Transport system should try new routes
The Government is undertaking a comprehensive review of Singapore's land transport. Chairman of the Parliamentary Committee on Transport Cedric Foo has a few ideas on what it should cover
By Christopher Tan
IF THE head of the Government Parliamentary Committee for Transport has his way, the duopoly of the public transport industry enjoyed by SMRT Corp and SBS Transit would be done away with.
What Mr Cedric Foo would like to do is to carve up the island into regions and let companies - including foreign ones - bid for the right to operate in each region for a specified tenure.
One year into his role as chairman of the public advocacy group, Mr Foo, 47, makes it clear in an hour-long interview with The Sunday Times that Singapore needs 'to consider alternatives to the current structure' in the year-long Land Transport Review.
There is nothing like competition to ensure an efficient and cost-effective public transport system, he says.
But there is no competition in the current set-up, says the MP for West Coast GRC and group deputy president of shipping group NOL.
'Competition is defined as choice for the commuter. But there is really no choice today.' SMRT runs mostly trains and SBS Transit, buses. Also, bus services along MRT lines have been removed in the name of rationalisation so that commuters would ride the trains and ensure that the heavy investment in trains pays off.
Mr Foo suggests that Singapore adopt the regional operating model that is in use in places such as London, Sydney and the Scandinavian countries.
The Government pays the winning bidders a sum that covers operating costs plus incentives for meeting targets on service, ridership volume and reliability.
Those who excel may be rewarded with bonus payments; and those who fail may not be invited for the next tender.
Fares are collected by the Government, which uses the revenue to award the operating contracts.
He says: 'The fares are set by Government and commuters. And meeting service standards becomes the transport operators' primary concern.'
Such a regime can be applied here, despite what seems like a small market.
Dr Paul Barter, an assistant professor at the Lee Kuan Yew School of Public Policy who researches urban transport policies, reckons the approach 'involves assigning a single public agency with responsibility to integrate the planning of routes, timetables and pricing'.
In an article he wrote in Ethos, a Civil Service College publication, he pointed out that the Singapore market is comparable 'to that of the whole of Australia' in terms of total demand.
Professor David Hensher, director of the Institute of Transport and Logistics Studies, University of Sydney, also favours the regional operating regime.
He estimates that Singapore could probably have up to 10 operating regions. Sydney, which has 4.2 million people, has 15 bus regions. 'Have enough players so you can benchmark,' Prof Hensher says. 'Small is beautiful.'
Mr Foo, who is also NOL's chief financial officer, is of the view that 'the status quo we have is not optimal because one party is having high returns and either the Government or commuter is paying too much'.
He says the two public transport operators here enjoy returns that are not commensurate with an industry that is 'low-risk, not volatile or cyclical, and where ridership will be growing''.
Public transport companies around the world 'belong to a class of investments that trade more like bonds than shares', while SMRT and SBST enjoy returns which are 'high by any measure'.
According to their latest annual reports, SMRT Corp and SBS Transit posted returns on equity of 22.1 and 20.6 per cent respectively. Singapore Airlines, Asia's most profitable carrier, posted an ROE of 14.9 per cent last year.
But Mr Foo thinks that operators should remain listed companies, as making profit is a powerful incentive.
He does not necessarily buy the argument that Singapore should have one bus operator and one train operator. 'You need buses to feed the trains, and trains take the longer haul.
'That's usually the more efficient way. So for buses to be a real competition to trains may be hard to do.'
But if commuters are to be persuaded to switch from car or cab to bus or train, public transport must offer a competitive alternative in terms of cost, comfort and time.
One way is to to have a 'throughfare' system to ensure that commuters who make transfers do not end up paying more. The removal of bus services along new MRT lines has led to some riders making one or more transfers.
'From a macro standpoint, you want to rationalise the system to reduce overall cost. But the savings should be passed on to those who are affected by the rationalisation,' Mr Foo explains.
'If you ship something from Shanghai to Rotterdam, and the box is transhipped in Singapore and Colombo, you cannot charge the customer more. In fact, you might have to charge lower because of the time delay,' the trained marine engineer explains.
To persuade more people to switch to public transport, he believes that 'demand management measures' for cars such as imposing congestion charges and capping the growth rate of cars should continue to be exploited.
Motorists, he says, must learn to accept these measures. 'If you don't have explicit demand management, costs will also go up - traffic jams, the time, the fuel, the pollution, road rage.
'It will make Singapore less attractive to live in and companies may think twice before investing here.'
At the same time, he thinks the authorities must 'explore intensification of road use''. 'Usually, it's heavy traffic coming into the city in the morning, and the other side of the road is empty. Or heavy traffic going out of the city in the evening, and the other side becomes empty.'
To cater to such uneven demand, Mr Foo says Singapore should explore 'electronic ways' to switch the direction of some lanes in an underused carriageway.
Companies and schools should consider staggered work and school hours; and urban planning can be improved so as to minimise the need for travel.
The Government should also invest 'more aggressively' in land transport infrastructure.
He says he is 'a bit disappointed with the speed' at which new projects - especially MRT lines - are being built.
The parliamentarian says the Government should start planning for new rail lines despite having just started work on the 40km Downtown MRT Line, which is scheduled to be up in 2018.
'I think infrastructure should lead rather than lag demand.'
His suggestion contradicts the current stand that MRT lines should start running only when there are enough users to cover running costs.
'We cannot value infrastructure investment just on ridership. There are a lot of externalites that bring value to the country. When you have infrastructure, the adjacent land increases in value. We need a holistic approach.'
He notes cases such as the North-East Line's Buangkok station. SBS Transit had refused to open it for two years because there were not enough residents in the vicinity.
He says the Government should 'lay the line and sell the flats, rather than the reverse'.
The Government should adopt the same approach to land transport as it does to the expansion of expansion of Changi Airport. 'We were quick to establish a budget terminal. We announced Terminal 3 will be ready next year - well before Terminal 2 is chock-a-block.' Mr Foo, whose GPC has asked to be 'engaged early' in the Land Transport Review by the Government, says: 'We should not have half measures. We should be bold so as to retain our competitive edge.'
