ComfortDelgro’s “self-examination” exercise

ComfortDelGro not comforting at all.

The following is a letter which was rejected by the Straits Times for publication. TOC thanks the writer, Mr Ong, for allowing us to publish it.

I refer to the article “Transport Dilemma: bus or car?” published on 15 Dec 07.

I can’t help but recall a similar article, “ComfortDelGro to review its domestic operationpublished in the Straits Times on 22 Nov 2006. (See below)

In the report, it was cited that public transport company ComfortDelGro, which is the largest transport operator here, will do “some soul-searching” and the ministry is embarking “on a review of the industry and the operator too, will embark on a self-examination exercise”.

Ironically, what was mentioned a year ago is now unearthed again, and it seems that all the suggestions that were brought up led to nowhere.

In light of this, I feel that the author missed out the most important thing which could be the reason why this teething issue is bought up from time to time and is yet unresolved, i.e. who the main boss behind the two transport operators is – which is Temasek Holdings.

Based on the two transport operators’ websites, Temasek Holdings owns more than 50% of the shares in both transport operators – SMRT and SBSTransit, and the rest of the shareholders are believed to be Government-Linked companies (GLCs).

Hence, could it be that Temasek has set a target on how much revenue they need to contribute to the “shareholders ” annually?

I would like to remind our leaders that not all issues can be resolved under a win-win situation. In fact, the reason for allowing public transport to be converted from public service to GLC is to avoid falling into the red and becoming a burden to the government. But it seems that after being privatised for more than two decades, it has been overdone and has caused a lot of headache for the politicians and the commuters.

Thus, may I suggest that Temasek buy over all the shares from the shareholders and merge SMRT and SBSTransit. Then work out a justifiable revenue that is enough to provide for maintenance cost, bus/train upgrading and overhead cost. I urge the government and transport operators to focus on how to serve commuters better by all means possible, which is the best way to discourage people from owning cars.

I think Singaporeans should decide whether they want to read articles and reports about our transport dilemma every year-end and hear about “self-examination” exercises which results in nothing but increases in fares every year – or send 10 to 20 opposition members into the parliament to get the teething problem solved.

Ong Tiong Ling

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Report in the Straits Times

22nd November 2006

Transport giant’s dilemma – serving both shareholders and commuters

ComfortDelGro expands overseas, it is re-examining its domestic operations.

The listed firm, which owns 75 per cent of transport operator SBS Transit, is doing some soul-searching, as its foreign business continues to dwarf its Singapore holdings.

In a speech yesterday, ComfortDelGro chairman Lim Jit Poh seemed to hint at a change in the company’s future direction, while affirming that Singapore would always be its base.

He said his company supported the Transport Minister’s recent call to make public transport the main choice for commuters, adding that as the ministry ’embarks on a review of the industry, we too will embark on a self-examination exercise’.

He sketched out the dilemma which his company finds itself in – having to serve both its shareholders and commuters.

The two roles, Mr Lim said, will have to be re-examined, and his company is preparing to submit a paper on this issue to the Transport Ministry.’

As an operator, SBS Transit will need to look at how best we can balance our duties as a service provider and as a public listed company with responsibilities to our shareholders,’he said.

While shareholders want good returns on their investments, commuters want a comprehensive service with low fares.

Indeed, Mr Lim noted that the public had taken two extreme positions on transport matters.

He said,’I note the public calls for more competition.

I also note the cry for centralised and integrated services.’ComfortDelGro has become the world’s second largest land transport operator since it was formed three years ago, Mr Lim said, in a speech to honour the company’s service excellence award winners.

Revenues from its overseas operations have outstripped those of local operations since 2004.

And its overseas operations accounted for nearly half of its group operating profit of $51.3 million for the third quarter of this year.

Mr Lim said his company was constantly looking at ways to improve and engage commuters, such as via the monthly season pass.

Mr Ong Kian Min, deputy chairman of the Government Parliamentary Committee for Transport, said ComfortDelGro’s corporate moves, if any, must place commuters’ interests first.’

I don’t know what it is going to do, but we must make sure that commuters’ interests are always safeguarded,’ he said.

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