the 2020 merger of two telecommunications companies: TOT Public Company Limited (TOT) and CAT Telecom Public Company Limited (CAT) under resolution of the State Enterprise Policy Committee (SEPC). Both companies had distinct service and investment businesses that significantly overlap, leading to management challenges. Thus, the purpose of merging was to reduce redundancy in government investments, enhance operational efficiency, and create a supportive agency for state policies related to digital infrastructure development. After the merger, NT continues to maintain its status as a state-owned enterprise under the supervision of the Ministry of Digital Economy and Society (MDES), with the Ministry of Finance holding 100% of the registered capital. NT holds market shares of approximately 97-99% in landlines, 25% in broadband, and 1-2% in mobile services. The Company had aspirations for an IPO, but due to the impact of the Asian Financial Crisis, this was not realized. The merger between TOT and CAT has resulted in NT's telecommunications assets having a value of over 300 billion baht or around 8 billion USD in January 2021, encompassing operations within five business groups:

1. Telecommunications Infrastructure Group

2. Service Groups: Conduit, Dark Fiber, Tower and Develop Assets

3. International Services Group

4. Service Groups: IIG, NIX, Connectivity, IDD and Submarine Cable

5. Fixed-Line and Broadband

6. Service Groups: Internet Retail, Datacom, Fixed Line, Satellite and USO

7. Mobile Phone Services Group

8. Service Groups: Wholesale, Retail, Trunk Radio and 5G Solution

9. Digital Services Group

10. Service Groups: Cloud, DATA Center and Big DATA, Solution & Manage Service, DATA Inter Change, Software & App., and Contact Center and Cyber Security

NT seeks government subsidies for projects mandated to ensure service coverage in rural areas, especially telephone lines. Balancing the dual missions of for-profit business and non-profit governmental public utility poses a challenge. An instance is the government's Village Broadband Internet Project (Net Pracharat). NT's obligations include infrastructure-related public utility, while competing with private sector companies for business with the general public as customers.

Objective-Setting Process: The objective-setting process involves two approaches: (1) incorporating stakeholders' expectations and needs into the organisation's mission, aligned with SEPO as a stakeholder; (2) aligning the company’s strategic objectives with government and the MDES’ multi-tier plans, along with SEPO. NT operates with dual roles - a commercial role and a role in serving national interests, including the Ministry and SEPO. Business plans are devised by NT, while policy input can be sourced from various channels.

For the future operational direction, NT has announced a business plan calls “the National Telecom Public Company Limited for 2023–2027”. The main objectives of this plan include aligning with state policies for digital transformation as a role of SOE in the telecommunications sector, as well as streamlining the organisation. The company aims to decrease its expenses by reducing its workforce from the existing 14 000 employees in 2022 (ranking as the seventh largest SOEs in terms of employee) to 9 000–10 000 employees by 2025 and eliminating overlapping expenses within the organisation. Additionally, the plan focuses on expanding service coverage and maximizing the benefits of using NT’s telecommunications infrastructure resources.

Table A B.3. Financial Indicators for NT

Indicators	Unit	2021	2022
Return	USD mil	3 037.60	2 686.25
EBITDA	USD mil	616.69	300.01
Net Profit	USD mil	36.64	-294.85
Assets	USD mil	8 540.87	8 008.13
Equity	USD mil	5 268.07	4 959.59
Provisions	USD mil	1 468.45	1 473.68
Long-term liability	USD mil	1 804.35	1 574.85
ROA	%	0.43%	-3.68%
ROE	%	0.70%	-5.94%

Source: NT Financial Report 2021-2022.

Performance Management: NT's performance is evaluated based on SEPO's guidelines and is backed by a yearly signed MOU that ensures effective processes and corporate governance. Financial statements are reviewed monthly, KPIs are assessed quarterly, and performance assessments are disclosed on the company's website every quarter. Procurement information is also published on the website, and financial disclosures are reported to SEPO and made available to the public on the website.

