Chatuchak Weekend Market leasing controversy


(Photo: 2Bangkok.com)

Above: Chatuchak Weekend Market

Chatuchak Weekend Market leasing controversy

BMA agreeing to clear outstanding debts with SRT - 10% revenue sharing as the only acceptable level - translated and summarized from Thairath, January 26, 2006
Chatuchak Weekend Market Director Chaloemchai Khiawprat told the press that they agree with SRT to pay back the outstanding debts from rent to SRT from year 2001 at 50 baht/sq-m/month paid up to December 2005 with a total payment of 27 million baht. However, BMA agrees to pay SRT the rent at 397 baht/sq-m/month.
If SRT refuses to accept the pay back at this rate, BMA would offer only 5-10% of revenue sharing instead of 30% revenue sharing as asked by Khun Phanloed Baiyok (Director of the commercial section, SRT Board). The rest would go to keep the branches of Chatuchak Weekend Market at Minburi and Rama 3 (Bangkok Square Market) afloat as well as the internal expenses (hiring personnel and utility bills) and major renovation of the market after 24 years of service.
Chatuchak Weekend Market Director said the major renovation is a must since the customers have filed the following complaints to BMA and Chatuchak Weekend Market Board:
1) Inadequate and dirty restrooms - need to build even more/better restrooms.
2) Uncollected garbage that litters the market.
3) Blistering heat - need water-cooling fans installed around the market
The first phase of renovation is to be done by the end of April 2006.

SRT board raising the rent and extracting outstanding debts from BMA - translated and summarized from Thaipost, January 17, 2006
The SRT board has changed the rules on leasing SRT land by changing the terms into a partnership and 30% revenue sharing and calling the private sector to bid for SRT leases. The highest bid would get the SRT land concession with a 30-year leasing period.
The leasing hike has been approved by the SRT board and SRT is asking BMA to pay back the outstanding debts from the new leasing rates unpaid for 3 years.
Mr. Phanloed Baiyoke (the owner of Baiyoke Tower 1-2)-- Chairman of the Board for SRT Land and Asset Development said the SRT board has approved the new rules of leasing SRT land which consists of
1) A leasing hike
2) 30% revenue sharing in addition to a leasing hike
3) This new leasing rule will be applied to the public sector and state enterprises that lease SRT land including Chatuchak Weekend Market of BMA.
4) Leasing SRT land by the private sector requires bidding. The highest bidder would get the 30-year concession or even longer.
5) The private sector whose contract with SRT has expired would follow the new SRT standard for leasing--at the market rate of the first year of the contract.
6) The private sector from giant corporations who lease SRT land would have to pay the lease at the current market prices which are readjustable.
7) The new leaseholder of SRT land would have get incentive to develop the vacant land of SRT.
8) The public and state enterprise who lease SRT land can be considered as partners and the leasing would be according to the percentage of shareholding.
Chatuchak Weekend Market is the first target since BMA has paid SRT only 3 million baht a year even though BMA gets 100 million baht of revenue a year and BMA has leased SRT land for 25 years. Even worse, BMA has not paid the rent to SRT of 3 million baht a year for about 3 years.
The SRT land of 200,000 rai would need the new rating along with the new scheme to multiply the revenue at market rates.


