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SMRT Buyout Could Lead to Less Transparency, but Offer Greater Benefits for Singaporeans


ELSON: Temasek Holdings looks set to buy out (or some say “bail out”) SMRT. This comes close to 20 years after the company was first floated with the aim of providing better rail operation services for which the public would benefit.

What Temasek could do is to make delist SMRT and take it private. What would delisting and privatisation mean for the public, though? For one, SMRT won’t be obligated to reveal how much profits it makes a year. It also won’t need to reveal how much of a pay increment current CEO Desmond Kuek receives (if he isn’t considered surplus to requirements by then). And, the public won’t have the benefit of scrutinising SMRT’s quarterly and annual reports if it chooses not to publish them for public dissection.

Can you imagine a social media world where armchair critics don’t get a chance to tuck into this information and hantam the company for fare hikes?

Wait, but doesn’t a Temasek buyout mean that SMRT now belongs to the government? Eh, no lah. The LTA will own the rail assets, while SMRT will run the rail operations. Temasek pays dividends to the Finance Ministry, but it is still a separate entity from the government despite closely-linked operations.

So SMRT stays a private company, but technically it will answer solely to the government machinery.

Is this a good thing, or not?

As the public, and the new “de facto” shareholder of SMRT (we pay taxes lah, dey), we have a right to scrutinise the company’s accounts. But since we don’t actually own any shares, SMRT can choose not to disclose all this information, as described above.

But being a gahmen-yet-not-gahmen entity has its benefits.

SMRT won’t be at the mercy of greedy shareholders out to enrich themselves through higher stock prices. So in theory, SMRT can focus on providing higher service levels to the public without the fat cats pawing at the purse-strings.

The other good thing is sustainability. As the government always says, it likes to plan for  a Singapore in the long term and it will have more leeway to do so without the distractions of the obligations that come with being a listed company.

There is also more leeway for the government to pump in subsidies to improve the state of our transport network, or at least the SMRT-run portions, without the hue and cry that private individuals are enriching themselves on taxpayers’ money.

And, for the critics, can SMRT fare worse than it has over the past two decades?

The Singapore government isn’t known for innovation, creativity or being at the forefront of cutting-edge technology. But it’s recognised globally for being reactive and efficient. Now it has a problem that it needs to react to fix.

How much trust you have in the government will determine whether you see this as a good deal for Singaporeans or another wasteful endeavour.




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