As presented in Table A B.4, NT's operational performance in 2021, reflected revenue exceeding 3 billion USD, with a substantial portion of the revenue originating from the mobile phone business (approximately 55.15% of the total revenue). However, the company incurred relatively high expenses, primarily driven by service costs such as leasing and asset usage fees. As a result, the net profit amounted to only 36.64 million US dollars. Despite this, it can be concluded that profitability is relatively low according to the rate of return on assets (ROA) and return on equity (ROE). Additionally, in 2022, it is evident that revenue is on a declining trend, resulting in negative net profit.

Capital Investments and Government Approval Process: NT typically self-funds its investments, but projects exceeding 1 billion baht (30 million USD) require government approval, even if funded from NT's own capital. Such project proposals must be submitted to the Board of NESDC. NT hasn't received capital injection from the government.

Board Nomination and Composition: The appointment of the NT's board of directors complies with the regulations of the National Telecommunications Public Co., Ltd. that stipulate the composition of the company's board with diverse qualifications, including skills, knowledge, experience, and diversity in terms of age and gender. At least one third of the directors must be selected from the Directors' Pool provided by the Ministry of Finance, and each member must possess expertise and knowledge in various areas according to NT's Skill Matrix, aligned with the organisation's missions.

The number of board members is set to be between 5 and 15, with at least one-third of the members being independent directors. Additionally, there must be a representative from the Ministry of Finance as a member to safeguard the interests of the SOE shareholders, and another representative from the relevant ministry as a member to bridge policy from the line ministry to the operations of SOE. In this regard, a representative from the line ministry must be a civil servant employed within the line ministry and must not be part of a regulator agency responsible for overseeing SOEs (NT, 2023[4]) In this process of appointing the board of directors, shareholders are considered to play a significant role as electors of directors based on the majority vote. Furthermore, during each annual general meeting, it is stipulated that a certain number of directors, being one-third, must vacate their positions.

According to NT, the company's board consists of a total of 13 members, with 3 female and 10 male members. One executive member, the CEO, has a seat on the board. Other members include one representative from the Ministry of Finance and one representative from Ministry of Digital Economy and Society (MDES). There are nine independent board members which come from academia and private sector, meeting the requirement for at least one-third of the board to be independent. It is notable that some of the independent board members are former civil servants. The recruitment committee is mandated to recruit people from different backgrounds, according to NT’s skill matrix and also considers potential candidates from the director’s pool. The board then approves the list of candidates, then passes it on to MDES, SEPO and SEPC Meeting, respectively.

Board Evaluation and Renumeration: An annual board member assessment is conducted every year. A board member conducts self-assessment and assesses the whole board. The results are then considered in the board meeting to discuss any rooms for improvement. However, these results are reported to SEPO and MDES.

Board remuneration) follows the cabinet decision, while only bonuses vary with performance. Allowances for meetings are limited to twice per month, at a cost of 10,000 baht (around 284 USD) per occasion, in addition to a monthly salary of 10 000 baht (around 284 USD). Monthly participation in multiple internal committee’s costs approximately 50 000 baht (around 1 418 USD). All this information is publicly available in the annual report.

Appointment Process for CEO: In principle, CEO appointment is within the scope of authority of the board. For CEO nomination and appointment, the board sets up a nomination committee, consisting of five board members, which is then passed on for the board to approve. Then, SEPO is consulted for approval on compensation for the CEO.

Anti-Corruption and Business Integrity Measures: Anti-corruption measures were prioritised post-merger. The board declared anti-corruption policy within one month after the merger. An Order on management of conflict of interest was also issued, in accordance with NACC Act Section 128. All procurement and trading contracting parties must acknowledge anti-corruption policies as part of contract, if not acknowledged or breached, the contracts are nullified.

Ethical standards, recommended by SEPO, and a Code of Conduct, including Non-Disclosure Agreements (NDAs), are applied to all staff, from the board downwards. The ethical standards, which serve as the ethical principles for the conduct of government officials, are established with seven provisions outlined in Article 5 of the Standards of Ethical Conduct Act of 2019 (B.E. 2562). The standards include a criteria for the moral behaviour of state officials, namely: (1) to adhere to the principal institutions of Thailand; (2) to have honesty, integrity, good conscience and responsibility; (3) to be courageous in making decisions and acting morally; (4) to think more of the common good than one’s individual gain; (5) to have result-based determination; (6) to perform duties on fair and without unfair discrimination; and (7) to be a good role model and maintain the good image of public service. The seven mentioned ethical standards are to be utilized as key principles in formulating the ethical guidelines for government agencies.2