BMA opinions on the Chatuchak Weekend Market leasing hike issue - translated and summarized from Thairath, January 17, 2006
The correspondent at BMA City Hall has reported about the discussion on the Chatuchak Weekend Market leasing hike issue between the BMA Governor and the Chatuchak Weekend Market Board. They have pointed out the following about the 30% revenue sharing scheme:
Pros:
SRT would write off the outstanding debts from leasing the area for Chatuchak Weekend Market of 30-40 million baht
Cons:
1) SRT would make a significant grab at the revenue of Chatuchak Weekend Market. BMA has to give away 30 million baht revenue to SRT from the assumed 100 million baht revenue.
2) BMA still has to carry the burden on the personnel expenses and the revenue to keep the loss-ridden Chatuchak 2 Weekend Market at Minburi afloat. The revenue sharing would dry up the BMA revenue after paying off the personnel expense and the subsidies of the new weekend market at Minburi despite the fact that BMA has turned the normal weekend market into the well-known market around the world without help from the central government.
3) BMA refuses to accept any SRT men who are going to meddle in Chatuchak Weekend Market affairs since SRT is going to send 3-4 men from the SRT board to control the Chatuchak Weekend Market--a third of the Chatuchak Weekend Market board.
Therefore, BMA has come up with the resolution that
1) BMA agrees to pay higher rent to SRT from 32 baht/sq-meter/month to 397 baht/sq-meter/month
2) BMA refuses to pay the rent at the rate higher than 397 baht/sq-meter/month
3) The settlement with SRT would be done by the end of February 2006.

BMA insisting that SRT has no right to modify the leasing contract before expiration - translated and summarized from Dailynews, January 17, 2006
Deputy BMA Governor Phanit Wikitset told the press that BMA could accept a gradual increase of the leasing rate from the current 32 baht/square-m/month to 50 baht/square-m/month in the first year (BE2545/AD2002) which will become 397 baht/square-m/month in the 6th year (BE2550/AD2007 - the last year of contract)--not a sudden 397 baht/square-m/month rate as requested by the SRT board.
Furthermore, BMA refuses to allow the SRT board to put their men on the Chatuchak Weekend Market board by insisting their independence to run Chatuchak Weekend Market which SRT cannot do because of their bureaucracy. No amount of threats from Chairman Phanloed Bayoke (e.g. terminating the leasing contract before 2007) would force BMA into submission on the Chatuchak Weekend Market leasing controversy. Even if SRT gets the private sector to run Chatuchak Weekend Market, SRT would have to set up a much higher leasing rate to please the new private sector (which could be TRT cronies) compared to BMA who have built up the fortunes of Chatuchak Weekend Market.
The SRT board of land and asset management must answer to the people how can they have come up with such exorbitant rates of land leasing instead of gradual increasing rates.
BMA would fight against SRT on the Chatuchak Weekend Market issue--fighting at all costs to make SRT accept the BMA scheme for gradual increase of lease payment.

Controversial revenue raising by SRT - translated and summarized from Prachachart Thurakij, January 12-15, 2006 and Thairath, January 11, 2006
Six companies that are renting Lad Krabang ICD have complained that SRT is going to raise the leasing price from 30 baht/sq-m/month to 84 baht/sq-m/month according to advice from consultants instead of the consent of the customers who rent the space. The customers who rent at Lad Krabang ICD demand only a 50 baht/sq-m/month rate. 84 baht/sq-m/month would compel the company to raise container costs from 1200 baht/box/month to 1700 baht/box/month. Even worst, the continuing red tape and the plan to monopolize the container box moving (570 baht/box) have outraged many shipping companies, prompting the reconsideration to use the container yards at Klong Toei port and ICD at Laem Chabang port instead of Lad Krbang ICD. This would definitely increase traffic jams. The SRT plan to raise the revenue has run into conflict with the government's policy to cut down logistic costs.
Also, the revenue raising scheme at Chatuchak Weekend Market is
1) Raising rent from 32 baht/sq-m/month to 397 baht/sq-m/month
2) Revenue sharing scheme of 30% from those who rent space at Chatuchak Weekend Market for those who are unwilling to pay higher rent
3) Add a representative from SRT to the Chatuchak Weekend Market board so as to define a new policy on the Weekend Market
Such revenue raising scheme has already outraged both BMA who runs Chatuchak Weekend Market because they thought that increasing the leasing rate would be enough for SRT. Furthermore, BMA is handling Chatuchak Weekend Market very well and feel very distrustful of SRT trying to handle Chatuchak Weekend Market or other leased space.
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