Two operators, different tracks

Shifting our rail operations to a completely new financing framework and delisting our main rail operator is not something we see every day.

It has taken us 16 years to realise that having an entity juggling the interests of shareholders and commuters is just too daunting.

Not that it is impossible, as shown by Hong Kong's MTR Corp, which listed in the same year as SMRT.

MTR's operating model is different from SMRT's though. The Hong Kong operator is also involved in building rail infrastructure and, in turn, is given development rights to properties along the metro lines.

This makes it less dependent on fare revenue. In fact, in the early years, there were no fare rises.

Just last month, McKinsey described MTR's rail-plus-property model as a "successful self-financing formula".

"Hong Kong's MTR Corp has defied the odds and delivered significant financial and social benefits: excellent transit, new and vibrant neighbourhoods, opportunities for real estate developers and small businesses, and the conservation of open space," it wrote in a report.

And because builder and operator are one entity (with interests aligned), the model has led to a network that is superior in design and build quality.

Singapore, however, prefers to accord proceeds from property sales to the Government. The money is kept in reserves for future generations. It is a sound decision, too.

Still, one wonders if there is greater benefit to be had from MTR's model. With the Hong Kong government being the majority shareholder, much of the money flows back to the state coffers anyway.

While that might be worth considering, Singapore's overhaul of the rail industry in the past week is already a monumental change. Without the burden of hefty capital expenditures, SMRT can focus on serving commuters better.

But if the overhaul does not work, let's hope we will flip the switch to change tracks sooner.