TL;DR – There is no smoke without fire.
Last week, LTA announced that SMRT will finally be getting on the New Rail Financing Framework (NRFF). Following that announcement, people have been wondering whether that is a first step in bigger changes to the way our train systems are run. If we follow that train of thought to its logical conclusion, one possibility is that our train systems would be nationalised.
And indeed, this news, just in.
Singapore investment firm Temasek Holdings has made an offer to buy over and take SMRT private at $1.68 per share.
If successful, this means the rail and bus operator will be delisted from the Singapore bourse.
What does the delisting of SMRT really mean for Singaporeans?
Going private is good for Singaporeans
By delisting and going private, SMRT can truly focus on providing quality service to its bus and train riders. As a publicly listed company, SMRT will have to answer to their many shareholders. Some of the shareholders are foreign entities. When these shareholders look at SMRT, what are they most interested in?
Same as any shareholders looking at the companies that they have shares in, things like share price and profits.
As shareholders, do you think they care whether SMRT is really providing quality service to its customers, its passengers? Not necessarily. Especially if those shareholders are foreign entities.
But if SMRT is delisted, then SMRT needn’t keep chasing after profits. Why? Because SMRT would only need to answer to one and only one shareholder – Temasek Holdings. And Temasek Holdings has one and only one shareholder – the government of Singapore. Then, as some analysts told Straits Times, this would lead to
“(SMRT’s) objectives being realigned, to be more on track to meet commuters’ needs and expectations.”
SMRT is still not nationalised. But we think that’s also a good thing
Even with the buyout by Temasek, it still doesn’t mean that SMRT has been nationalised. Yes, with the buyout by Temasek, SMRT will only have one and only one shareholder, and that shareholder (Temasek) has one and only one shareholder (the government of Singapore). But SMRT will still be private company. It still isn’t a statutory entity under the Ministry of Transport. So it’s still not nationalised. But that’s a good thing.
If SMRT is nationalised, then SBS Transit would likely have to be nationalised too. If that happens, it means that the rail market is no longer contestable. No matter how well or badly the rail system is run, the operator will be the same statutory entity. But if SMRT and SBS Transit remain as private companies, the rail market remains contestable.
In other words, if the SMRT doesn’t do a good job, never mind who SMRT’s parent company is, the government can still award the tender to operate the lines to another operator. And this operator could possibly be a foreign company (e.g. Hong Kong’s MTR Corporation). Now that would be a real slap in SMRT’s and Temasek Holding’s face.
So, as we said in an earlier post:
“SMRT, you (still) better bloody wake up your bloody idea!”
In short, we are happy that the SMRT is most likely going to be delisted. Now SMRT can focus on providing quality train service without being distracted by having to answer to other pesky shareholders. At the same time, SMRT will still be kept on its feet.
In the end, it’s a great thing for Singaporeans.
(Featured image via Straits Times)
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