Outgoing chairman urges government not to implement fare adjustment plan The commercial-based business model of MTR Corp (MTRC) must not be sabotaged in the face of the government shifting its policies on transport fares and land supply, the outgoing chairman and chief executive Jack So Chak-kwong told the administration. Mr So, who is leaving MTRC tomorrow to join telecoms giant PCCW, warned of potential disastrous consequences of turning the semi-privatised company into a government-subsidised unit by citing fiascos in the London, Paris and New York subway services. His farewell comments were in response to government proposals to implement a fare adjustment policy on public transport and overhaul land supply by MTRC and its counterpart Kowloon-Canton Railway Corp (KCRC). The proposals raise serious doubts on MTRC's autonomy in determining fares and its future prospects of making profits from property to finance hefty rail investments. 'MTRC's success is due primarily to its commercial-based operating principle in the last 20 years,' Mr So said. 'The company is among a very few government-controlled companies which are able to deliver profits without any government subsidies. 'Any government policy changes should be examined carefully so that MTRC's operating principle will not be damaged.' The Environmental, Transport and Works Secretary Sarah Liao Sau-tung vowed to install a fare regime which would adjust bus and rail fares by linking transport utilities' operating data with economic conditions after they rejected public calls to lower fares amid the protracted deflationary environment. In an attempt to inject life into the battered property market, the government, MTRC and KCRC reached an understanding to suspend land auctions this year to tighten supply. Longer-term measures are pending to squeeze the rail firm's land supply. 'A balance on the interest between the public and MTRC minority shareholders must be struck,' Mr So said. The same principle must also be applied to a possible merger between MTRC and government-owned KCRC under the government's year-long study, he said. Mr So repeated that he had resigned from MTRC for 'personal reasons', despite rumours that his exit was related to the merger. He reminded the government, which owns 76 per cent of MTRC, of the importance of property development to the company, pointing to promises in its listing prospectus in 2000. 'Property development, as listed on the listing prospectus, is relevant to our core rail business and is necessary. It is not a government subsidy as we pay land premium,' Mr So said. 'However, we agree that we should co-ordinate with the government about land supply in order not to flood the market with cheap land.' Mr So counts the company's $10 billion listing in 2000 as one of his main achievements during his eight-year stint with MTRC. He can also count subsidiary Octopus Cards among his achievements. There are about nine million of the company's smartcards in circulation compared with Hong Kong's 6.8 million population. However, MTRC's ill-fated bid for the fourth cross-harbour rail link between Central and Sha Tin which was awarded to KCRC last year blemished Mr So's leadership. 'It's a regret that we can't serve Eastern Kowloon's population as we had prepared for the rail line for 20 years,' he said.