Government Savings Bank (GSB)

The Government Savings Bank holds the status of SOE under the Ministry of Finance. It operates as a bank catering to retail customers, with a primary focus on providing credit for rural development and fostering the growth of small-scale entrepreneurs. The bank is entrusted with the responsibility of being a specialised financial institution, and it has been designated by the government as a vital tool to undertake quasi-fiscal activities. These activities are aimed at revitalizing and stimulating the economy, as well as improving the quality of life for the population. The Government Savings Bank's role in this capacity is to enhance access to financial resources for individuals and contribute to overall socio-economic development.

In addition, Government Savings Bank also holds a significant position as a large and influential SOE within Thailand’s economy. In 2022, the bank is ranked second in terms of total assets among SOEs, trailing only behind PTT, and fifth in terms of number of employees, with a total of 21 977 personnel. Moreover, it ranks third in terms of dividends, following the Government Lottery Office and PTT. Notably, the bank contributes as much as 436 million USD to the state revenue. For a comprehensive overview of operational results and financial indicators, refer to Table A B.4.

Table A B.4. Financial indicators for Government Savings Bank

		2018	2019	2020	2021	2022
Return	USD mil.	2 521.67	2 172.81	2 012.78	2 234.95	2 291.35
Net Profit	USD mil	924.61	717.66	553.22	757.39	816.20
Assets	USD mil	79 609.27	83 488.74	86 221.67	90 872.58	92 652.86
Equity	USD mil	6 045.12	6 059.03	5 963.55	6 426.79	6 793.53
Provisions	USD mil	73 564.15	77 429.71	80 258.12	84 445.79	85 859.33
ROA	%	1.16%	0.86%	0.64%	0.83%	0.88%
ROE	%	15.30%	11.84%	9.28%	11.78%	12.01%

Source: Government Savings Bank Financial Report 2018-2022.

It is evident that company is considered one of the SOEs with a strong profit-making capability. Despite having a relatively low return on assets (ROA) of around 1%, owing to the nature of banking operations, it maintains a relatively high return on equity (ROE). The ROE was notably high, reaching 15.30% in 2018 before decreasing to 9.28% in 2020. However, there has been an upward trend in the following years, particularly in 2021–2022, bringing the ROE closer to the rates observed prior to 2020. This highlights the bank's ability to adapt and enhance its financial performance.

Board Appointment and Composition: The process of appointing the Board of Directors is specified in the Government Savings Bank Act B.E. 2489 (1946). The board consists of a chairperson and a minimum of six directors, but not exceeding thirteen directors, who have a three-year term of office and are appointed by the Cabinet. The company’s Director-General also serves as a director and secretary of the committee. The Bank is mandated to have independent directors, not less than one-third of the total number of directors. In 2023, the Bank's board of directors comprised a total of 13 members, including 5 female members and 8 male members. Among them, there are three representatives from the Ministry of Finance (one of whom is a chairperson), one Director-General of the Government Savings Bank, and the rest are independent directors from various sectors, such as academia and business, mostly with a focus in economics and finance. The definition of independent directors is provided in Qualifications and Scope of Work of the Audit Committee B.E. 2558 (2015) (Government Savings Bank, 2023[5]). Directors shall have prerequisite qualifications and no disqualifications according to Standard Qualifications of State Enterprise Directors and Officials Act, B.E. 2518 (1975), and the amendments; Government Savings Bank Act, B.E. 2489 (1946), and the amendments; Payment System Act, B.E. 2560 (2017); the notification of the Bank of Thailand on Corporate Governance.

Board Evaluations: GSB Board of Directors performs one self-assessment per year to allow the Board to review their roles, duties, performance as well as challenges that they faced during the year, in accordance with the principles and guidelines for good corporate governance in State Enterprise B.E. 2562 (2019).

