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26-05-2014, 05:10 PM
An honorable member of the Coffee Shop Has Just Posted the Following:
Last week, the Land Transport Authority (LTA) announced a major revamp to Singapore’s public bus industry — a move that many observers say amounts to semi-nationalization. I agree that LTA’s latest revamp does amount to a near re-nationalization of the bus industry after decades of privatization.
Under the new bus contracting model, the government will own, provide, and fund all bus operating assets and infrastructure, including buses, depots, monitoring and operations systems, and fare systems. The LTA will determine the bus services to be provided and set the required service standards. Bus operating companies will then bid for the right to operate these services through competitive tendering. Twelve packages of routes, with about 300 to 500 buses each, will be available, and the packages will be based around depots and could be a combination of existing and new routes.
Revenue from bus fares will go to the government, while operators will pocket the non-fare revenues such as advertising on buses, or commercial rentals at bus interchanges. The operators will also receive compensation from the government for operating the required bus service routes.
Bus operators will be in charge of hiring and paying drivers to operate the buses, in addition to administering and managing all other aspects of bus operation.
In the wake of the latest announcement from LTA, the share prices of SBS Transit and SMRT have shot up. In fact, these two companies have seen their share prices go up significantly even before the announcement was made. This led Mr Ravi Philemon, a social activist and community worker, to file a police report requesting that the authorities investigate into the possibility of insider trading in these two companies.
See the charts below for the 5-year share prices of SBS Transit and SMRT.
http://www.sgpolitics.net/wp-content/uploads/2014/05/sbstransit.jpghttp://www.sgpolitics.net/wp-content/uploads/2014/05/smrt.jpg
As can be observed from the above two stock charts, both SBS Transit and SMRT Corporation have seen their share prices decline inexorably for the past three years (2011-2014).
The sudden increase in their share prices due to the LTA announcement demonstrates that the market perceives that the government has essentially bailed out these two Government-Linked Corporations (GLCs).
Taxpayer dollars will be used to re-acquire bus operating assets from both SMRT Corporation as well as SBS Transit. These two companies will therefore receive a financial rescue package and be relieved of the burden of holding on to the bus operating assets.
The reason why the government has moved to a semi-nationalization of the bus industry, reversing decades of privatization, is because it has become clear in recent years that the old privatized model has failed to deliver good service to bus commuters, who have had to endure the ignominy of paying higher and higher fares whilst enduring declining service standards.
Bus operators were also shunning routes that they deemed unprofitable. Commuters who had no choice but to use those routes to commute to school or to work were then saddled with long waiting times and delays.
Eventually, it became abundantly clear that the old privatization model resulted in bus operators working on a “profits first, people second” mantra.
This led to complaints from the public, who criticized the bus operators for profiteering at their expense. Singaporeans also blamed the LTA for allowing so many requests for fare increases to be approved when they did not feel that service standards had improved correspondingly.
The fare hikes coupled with disappointing service standards started to cost the PAP government politically. The government therefore has been left with no choice but to address these concerns. Hence, the semi-nationalization of the bus industry.
Under the old privatized model, taxpayer dollars were also used to fund the purchase of assets such as buses and bus monitoring systems that would eventually be owned by bus operating companies. An example is the Bus Service Enhancement Programme (BSEP) introduced in 2012 in which the LTA set aside $1.1 billion to fund the initiative. Part of the $1.1 billion went into purchasing 550 buses for use by the bus operating companies.
Transport Minister Lui Tuck Yew said last week that Singapore is now ready to move beyond BSEP, and said that the new contracting model will enable the Government to “respond more speedily to changes in ridership patterns and commuter needs and provide a better service to commuters.”
Two keywords however which neither he nor LTA has used thus far is “bailout” and “nationalization“. But that is what the latest overhaul of the bus industry amounts to.
Click here to view the whole thread at www.sammyboy.com (http://www.singsupplies.com/showthread.php?182444-Bus-industry-revamp-bail-out-package-and-semi-nationalization&goto=newpost).
