The government announced in May this year that it would restructure the public bus industry to a “government contracting model”. The government claimed that this would make the industry more competitive which it said will raise service standards. However, the new model will not result in lower transport fares. Transport Minister Lui Tuck Yew had said that regular fare increases will be needed to make sure the new model is sustainable. There will be a need for us to make sure we have regular fare increases of the right quantum, Mr Lui had said in July. But this is contradictory to what was said when the new model was first introduced, where it was said that the model will be “cost-competitive”. Add to it that of the 12 bus contract packages under this new model, the government has already decided to set aside nine for SBS Transit and SMRT, this means that the government has already intended for these two companies to be protected and the competition to be only opened for three packages. At the end of it all, the question remains – even with the new bus contracting model, it does not look like the situation will change drastically. In fact, the bus industry in Singapore would still operate on an effective duopoly with the rest of the companies dressing up the competition but without any real weight on them. This is akin to how the government had seemingly liberalised the taxi industry but where the big players such as ComfortDelgro continue to hold sway in much of the decision and where when the telecommunications industry was liberalised, when Virgin Mobile tried to enter the fray, it was eventually forced out, leaving three government-linked companies to put up the show. Observers were right then to call out the bus contracting model for what it is when it was first announced. Would it change the landscape of the bus industry? Looks like it will not. In fact, what Mr Lui said is more telling: regular fare increases will be needed to maintain this model. If anything, fare increases look like the most certain goal of the new bus contracting model. Everything else would be secondary.
Posted on: Fri, 21 Nov 2014 04:25:19 +0000
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