Risk Management and Corporate Governance: The Bank has applied the Governance, Risk Management and Compliance (GRC) policy to enhance the efficiency of its good governance, risk management and internal control. The main committees of risk management are GSB Board of Directors, Risk Oversight Committee, Audit Committee, Executive Committee and Asset and Liability Management Committee. The Bank has emphasised on Key Risk Indicators (KRIs) to notify early warnings that exceed the Risk Appetite and/or Risk Tolerance level by sending email to executives or relevant team to monitor/ review the risk level, determine risk management measures/plans to keep up with the current situation, and reduce/control risks by considering the appropriate cost of risks such as NPLs rate, L/D Ratio and Value at risk.

The Risk Monitoring Committee is responsible for monitoring risk management in areas such as operational, strategic, and reputational risks. GSB reviews the good corporate governance policy by defining principles and guidelines for good corporate governance:

1. Sustainability and Innovation: Establish a policy, operation manual, long-term master plan, annual action plan on social and environmental responsibility according to international standards (SDGs)

2. Information Disclosure: the information is disclosed through various channels that are easily accessible.

3. Ethics: The Bank has a code of ethics and conduct manual for the Board of Directors, executives and officers to ensure that everybody strictly. Besides, the Bank has measures for monitoring and protecting complainants.

4. Establish a policy for stakeholders in order that the Bank will run its business ethically and transparently and not to violate the rights of stakeholders or create unfair competitive advantages.

State Railway of Thailand (SRT)

The State Railway of Thailand, or SRT, is a stat-owned enterprise under the Ministry of Transport. It is responsible for overseeing the railway operations in Thailand. In 2022, SRT operates a total railway network spanning 4 814 kilometres. It is the primary organisation responsible for all the main activities of the country’s rail transportation system. This includes developing the network’s infrastructure, maintaining the foundational structures, and operating all railway services.

As a result, SRT plays a crucial role in transporting goods and passengers, contributing to the efficiency of the country’s logistics system. Its ability to transport a large volume of goods results in cost-effective freight transportation by rail. Additionally, it provides passenger transportation services with affordable fares as a response to social service policies. Furthermore, it aligns with the policies and strategies of the state.

However, SRT faces challenges such as inefficiencies in management, financial instability, staffing shortages, and the deterioration of infrastructure. These issues have led to difficulties in achieving the organisation’s goals. Due to these problems, the operational performance of SRT has continuously suffered losses in the past. Efforts to address the revenue challenges of SRT have been ongoing since 1998. Currently, the SOEs rehabilitation plan for SRT is included in the “State Railway of Thailand Business Enterprise Restoration Plan 2023-2027.” This plan outlines measures to address SRT’s issues, including increasing revenue from operations and other business activities, reducing expenses, improving service quality, restructuring the organisation, and transforming the business model into a platform provider for the rail system. These measures are all geared toward optimizing the use of SRT’s resources to achieve a positive EBITDA by 2033.

In addition, SRT also engages in other businesses through its subsidiary companies. These include two companies: (1) S.R.T. Electrified Train Co., Ltd., which manages mass transit projects such as the Red Line Mass Transit System Project, and (2) SRT Asset Co., Ltd., which oversees land management, real estate development, and enhancing the value of SRT’s assets for optimal utilization. Given that a significant portion of SRT’s land remains undeveloped, notably areas around Krung Thep Aphiwat (Bang Sue) Station, SRT Asset will plays a pivotal role in transforming these spaces into revenue-generating assets. In this regard, concerning SRT’s future operational plans for business recovery, it is anticipated that both subsidiary companies will play pivotal roles in enhancing revenue and operational efficiency for SRT in the coming years.

To fulfill all its missions, SRT operates with a workforce of more than 13 581 employees in 2022. This includes 13 008 employees from SRT itself and 573 employees from subsidiary companies. This positions SRT as the eighth largest of Thailand’s SOE in terms of number of employees. Moreover, in terms of assets, SRT ranks as the sixth largest of Thailand’s SOEs.

