• Wed
  • Oct 1, 2014
  • Updated: 11:31pm
CommentInsight & Opinion

Officials need to improve monitoring of MTR

PUBLISHED : Thursday, 08 May, 2014, 4:28am
UPDATED : Thursday, 08 May, 2014, 4:28am

There can be no dispute that the government and MTR have done a bad job in delivering the HK$67 billion high-speed railway to Guangzhou on time. That the public had been kept in the dark about the delay makes it even more regrettable. Only under mounting pressure did the transport and MTR chiefs come clean on the tussles behind the scene last Friday, which, unsurprisingly, fuelled accusations that the two had colluded to cover up the delay. Even though they have rejected such claims and apologised for the dismay, the public is still understandably enraged.

It is, however, too early to call for resignations. The government and the railway corporation have each launched a review of the system. The independent expert panel to be appointed by the chief executive will examine the project management and supervision mechanism, while non-executive board directors of the MTR will separately look into the delay. The probes are expected to provide more evidence, which can help to apportion blame and punishment.

Delays for projects of such scale are not unusual. The question is whether the public has been misled. In hindsight, transport minister Professor Anthony Cheung Bing-leung wrongly gave the benefit of doubt to MTR chief executive Jay Walder, who assured Cheung that the company could push contractors to catch up so long as 2015 remained the target schedule. Walder was overconfident. Even though the pair denied any intention to lie, the public has not been given the whole truth.

The 26-kilometre railway has been touted as the world's most costly to build by length - and the two-year delay will no doubt push up the bill. The government has rightly sought legal advice on whether the MTR should foot the extra cost.

More importantly, a better monitoring mechanism is needed to prevent similar problems in the future. The controversy gives officials the opportunity to reassert control over the MTR, which is often criticised as an independent kingdom without government oversight. It currently serves five million passengers a day and is building another five rail lines. As Cheung said, a recent series of technical glitches had already rocked confidence in the system. The high-speed railway saga raises further concerns over its governance and accountability. The government should learn a lesson and ensure the MTR can uphold its reputation as a world-class railway operator.


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As I've commented on China's SOEs, the Hong Kong MTR is a similar hybrid, which is neither private nor public, thus inheriting all the bad "genes" and none good. The best model forward, as I've advised, is for the government to exchange its investments (in past years) for a new class of non-voting dividend paying (with cumulative feature) preferred shares. This way, the corporation is completely privatized responsible only to the common shareholders (should be 100% private investors) without further expectations from government bailouts. Government can still moderate fares to the public but by direct fare subsidies (like the $2 fare to seniors). Thus management can be more innovative and run the corporation in accordance to the standards and governance of a private enterprise. The preferred shares scheme allows the government to get a steady long term return from its investments, maintain some leverage and is more fexible (than bonds) as cumulative dividends can be deferred (should emergency situations disctate).
MTRC is a flawed organization from its inception on in the colonial time. Its construction funding was giving it autonomy to raise fund through being a property developer. Hong Kong suffers ever since with high housing cost across entire Hong Kong as it sets the benchmark for housing cost – all actual or pretend paying for the rail and station too.
The later mixed ownership and expansion of its business across the boarder further erodes its core responsibility which is to provide and maintain an efficient and affordable public transportation service in Hong Kong. MTRC has become more a business corporation for business in property development and rail development / management in mainland and elsewhere. (I was astonished to see even cleaning crews cleaning windows in Soho office complex in Beijing in year 2000 all wearing a badge with MTRC logo.)
There is no use for officials to improve monitoring a flawed organization. Effort should be paid to fundamentally to rethink the mission for MTRC and organize it accordingly. Hong Kong’s well- being is beyond just a dependable transportation but too a housing cost that doesn’t include paying building rail and station -- actual or not. .
This editorial is far from being perceptive. It is flawed to the core.


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