Buy MTR Corp and turn it into statutory body, former railway boss tells Hong Kong government
Lawmaker Michael Tien says rail operator’s property development projects should be sold and the funds used for social welfare
Hong Kong’s former railway boss has proposed drastic measures to improve the management of the city’s rail operator, suggesting that the government purchase all its shares and turn it into a statutory body so profit maximisation would not be its business goal.
Such a move could ensure better scrutiny of railway projects, and the government’s financial reserves were deep enough to let it do so, said Michael Tien Puk-sun, a former chairman of rail operator KCR before it merged with the MTR Corporation in 2007.
“It’s like turning the MTR into the Airport Authority. If the government wants to build something, the government will pay for it,” he said in a phone interview on Monday.
The government did in fact list the MTR Corp on the Hong Kong stock exchange in 2000 and currently holds a 75 per cent stake in the rail operator.
If Tien’s plan is adopted, it would cost the government HK$60 billion (US$7.6 billion) to buy the remaining 25 per cent of the company’s shares. MTR Corp shares were down HK$0.55, or 1.37 per cent, to HK$39.50 at market close on Monday.
Tien, now a lawmaker, made the remarks on Monday as the transport company continued to be embroiled in a spate of controversies. Last week, more subsidence problems were discovered at the site of a new MTR station in Hong Kong’s most expensive rail project.
Speaking on a Commercial Radio programme, he said: “A lot of people say that MTR is Hong Kong’s biggest property developer. It is a listed company. It needs to keep its share price at a certain level.”
MTR Corp is not allowed to tweak its fares as it wishes, as the adjustments are subject to an established mechanism that considers, for example, inflation. This, Tien said, raised the question of how the company could maintain its share price in the long term.
The transport operator would have to look for income via other channels, and was thus engaged in overseas projects, Tien said. The board of directors had been dealing with a heavy workload, he added.
“Do Hong Kong people want the MTR Corp to be the most profitable company in the world? I don’t think so. At least not for me,” he said. “The Airport Authority has not been building airports around worldwide. Why should the MTR Corp, a listed company, do so?”
Tien said on the radio programme that the government should take over the rail company’s property development projects, sell them and spend the money on social welfare.
Property development forms a key part of the MTR Corp’s business model; it grants land to developers for residential and commercial development to generate income to fund hefty rail investments and create demand for rail services.
Under his proposal, Tien said, the company’s board of directors would have less work on its plate and could focus on issues such as upgrading certain aspects of the railway system, and whether there were new technologies to minimise delays.
Last week, the MTR Corp overhauled its top management team after the government demanded heads roll for the scandals plaguing the HK$97.1 billion Sha Tin-Central rail link.
The government has asked police to investigate “huge discrepancies” and “conflicting reports” in the company’s submissions on the project.
MTR Corp chairman Frederick Ma Si-hang said he had submitted his resignation twice “on the grounds of accountability”, but the government had asked him to stay on until a new CEO was in place in six to nine months.
CEO Lincoln Leong Kwok-kuen, who had renewed his contract for two years in February, will quit once his successor is appointed.
Projects director Philco Wong Nai-keung resigned immediately last Tuesday while three other general managers for the project – Lee Tsz-man, Jason Wong Chi-ching and Aidan Rooney – also left.
On Friday, the MTR Corp was forced to suspend all excavation work at the future Exhibition Centre station in Wan Chai on the Sha Tin-Central link, as areas around the construction site were sinking beyond acceptable levels.