PUBLIC BUS AND MRT/LRT COMPANIES (Merger)

Mr Thomas Thomas asked the Minister for Communications and Information Technology if his Ministry will work towards the merger of all public bus and MRT/LRT companies to gain economies of scale and provide commuters with a more integrated and cost efficient public transport system.

Dr John Chen Seow Phun (for the Minister for Communications and Information Technology): Mr Speaker, Sir, as our public transport operators are publicly listed companies, they make their own commercial decisions when it comes to issues of merger. However, while the merger of all public transport operators (PTOs) may provide greater economies of scale, it is in the interest of the general public for sufficient competition to exist in the industry. Competition ensures that the PTOs will strive to improve their service and provide better value for money to commuters. The proposed merger of SMRT and TIBS will result in a multi-modal transport operator, while SBS will be the second multi-modal operator next year when it commissions and operates the North East Line. These two multi-modal operators will be well positioned to provide integrated and seamless travel to commuters.

Mr Thomas Thomas (Nominated Member): Can I ask the Minister whether he can consider it a competition when commuters do not have a choice, whether they are being served by SBS or TIBS? They have to live with whichever public transport company runs the route along where they live or want to use?

Dr John Chen Seow Phun: In our case, by competition, we mean to provide a benchmark for comparison. So if you have only one operator, like what the Member is proposing, then really we do not have comparisons as to the efficiency and service levels, whether they have put in the best, and so on. But if we have two, then we can clearly compare, and I think that is a good thing to have.

Mr Thomas Thomas: Mr Speaker, can I ask the Minister of State, when he is talking about world-class transport, are we comparing internally or are we comparing with the rest of the world to be the best in the world?

Dr John Chen Seow Phun: When we say "world class", of course, we compare ourselves with the best in the world. But how do you achieve that? If we have comparison between two operators in Singapore, that also gives us assurance that they are doing the right thing.

Mr Thomas Thomas: Would the Minister consider that Singapore being very small and if there is one company sharing resources, just like the banks are being encouraged to merge and share resources and skills, we will have an even better public transport system? After all, many of the big cities of the world do not have too many bus companies or transport companies operating in those cities.

Dr John Chen Seow Phun: Sir, I agree with the Member that there is economy of scale if you have got a big operation. But there are also the disadvantages of the operator being the only operator, ie, being complacent and so on. So I think our approach of managed competition is a correct one. I would not support a situation where you have numerous operators and that would also not be good.

Mr Low Thia Khiang: The Minister of State said that we need some competition in order to set benchmark, and he mentioned two. I wonder why two competitors will be considered as a benchmark. Why not three or four? And he mentioned about managed competition. Would he explain to us what does he mean by "managed competition"?

Dr John Chen Seow Phun: To have this comparison, you must have at least two. Whether three or four, depending on the size of the market again, if you have too many, you may have the problem that Mr Thomas mentioned about, ie, lack of economy of scale. As I have said, we are reviewing it and we will make a decision in due course.

As to why it is called managed competition as opposed to free competition, it is because we do not allow players to just freely come in. So that is the meaning of "managed competition".

Mr Speaker: One last question. Mr Thomas.

Mr Thomas Thomas: Mr Speaker, Sir, I just want the Minister to clarify, because I do not understand. If it is managed competition with two, why can it not be managed competition with one? Since we always say that we are short of players, we have a concentration of players to give even better services.

Dr John Chen Seow Phun: Sir, may I ask the Member: how do you compete with only one player?