As the number of cars on roads climbs steadily and clogs city streets, mass transportation becomes increasingly important for the millions of people who live in the world’s major cities. For many urban areas, building new mass transport infrastructure at this late stage of their development is a huge quandary.
Thailand’s capital, Bangkok, with about 13 million citizens, has its SkyTrain and a Bus Rapid Transit (BRT) system, which provide a reliable means of moving about the city. They are both owned by Bangkok Mass Transit System Public Company Limited, itself majority owned by BTS Group Holdings Public Company Limited (BTSG).
BTSG is a complex conglomerate with interests in four major business units – mass transportation systems, out-of-home media, property, and payment and logistics services. It has holdings in 57 subsidiaries, jointly controlled companies and associated firms.
BTSG operates a majority owned subsidiary, VGI Public Company Limited (VGI), with offline-to-online solutions on platforms including out-of-home and online advertising. Its payment arm, Rabbit Group, operates Thailand’s Rabbit platform for epayment operations, and Kerry Express operates its logistics division.
CEO of BTSG, Kavin Kanjanapas, sees a historic opportunity for BTSG to bring its strengths under a single umbrella to provide a complete transport logistics solution for Thailand – and ultimately beyond its borders – and is wasting no time in pursuing it further.
“I believe that we are actually the only company in the world that owns those three components together – advertising, transportation and epayment systems. We can link all three businesses together and create a complete ecosystem with offline and online media, mass transit technology and payment systems for them. We have a lot of synergy between all three businesses,” Kavin tells The CEO Magazine enthusiastically.
Secured opportunities
The Thai government has been enthusiastically pushing for new line extensions and infrastructure, including trains, buses and a new airport. In 2017, BTSG was awarded concessions from the
Thai government for two new transit lines, called the Pink Line and the Yellow Line. Kavin is excited about the possibilities they bring, although they will stretch the company’s immediate capabilities.
“Both are monorails and about 65 kilometres long, which is longer than our company’s core line, which has been running for 20 years. That one was about 24 kilometres, so this is three times longer,” he says.
“This is exciting new territory. Since it’s a monorail, it’s a challenge for our train system. The line is long and it travels through three provinces outside of Bangkok. Its construction started more than a year ago and we have to finish it within three years. By 2021, we will have 133 new kilometres in operation, which requires increased staff and expertise.
“We studied a lot before the bidding. Our business development team has been working hard for the past 10 months to make sure we are ready. Before you enter a bid, you have to look at the price, construction times and the suppliers, because every mode of transportation is different.”
The unique solution
BTSG’s activities in epayment systems and media as well as transport give the company unusual – and advantageous – synergies for incorporating its expertise in all three areas of Thailand’s growing transport systems. But to do this well, the company needs to bring in expertise from both Thailand and abroad.
With this in mind, the Group’s media company, VGI, purchased 23% of Kerry Express, a sister company of Kerry Logistics Network Limited, a listed company in Hong Kong. Kerry Express focuses solely on parcel deliveries and has been delivering more than two million parcels each day in Thailand. It pioneered payment-on-delivery in the country, including the acceptance of cash or Rabbit LinePay on deliveries to households.
“They’ve connected with many households in Thailand already,” Kavin says. “We’re facing new challenges in technology, so we’ve created an ecosystem for Thai citizens, particularly with ecommerce and data. BTS and Kerry have a direct physical connection with consumers, and Line is actively used by more than 45 million Thai people now.
“Under the Rabbit card and e-wallet (Rabbit LinePay), we have a loyalty program called Rabbit Rewards, where people can earn and burn points,” he adds. “Ecommerce in our country is expanding, and the growth of the company has been amazing.
“If you want to compare this business with China, Taiwan, Japan or Korea, the penetration rate of ecommerce is still very low, so there will be a very big jump. But I believe in two to three years’ time, people will be using a lot more ecommerce delivery services.”
Kerry Express, with BTSG and VGI, recently launched BTS Express Service, which provides a delivery service for customers to send parcels from a BTS station to other stations within three hours.
Under BTSG’s Payment platform, Rabbit Group is the leading micropayment platform in Thailand, with more than 18 million reachable data points around the nation. Through Rabbit Group’s data analytics, VGI is able to offer measurable and targeted advertising opportunities.
