Baffled about price hike

5 May 2005

3 May 05

My fellow Singaporeans,

The news that our public transportation operators, SMRT and SBS, are submitting their proposals to the Public Transport Council (PTC) to increase fares of buses and MRT should not sound alien to us anymore. While I’m not a socialist, in that our transport operators should be operating at a loss, I’m rather baffled and unconvinced on the operators’ rationale to seek PTC’s approval to permit them to hike their fares.

First of all, lets get the record straight here. Our transport operators aren’t operating at a loss here. While their using of ‘higher operating cost’ and the ‘absence of price hike since 2002’ to justify their request for a fare hike seemed convincing initially, further thought suggest that these rationale does not justify the impending price hike. It seems absolutely ironic that the news about SMRT’s application to increase fares was published on the front page of the Straits Times on 29 Apr 05 while the financial report of the listed transport operator was published on the ‘Money’ session the same newspaper. Just for the uninitiated, it was reported that SMRT had made a record net profit of 126.9 million in the financial year ended 31 Mar 05 – thats a 42 percent increase in profits compared with 89.5 million in the previous year! Considering this, it seemed that the ‘higher operating cost’ may not be that high after all to seriously affect the company’s profitability.

Even if readers do not subscribe to the above financial figures, it is publicly known that our commuter company is one of the few ‘major’ players in this industry. As such, it’s only fair to infer that the transport company would have the luxury of having a broad base or volume of ‘customers’ (residents and non residents) and would have little or no chance of making a loss. According to information obtained from the Economic Development Board (EDB) dated for year 2002, the MRT and LRT served 1.071 million and 40,805 average passenger trips daily respectively. Their concern, it seems, is mainly to determine on the percentage of its profitability.

The other matter of concern would be the unemployment rate in Singapore. From a press release obtained on the Ministry of Manpower (MOM) website, it clearly states that the “Employment gains moderated in the first quarter of 2005 amid a SLOWDOWN in economic growth” and that although total employment “increased by 11,600, it is still lower than the 13,700 in the same period in year 2004”. With the slowdown, it was also reported that the “unemployment rate was slightly higher at 3.9% in March 2005 compared to 3.7% in December 2004”. Although the unemployment rate was slightly higher, “it was still lower than the unemployment rate in March 2004 which stands at 4.5 percent”. However, although there’s a slight improvement in terms of unemployment compared to March 2004, it is worthwhile to note that there’s a probable ‘rebound’ in the quarterly employment rate as statistics for the unemployment rate indicated as follows:-
Mar 04 (4.5%),
Jun 04 (4.3%),
Sep 04 (3.6%)*(lowest)*,
Dec 04 (3.7%)
and finally Mar 05 (3.9%).

As such, it would be extremely insensitive to read that our few commuter companies, whose purpose were to serve the people of Singapore, would seek to increase their fares during this period of uncertainty.

As such, I would really hope that the authorities, in this case the PTC, would reject and delay the price increase for all BASIC public transport services such as LRT, MRT and bus (excluding cabs which I considered as a
luxury form of transport) at least to a time when our unemployment rate goes below 2.9 percent.

Finally, on a personal note, I would really hope that more Singaporeans would voice out their opinions whether its dissent, disapproval or for that matter, support on issues such as the issue of price hike.


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