Last week, the Land Transport Authority (LTA) announced a major revamp to Singapore’s public bus industry — a move that many observers say amounts to semi-nationalization. I agree that LTA’s latest revamp does amount to a near re-nationalization of the bus industry after decades of privatization.
Under the new bus contracting model, the government will own, provide, and fund all bus operating assets and infrastructure, including buses, depots, monitoring and operations systems, and fare systems. The LTA will determine the bus services to be provided and set the required service standards. Bus operating companies will then bid for the right to operate these services through competitive tendering. Twelve packages of routes, with about 300 to 500 buses each, will be available, and the packages will be based around depots and could be a combination of existing and new routes.
Revenue from bus fares will go to the government, while operators will pocket the non-fare revenues such as advertising on buses, or commercial rentals at bus interchanges. The operators will also receive compensation from the government for operating the required bus service routes.
Bus operators will be in charge of hiring and paying drivers to operate the buses, in addition to administering and managing all other aspects of bus operation.
In the wake of the latest announcement from LTA, the share prices of SBS Transit and SMRT have shot up. In fact, these two companies have seen their share prices go up significantly even before the announcement was made. This led Mr Ravi Philemon, a social activist and community worker, to file a police report requesting that the authorities investigate into the possibility of insider trading in these two companies.
See the charts below for the 5-year share prices of SBS Transit and SMRT.
http://www.sgpolitics.net/wp-content/uploads/2014/05/sbstransit.jpghttp://www.sgpolitics.net/wp-content/uploads/2014/05/smrt.jpg
As can be observed from the above two stock charts, both SBS Transit and SMRT Corporation have seen their share prices decline inexorably for the past three years (2011-2014).
The sudden increase in their share prices due to the LTA announcement demonstrates that the market perceives that the government has essentially bailed out these two Government-Linked Corporations (GLCs).
Taxpayer dollars will be used to re-acquire bus operating assets from both SMRT Corporation as well as SBS Transit. These two companies will therefore receive a financial rescue package and be relieved of the burden of holding on to the bus operating assets.
The reason why the government has moved to a semi-nationalization of the bus industry, reversing decades of privatization, is because it has become clear in recent years that the old privatized model has failed to deliver good service to bus commuters, who have had to endure the ignominy of paying higher and higher fares whilst enduring declining service standards.
Bus operators were also shunning routes that they deemed unprofitable. Commuters who had no choice but to use those routes to commute to school or to work were then saddled with long waiting times and delays.
Eventually, it became abundantly clear that the old privatization model resulted in bus operators working on a “profits first, people second” mantra.
This led to complaints from the public, who criticized the bus operators for profiteering at their expense. Singaporeans also blamed the LTA for allowing so many requests for fare increases to be approved when they did not feel that service standards had improved correspondingly.
The fare hikes coupled with disappointing service standards started to cost the PAP government politically. The government therefore has been left with no choice but to address these concerns. Hence, the semi-nationalization of the bus industry.
Under the old privatized model, taxpayer dollars were also used to fund the purchase of assets such as buses and bus monitoring systems that would eventually be owned by bus operating companies. An example is the Bus Service Enhancement Programme (BSEP) introduced in 2012 in which the LTA set aside $1.1 billion to fund the initiative. Part of the $1.1 billion went into purchasing 550 buses for use by the bus operating companies.
Transport Minister Lui Tuck Yew said last week that Singapore is now ready to move beyond BSEP, and said that the new contracting model will enable the Government to “respond more speedily to changes in ridership patterns and commuter needs and provide a better service to commuters.”
Two keywords however which neither he nor LTA has used thus far is “bailout” and “nationalization“. But that is what the latest overhaul of the bus industry amounts to.
Click here to view the whole thread at www.sammyboy.com (http://www.singsupplies.com/showthread.php?182444-Bus-industry-revamp-bail-out-package-and-semi-nationalization&goto=newpost).