“We are not just providing transportation, but also connecting people with data with our epayment system, and providing business opportunities for companies,” Kavin says. “The difference between us and a lot of transportation companies is our non-fare box revenue (revenue from non-fare sources) is actually growing a lot larger than other companies.
“Our non-fare revenue is about 25% compared with the fare box. But it doesn’t mean that the fare box revenue is low – it reflects that the non-fare box revenue is actually very high.
“The reason for that is we control all the media, all the smart cards, all the data and then we join it all together to make the ecosystem a lot smarter. What we are doing at the moment is actually using a lot of the media budget from customers to support transportation, so VGI is acting more as an intermediate company, transforming this revenue into subsidising the transportation part.
“So that’s why, when we have all those kilometres opening in the next three years, we will have more passengers travelling with us, and when you have more people on trains, you have more eyeballs. When you have more eyeballs, you have more data from the Rabbit card. And when we use all this data to advertise in our media for brand owners, it will be more accurate,” explains Kavin.
Looking further ahead
Although the company has been in operation for more than 20 years, Kavin considers it to be relatively young in the transportation industry and there is scope for further growth in the future. “We may be young in the market, but we are doing well,” he beams.
BTSG is pursuing ambitions to expand beyond Bangkok to the rest of Thailand. Over the next few years it will expand its reach into other parts of the country, Kavin says. “I believe there will be more and more lines coming up for bids, so for the next six to 12 months we will concentrate on those,” he says.
“Slowly, we have been expanding to serve all of the people of Bangkok, and soon we’ll be reaching the whole country,” he adds. “In the old days, we only focused on Bangkok, which has around 12–13 million people. We already have our epayment network in buses, boats and retailers all over the country. Some of the buses in Phuket and Chiang Mai are already receiving our cards. In addition, we deliver almost two million parcels daily, and our advertising network reaches throughout the country.
“So that’s why I believe our way forward for the next three to five years is to reach right around the country,” he says. “We are aiming at the whole population of 70 million instead of just 13 million in Bangkok. We are trying to reduce the transportation time for all Thai citizens so they have more time to spend with their families. This is what we want to see.”
Kavin points out that, in Bangkok, only about 13% of people travel by rail, while about 79% use buses. In countries like Singapore and Hong Kong, 40–50% of the population use rail transport. BTSG is examining ways to entice more people to use rail in Bangkok and further afield in Thailand as the new lines are constructed.
“The rail system in Thailand is still not as mature as Hong Kong, Tokyo, Singapore and similar areas,” admits Kavin. “But I think we have seen during the past few years that we can push this up to 33%, and get bus use down to 66%. This is what I have in mind now.
“But one thing is true – what we have to make sure is that the government has a direct role to play. Two governments ago, they put out a very ambitious plan of mega-projects for rail construction. They were talking about maybe 50 kilometres of rail construction. Now, there are 160 kilometres.
“They keep investing into this, so there will be another 116 kilometres of bidding coming out,” he adds. “I’m sure the government will put in a lot of new lines, like the LRT, Red Line, the Orange Line, and an extension of the Purple Line over the next three to five years.”
Kavin has higher long-term ambitions for the company, looking beyond Thailand’s borders into new regions in South-East Asia and beyond, through the company’s transportation, property and media arms. “We want to take our business model to other countries in South-East Asia,” he explains. “We would replicate our model in Thailand, where we could start with rail mass transit in both Malaysia and Indonesia, then expand to advertising, and then look to expand into the payment business.
“We use VGI and MACO, which is another listed company in our hands, to go for media opportunities,” he adds. “We also have some office buildings, media and some buses in Malaysia running under our management. And the first Indonesian monorail was opened a few months ago. We have 20-year concessions for the media there.
“Another step forward will be our epayment system. We’ll propose that our Rabbit card can go to their countries to be used as a payment system. We explain our business model in Thailand to government sectors in Malaysia and Indonesia, and they are very happy to discuss how we can copy this successful model into their country,” he explains. “If we have the chance we would be happy to bid in China again, and other countries like Australia, the US and around Europe.”
BTSG is active in the real estate sector as well, and already has a presence in Europe with hotel properties. “We hold about 18,000 rooms now in 16 countries across Europe, Asia and the Middle East,” Kavin explains. “We already know the local cultures, government and tax situations. Hopefully, we will grow into further business areas there.”
