20160430 SMRT: FY2016 profit up 20% but commuters may need to pay higher fares

SMRT has just reported that its FY2016 net profit has increased by 20% to $109.3 million.

Despite making more money, SMRT has hinted that fares need to be adjusted (don’t ask if it’s upwards) because “fares are not keeping up with costs”.

SMRT should be focused on improving safety and reliability but its priority seems to be rewarding Temasek Holdings, its major shareholder. Was Desmond Kuek, SMRT CEO, hoping that in return for higher profitability, his pay package will increase to more than $2.5 million?

It is disingenuous of SMRT to highlight only rail operations related costs while ignoring the massive profit from rental of retail space and advertisements: although FY 2016 rail profit was $7.4 million, non-rail profit totaled $133.3 million.

SMRT service has been deteriorating since rail operations started in 1987. Besides our population more than doubling from 2.8 million, monthly tourist arrivals has increased from about 300,000 in 1987 to an average of 1.3 million. On Saturdays, trains are packed like sardines and it gets worse on Sundays: the majority of commuters are foreigners. Should SMRT be even hinting at another fare hike while providing a lousier service standard with guaranteed regular major disruptions?

Although the PAP has projected there will be 900,000 elderly citizens by 2030, why has SMRT been removing an increasing number of seats? Is this SMRT’s appreciation to our pioneers?

Our MRT system seems to be run by shitty people corrupted by greed: people with prior irrelevant experience parachuted into leadership positions accompanied by million dollar salaries. SMRT CEO Desmond Kuek, ex paper general, for all he’s worth would have been earning only a fraction of his $2 million plus pay package in the private sector (real one, not government linked) if not for the PAP throwing tax dollars at CEOs/directors of GLCs.

54% owned by Temasek, SMRT has been rewarding Temasek to the tune of more than half a billion dollars in dividends since 2001 (table below).

Common sense dictates the need for a proper maintenance regime but SMRT was not bothered one bit about maintenance. Commuters are now paying the price for its irresponsibility and a management seriously lacking in common sense. As evidence of SMRT serving only Temasek instead of commuters, 80% of its operating profit was paid out as dividends in 2012. Where to find money for maintenance like that?

Source: TOC article by FAILRAIL.sg

Something is very wrong with a government which allows huge profits to be made from the provision of a public good.

Our MRT system is now broken beyond repair (“no medicine can help” in Hokkien) so long as our PTOs’ objective is to continue padding Temasek’s bottom line.

SMRT has set the stage for another fare increase despite increasing its profit by 20%. But why should Singaporeans pay more for deteriorating service standard because SMRT wants to increase Temasek’s returns?

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