In April, the first day of the fare increase for buses took effect as decided by the Bangkok Mass Transit Authority (BMTA). The main reason for this adjustment was the delay in fare hikes over the years, despite requests from private operators. The previous fare rates did not align with actual costs, and this price adjustment is expected to foster competition and improve services, as newer bus models can charge higher fares. Consequently, minivans and songthaews are also preparing to raise their prices, amidst questions about whether service quality will improve. Many people are opting to drive instead of using public transport, contributing to Bangkok's status as one of the most congested cities in the world.

What Causes Traffic Congestion?

There are numerous answers to this question, including urban planning, traffic discipline, and environmental conditions. However, the most tangible and statistically supported answer is that traffic congestion in Bangkok is due to the number of vehicles exceeding the available road surface. According to the Department of Land Transport, as of March 2019, there were a total of 10,193,685 registered vehicles in Bangkok, with 4,585,242 being passenger cars for up to seven people. This figure does not include vehicles registered in other provinces that operate in Bangkok. When examining Bangkok's urban layout, traffic routes are often congested, with commercial centers at the core, causing roads to become gathering points for vehicles, consuming 10% of the total area available for traffic. Moreover, this 10% of road surface is not entirely usable due to ongoing road closures for urban redevelopment.

What Problems Does Traffic Congestion Create?

The issues associated with traffic congestion are not limited to traffic itself but extend to other costs that those caught in traffic must bear. For instance, time costs are significant; a survey revealed that Bangkok residents spend an average of 61 hours per year stuck in traffic, the highest in the world. While 2.5 days may not seem long, considering it as wasted vacation time adds to the cost. Other issues include environmental impacts, health concerns, and long-term relationship strains.

How Does Traffic Congestion Create Investment Opportunities?

It is evident that factors related to traffic congestion can be divided into two main categories: the number of vehicles and traffic conditions, which are direct factors, and the opportunity cost of other expenses, which are indirect factors. From a problem-solving perspective, this can lead to a variety of business investment opportunities, which Peer Power categorizes into two parts:

Investing in Direct Factors

This refers to factors directly related to traffic congestion, namely investments in the automotive sector and urban infrastructure. Businesses in this category that are worth investing in include:

Investing in the Automotive and Manufacturing Sector (Auto)

The increasing number of registered vehicles each year indicates a strong demand for car usage. Therefore, manufacturers of vehicles, parts, and equipment remain attractive. Although Thailand does not have direct car manufacturers, it often operates as a production base and distributor. Thai automotive stocks (Auto) are numerous, with fluctuating unit prices that are not excessively high or low. Overall, companies in this sector rarely incur losses, although some, like GoodYear or GYT, may see reduced profits. However, they tend to offer increasing and consistent dividends. For those interested in investing in Auto stocks, a long-term investment strategy focused on dividends is safer.

For future vehicles, such as electric cars and autonomous vehicles, investments should be directed towards foreign stocks instead.

Investing in Public Transport (Trans)

Many have heard that a good public transport system is a hallmark of developed countries. In Thailand, two public transport systems related to traffic congestion that are viable for stock market entry are BTS and BEM, both of which report positive profits, although their dividends are low. BTS has even seen a decrease in dividends. Holding shares in the public transport sector appears promising, whether for short-term trading or long-term holding with modest profits.

Investing in Car Insurance (Insur)

Most people love their cars, as they are valuable assets, and repair costs can be significant if damage occurs. Therefore, the car insurance business is a worthwhile investment for car owners seeking safety and for investors in the stock market, as many large car insurance companies are publicly traded. The highest-priced stock in this sector is Bangkok Insurance (BKI), which has a selling price of up to 325 baht and has shown consistent positive trends. However, investing in insurance is unique and subject to frequent policy changes, so caution is advised.

Investing in the Energy Sector (Energ)

Currently, vehicles still run on fuel, and many fuel companies are publicly traded, often reporting profits that fluctuate yearly. Major energy companies like PTT or Esso have moderate stock prices and quantities. For short-term investments in this area, one must be diligent in monitoring the market.

Investing in Real Estate (Prof)

The lack of road surface and the expansion of urban areas lead to the dispersion of residential areas. We see a rapid increase in condominiums near electric train lines and housing developments close to expressways, as people choose to spend money to save time. Living in easily accessible locations is a preferred investment for many. If interested in real estate investment, Peer Power has previously discussed the risks and returns associated with investing. Real estate investments require consideration of other risk factors due to liquidity and market saturation.

Each type of business mentioned carries its own risks and factors that can lead to price volatility and varying returns. The insurance sector is sometimes categorized as a savings investment, particularly for health or long-term life insurance.

How Can We Invest in Indirect Factors of Traffic Congestion?

This category includes businesses that arise to solve other problems caused by traffic, such as food delivery services or ride-hailing businesses. In Thailand, notable examples include Grab, GetFood, HonestBee, and Foodpanda, which are primarily startups. Therefore, investments in this sector may take the form of angel investing.

While traffic congestion is frustrating and seemingly endless, understanding its structure reveals numerous investment opportunities arising from this situation.

SOURCE:  www.peerpower.co.th