Tuesday, March 11, 2008

$400,000 coming from whose pockets?

SMRT, the incumbent public rail tranport company in Singapore has been slapped with a heavy fine in March 2008 for a train delay incident which happened in January 2008.

According to the Today's paper [ Source Article ] , SMRT has been fined by the Land Transport Authority, LTA, for about SGD$400,000 for the 7 hour delay which affected more tha 57,000 commuters. SMRT admitted to their fault for this incident which they claimed was due to human error and complacency. Though buses were rolled out during the incident as contingency plan, peak hour traffic impaired its efficiency.

It is up to the public transport operator to operate within LTA's guidelines and naturally, if there is a breach in the guidelines set out by LTA, a penalty will be imposed onto the operator. Given such tight guidelines, wouldn't it be more appropriate if LTA routinely check on the operator's operating and maintenance procedures, rather than to impose a fine whenever a guideline is breached? Bear in mind that the rail system was designed and built by the LTA jointly with the operator before it was fully handed over to the operator.

A grand fine of $400,000, the grandest ever penalty imposed by LTA on a public transport operator. Singapore is one of the countries where public tranport is not subsidised by the Government. In fact, one of the even fewer countries where the public transport operator is privately owned and making a generous profit.

However, as SMRT is a public listed company with directors and CEOs, annual reports are shown to all shareholders. Top level management are committed to show positive figures and maintain profits so as to maintain interests of directors and shareholders... not to mention also save their own jobs.

One has to ask, how is SMRT going to pay the fine and still keep up to its positive financial records. the main revenue from a public transport operator is naturally its transport business, namely, everyone whom uses their public transport contributes to its revenue. Everyone like you and me, using the trains, buses and taxis to get to work. With LTA imposing such a heavy fine, how is SMRT going to recover this $400,000 fine to keep up to its annual profits as compared to last year.

Are we going to see a dip of $400,000 from their annual profits?
If so, this will mean a smaller bonuses for their staff and shareholders alike.
Will the $400,000 come from their operation overheads?
Will the $400,000 be translated into lower gross profit for their financial year?


Was a fine of $400,000 from LTA the only way to ensure public transport operators maintain a certain standard of uptime and reliability? Or could LTA be more involved in their maintanence to prevent a reoccurance of this incident?

What is LTA going to do with the $400,000 anyway? Build a 3rd set of rails on existing tracks for emergency use when the 2 sets fail? Can the $400,000 be used by LTA into developing some system to track failures before it happens?

Each and every system that the LTA implements will cost money and these monies are recovered from the public transport operators via a lease-purchase agreement, such investments from the public transport operators are then recovered from...... the public whom uses their system.

One fine example is the EZ-Link system. Millions are invested into the system... Did LTA pay for this without public expense? No doubt the system is good, but since the introduction of the system, it seemed fares increased almost 2 times every year. To the public, it merely seemed like easier access for the public transport operators to raise fares.

Was it fair? $400,000 penalty?

How can the operator, after losing $400,000, continue to appear in the blue financially and make similar profits to appease its shareholders and directors?

What is LTA going to do with the $400,000?

Will the next fare rise justification take into account of the $400,000 lost/gained?

Do Singaporeans really care about this $400,000 and its complex repercussions?

Today is 11th March 2008
Time now is 12:19 hrs

To some, $400,000 is about $200,000 short of being a peanut's price in Singapore.
Singapore's short of monkeys working for peanuts and one famous ape just died recently.
Anyone wanna take its place?