Singapore works. Or that was the city-state's reputation until one December day six years ago, when a solitary defective fastener brought the subway system screeching to a halt.
That marked the start of a saga of frequent shutdowns and stranded passengers that has continued unabated. Earlier this month, Transport Minister Khaw Boon Wan apologized for a 20-hour disruption caused by preventable flooding. This past Wednesday, some trains were slowed during the morning rush because of a track fault.
The latest incidents come a year after Singapore's state investment firm, Temasek Holdings Pte, bought out the minority shareholders in SMRT Corp. Because Temasek is owned by the finance ministry, the deal effectively nationalized the island's main train operator, shortly after Khaw paid it S$991 million ($735 million) to offload trains, signaling systems and related assets to the transport regulator.
Relegation to an "asset-lite" operator hasn't brought much discipline. Khaw, who's credited with containing the spread of the deadly SARS epidemic as Singapore's acting health minister 14 years ago, is frustrated that SMRT is failing in mundane tasks like emptying out the holding tanks beneath tracks so they can absorb rainwater without jamming the service.
Time to wield a bigger rod. The Land Transport Authority, the regulator, is seeking an adviser to guide it on "non-fare business."
A Singapore decision to unbundle the running of trains from advertising and property rentals would be a radical departure from the model established by Hong Kong's MTR Corp., arguably the global exemplar for delivering value to commuters by capturing large profits in real estate. Almost three-quarters of MTR's operating income last year came from advertising at stations as well as from renting out, managing and developing malls. Yet it has a solid core: the company, 74 percent-owned by the Hong Kong government, has an on-time record of 99.9 percent.
While Singapore's SMRT crows in its last annual report about improving the number of kilometers between major delays to 140,000 from 65,000 in 2012, MTR's main passenger lines have seen such glitches only after 5.6 million kilometers this year.
As part of a new agreement, SMRT is being forced to sacrifice a part of the 50 to 60 percent profit margin it used to enjoy on advertising and property rentals. Maybe it doesn't deserve any. What's even the point of paying a dividend to Temasek, which funnels the money back into the government's budget, which then helps investment in new lines?
All that would make sense if the rail operator understood its primary obligation. However, a decade under the stewardship of Saw Phaik Hwa, a former overseer of duty-free shops, seems to have altered SMRT's DNA.
In the year ended March 2016, a few months before it was stripped of its major assets, SMRT took in pure rail revenue of about $500 million and managed to squeeze a $7 million operating loss out of it. 1 The company whined about how fare adjustments weren't keeping pace with rising operating costs. By contrast, MTR's Hong Kong rail operations earned an Ebit margin of almost 15 percent on $1.15 billion of revenue in the first half of this year. Nobody's lamenting the low fares.
MTR sets itself numerical targets in 14 operational areas. Some of them, such as air-conditioning failures, or the reliability of the Octopus stored-value card processor at light-rail stations, aren't even regulatory requirements.
Over in Singapore, the transport regulator gives a civics lesson to commuters. Its "graciousness campaign" features such immortal characters as "Move-In Martin," "Bag-Down Benny," and "Hush-Hush Hannah".
Since Singapore seems unable to give up the paternalistic attitude, that's all the more reason for it to junk the Hong Kong model and let the city's hyper-efficient government take over the subway service entirely.