SINGAPORE MRT LTD AND TRANS-ISLAND BUS SERVICES LTD (Failure to complete merger)

Mr Chng Hee Kok asked the Minister for Communications and Information Technology if he will explain the rationale for the proposed merger between the Singapore MRT Ltd and Trans-Island Bus Services Ltd and the reasons for its failure to complete.

The Minister of State for Communications and Information Technology (Dr John Chen Seow Phun) (for the Minister for Communications and Information Technology): Sir, in the 1996 White Paper on World Class Land Transport System, the Government had envisaged an excellent, integrated and seamless public transport as a cornerstone of our land transport policy. It anticipated the need to expand the rapid transit system (RTS) and to integrate the network of rail and bus systems.

Integration of rail and bus services requires public transport operators to plan for multi-modal operations so that they provide services for the entire journey, and not just individual legs of a journey on single modes. Through integration of rail and bus, multi-modal public transport operators will be able to not only improve their services to the commuters, but also optimise resources and reap economies of scale and synergies in operating across the different transport modes.

Our view is that the size of our public transport market will have room for two or more multi-modal operators for better competitive services. The benchmarking and competition between two or more multi-modal operators will result in a more efficient public transport industry.

The merger discussions between Singapore MRT Ltd and Trans-Island Bus Services Ltd to form a multi-modal operator were based strictly on commercial considerations. The two companies have announced that they were unable to conclude the discussions successfully. SMRT has explained that it has decided to seek a listing on the Stock Exchange of Singapore to enable it to establish the market value of its shares, and give the company greater flexibility in future discussions with possible merger partners.

On MCIT's part, our policy on promoting multi-modal transport operations remains unchanged. As both SMRT and TIBS have said that they will consider all options, we should await their proposals.

Mr Chng Hee Kok: Sir, will the Minister clarify the position? There seems to be a public perception that this proposed merger between SMRT and TIBS is a Government-sponsored matter. As a result of that, there was a run up in prices and shareholders who bought the shares at $4 have now lost money. Should the Government not have responded much earlier and made the position very clear that this is not a Government-sponsored matter?

Dr John Chen Seow Phun: Sir, the Government sets the policy direction and the policy direction for the industry is that we want to promote multi-modal players. But how they form a multi-modal company is up to the individual companies to decide. So if they had decided not to proceed but to do other things first, it is purely based on their own consideration.

Mr Chng Hee Kok: Is the Minister of State saying that the Government has got nothing to do with this proposed merger between SMRT and Trans-Island Bus Services Ltd?

Dr John Chen Seow Phun: What I am saying is that the Government had made known its policy of wanting to promote multi-modal operations. It was stated in the White Paper, and with the award of the North-East line to SBS, it is another indication that this is something we want to do. But whether private and publicly listed companies can come to terms is beyond our control.