Table A B.5. Financial indicators for SRT

		2018	2019	2020	2021	2022
Return	USD mil	520.89	478.63	472.64	399.49	628.27
EBITDA	USD mil	-76.03	-204.47	-241.09	-234.18	-19.11
Net Profit	USD mil	-372.49	-487.66	-569.51	-522.96	-455.86
Assets	USD mil	19 038.88	20 570.94	22 294.28	23 885.21	25 358.02
Equity	USD mil	1 331.41	1 330.70	1 330.48	1 330.22	1 328.96
Provisions	USD mil	2 150.04	1 396.00	1 978.65	2 173.65	2 882.98
Long-term liability	USD mil	15 557.43	17 844.24	18 985.15	20 381.34	21 146.08
ROA	%	-1.96%	-2.37%	-2.55%	-2.19%	-1.80%
ROE	%	-27.98%	-36.65%	-42.80%	-39.31%	-34.30%

Note: Net profit does not include legal compensation for losses from government.Source: SRT Financial Report 2017-2021.

The financial indicator as presented in Table A B.5 shows an improvement of the operational performance for 2023 compared to 2018-2021. In 2023, the SRT achieved revenues of over 600 million US dollars, representing an increase of more than 50% from 2021. Although EBITDA remains negative, but still better than the previous year due to the increase in revenue. However, the net profit still indicates a loss at a level quite similar to the previous year, primarily due to increased financial costs. This rise in financial costs is a result of the continued increase in investments for infrastructure projects and the addition of locomotives to enhance service capacity.

Regarding profitability, considering both ROA and ROE, it’s evident that ROA has increased compared to the years 2018-2021. However, ROE remains lower than the levels observed during the years 2018. This is due to the growth in assets being driven by an increase in liabilities, while the equity portion has experienced a slight reduction. As a result, SRT still faces challenges in enhancing operational efficiency in line with the planned restoration strategy.

According to the State Railway of Thailand Act B.E. 2494 (1951), the Board of Directors shall be appointed in two ways: (1) by the Cabinet which consists of a chairman and a minimum of four directors, but no more than six directors who have suitable credentials and experiences for the undertakings of SRT business; and (2) by the ex officio officials, of which the SRT’s governor is the secretary of the Board of Directors. In 2023, the Board of Directors comprises a total of eight members, with two female members and the remaining members being male. The composition of the board includes senior executive officers from the public sector, representing government agencies. This includes two directors from the Ministry of Transport, one director from the Budget Bureau, and one director from the Ministry of Finance. Additionally, there are three independent directors who are experts from the private sector, and the last director is the Governor of the SRT, who is selected through a process of nomination and screening by the Nomination Committee and the Board of Directors before being formally appointed according to the Cabinet’s resolution.

References

[5] Government Savings Bank (2023), Board of Committee, https://www.gsb.or.th/en/about/board-of-committee/.

[4] NT (2023), แผนเพิ่มประสิทธิภาพการกำกับดูแลกิจการของคณะกรรมการบริษัท โทรคมนาคมแห่งชาติ จำกัด (มหาชน) 2566, https://www.ntplc.co.th/docs/default-source/good-corporate-governance/6.แผนเพ-มประส-ทธ-ภาพการกำก-บด-แลก-จการ.pdf?sfvrsn=af012ff_1.

[2] PTT (2023), About PTT: Nominating Committee, https://www.pttplc.com/en/About/Corporate-Governance/Corporate-Governance-Structure/Board-Committees/Nomination.aspx.

[3] PTT (2022), Governance and Ethics, https://www.pttplc.com/en/Sustainability/Sustainabilitygovernance/Corporategovernance.aspx (accessed on 31 August 2023).

[1] PTT (n.d.), Corporate Governance & Business Code of Conduct Handbook, https://www.pttplc.com/uploads/Media/Information%20Center/ข้อมูลข่าวสารตามมาตรา%209/มาตรา%209%20(8)%20ข้อมูลข่าวสารอื่นที่คณะกรรมการกำหนด/คู่มือการกำกับดูแลกิจการที่ดี%20(คู่มือ%20CG).pdf.

Notes

← 1.  Independent directors are required to meet specific qualifications related to their independence, as outlined in the Stock Exchange of Thailand's announcement "Qualifications and Scope of Work of the Audit Committee B.E. 2558 (2015)". More details about the qualifications can be found at: https://www.set.or.th/en/listing/listed-company/simplified-regulations/maintaining-status/audit-committee

← 2.  https://www.sepo.go.th/content/347