Why SMRT will continue to be stuck in a dark tunnel

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An honorable member of the Coffee Shop Has Just Posted the Following:

Singapore’s land transport policy is stuck in a dark tunnel of bad planning, funding contradictions, regular breakdowns, late arrivals and a human crush that has reached unprecedented levels. And if the government response is any guide, no discernable light is evident at the end of that tunnel.

Once touted as a world-class system, the city-states transport system is now creaking, even cracking, as public pressure mounts for a comprehensive review of a business model that is reaching its run-out date.

At the heart of the debate is whether the country needs to go back to a nationalised, or even a semi-nationalised, system. The government is not convinced. It says a government-run system is not efficient and will only mean that more taxpayer’s money will have to be ploughed in to it to make it run smoothly. The counter argument is that the government is already subsidising the two publicly-listed companies, SMRT Corp. and Comfort Delgro, by paying for the rail network, trains and buses and providing fare subsidies for some groups of commuters.

When a fare hike of 3.2 per cent was announced last month, the government stepped in to say it would pay the transport companies about S$50 million a year to subsidise the fares of disabled people, low-wage workers and children below seven years old. And last year, it pumped in about S$1.1 billion to buy 550 new buses because the road transport system was becoming overcrowded and vehicles were reaching bus stops late. These are the kinds of funding contradictions that will continue to bedevil the system. Publicly-listed companies being paid government money to sustain their business model is coming under scrutiny, with some asking why shareholders of the two companies are being fattened with taxpayer’s money. And as long the government fails to overhaul the model, more critics will jump on the bandwagon.

But Singapore is not in a hopeless situation. The MTR in Hong Kong represents a gold standard that others can follow, says The Atlantic magazine. And it has the big bucks to prove its case, with the publicly-listed transport company boasting a profit of about HK$4.25 billion in the first half of 2013, up 5.1 per cent from the same period in 2012. The Hong Kong model works on a system that strikes a deal with shop owners in and around the stations. The company receives a cut of the shopkeepers’ profits since it transports customers to the malls.

SIM University Professor Park Byung Joon told The Independent Singapore there are many factors behind the profitability of the MTR. The rail lines run along very densely developed areas. “Even Singapore cannot match the density of Hong Kong’s business/commercial districts. Also, it is very expensive — and in some sense, inconvenient — to drive cars in Hong Kong.


“Another factor is the property-transport link. MTR Corp is also a big property developer. Some of the new stations are either part of shopping malls or right under big housing estates and these are developed by the MTR.”

Asked if Singapore could adopt such a model, Park said: “I am a bit sceptical that the same level of success can be repeated in Singapore. Singapore does not have the density of Hong Kong. Also, it can be quite controversial to implement the ‘integration of transport and build’ model in Singapore. It may mean giving too much development and planning power to the public transport companies.”

The questions before the government are obvious. For how long are you going to indirectly pump money into the two publicly-listed transport companies? Is this sustainable? Can a better system be found to cater to a population of 6.9 million by 2030? Why not cut to the chase and decide that a government-run system might be better than the present convoluted one?

A report by Maybank last month echoed the views of many people: “Without radical reforms, Singapore’s land transport business model is unsustainable.”

- http://theindependent.sg/smrt-tuck-in-a-dark-tunnel/


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