The good fight
The company has been financially secure for years, and has a clear growth strategy for the future. In 2018, it was selected as a member of the Dow Jones Sustainability Indices Emerging Markets 2018 and won the SAM Bronze Class distinction as part of a corporate sustainability assessment. “We have our own, achievable plans,” Kavin says. “We have planned well to move forward with our staff of more than 30,000 people worldwide.”
But it hasn’t always been smooth sailing for BTSG. Thailand was profoundly affected by the 1997 Asian financial crisis and, although it was an uncertain time for the business, Kavin says it was an exciting time in his career that he now looks back on rather fondly, despite the stress.
He was then only 20 years old, had just returned from studying in London to help his father rebuild the company and enjoyed navigating the very challenging environment. “People often think that from 1998 to 2009 it was a terrible crisis and we had to spend a lot of time recovering economically,” he explains.
“Yet I was the happiest in my career at the time, because in those 10 years I couldn’t predict what would happen the next day. You never knew when financial trouble might strike or whether the BTS could be built. There were many unpredictable elements.”
Kavin spent time closing businesses during the crisis for his father in Hong Kong. He returned to Thailand to start VGI. Kavin’s father, BTSG Chairman Keeree Kanjanapas, gave him THB5 million (US$147,000) to start the company; 20 years later, it has grown to THB80 billion (US$2.6 billion), of which Kavin is unreservedly proud.
What Kavin is most proud of, however, is simply being his father’s son. His father has had a significant impact on his life and career. “My father has truly been my mentor,” he says.
“When I came back from London in 1997, the only one I could follow was my father. At that time of the financial crisis, all the top management of the company had left. They saw the company taking a downturn. Our family was in great debt, and no-one stayed with us. I understand why; everyone has a family to take care of. However, since my father was the owner, he had no choice but to stay. From that moment, we worked side by side to fight for the rest of his life.”
It was a deeply uncertain time for the company, like many businesses during the crisis, and it teetered on the brink of disaster. Keeree stood firm and taught Kavin to do the same. “I think his perspective of never giving up applies to our family, and the people of Thailand. I’ve seen him suffer and go through ups and downs. He has had carefree days and hard days, which were sometimes hard to cope with.”
Those problematic years changed Kavin. He’s learned to be empathetic and uses this philosophy with his staff. He says he and his father are open people who support each other. “My father gives me a lot of support and advice. I’m proud to be his son; he taught me to fight to the end.”
A grander plan
There are 30,000 BTSG staff across the globe and Kavin believes in championing them. “Many of my staff need their jobs to support their family, which is the reason my father and I are still here,” he says. “The motivation to continue working hard comes from them.”
Family is a constant refrain for Kavin. He has a 14-year-old daughter and an 11-year-old son. He works not for money, he says, but the next generation of BTSG, which includes his family and his staff’s families. “Money isn’t everything,” he asserts. “Yes, you need money to buy things, but to me, health, love and family are worth much more than money.
“Family means not just my own family, but the whole BTS Group,” he adds. “I consider myself as having thousands of families. The advice my father and I give to them is to live a healthy and happy life. With more health comes more life. No life, no business. My wish is for everyone to spend more time with their family.”
Over the past 20 years, BTSG has built a large, vitally important transport platform for the nation. As it reaches further out into the country, its importance will only increase.
“The transit platform is very important for the Thai people. We’re actually building a platform that they can live with, and improve their lives. Mass transit, anywhere in the world, is much the same. You have millions of people travelling in your mass transit system, but most transport operators don’t really know their customers,” he says.
“What my father and I want to do is get to know our customers better than before. It’s not like we are just transport operators. If you are just an operator, you don’t have to know your customers.
“As long as your staff keep telling you that your customers are happy, then you are punctual, you’re safe and you are good enough. But today, we’re not just looking for safe services – we want to know our customers.
“We actually want to connect all 70 million people in Thailand. This is what our aim is. That’s why we have to expand our network – at the end of the day we want to reach all Thais. But we’ll grow slowly; in terms of customer numbers and construction, we’ll go slowly according to the plans of the government. But we will push and make sure that we can reach the 70 million people of Thailand as soon as possible.”
