Moving Millions. Rikkie Yeung. Published by Hong Kong University Press, HKU. For additional information about this book

Transcription

1 Moving Millions Rikkie Yeung Published by Hong Kong University Press, HKU Yeung, Rikkie. Moving Millions: The Commercial Success and Political Controversies of Hong Kong's Railway. Hong Kong: Hong Kong University Press, HKU, Project MUSE., For additional information about this book No institutional affiliation (28 Nov :29 GMT)

2 Epilogue On 12 December 2007, the history of Hong Kong railways turned to a new page. The operation of all railways systems was merged under the MTRC Limited on that day. The KCRC ceased to be a railway operator and was restructured into a government entity holding the KCR railway assets. The MTRC Limited was given a new Chinese name (!"#$% Hong Kong Railways Limited ), aptly reflecting its new status a railway monopoly in the territory. The burden of assimilating the KCRC operation would be immense on the MTRC management. The complex task was compounded by a more restrictive policy environment than before. Meanwhile, commercial pressure was mounting on the MTRC to grow business locally and internationally. Implementation of the merger would probably be the biggest challenge for the MTRC Limited ever since its establishment in the 1970s. The government s railway merger reform was endorsed by the legislature and MTRC minority shareholders earlier that year. In the Legislative Council dominated by pro-establishment politicians, it was not a big surprise for the Railway Merger Bill to be passed with only technical amendments on 8 June The Bill was supported by 32 votes from the DAB, Liberal Party and other pro-government legislators. 20 votes from the Democratic Party, Civic Party and other democrats were against the Bill. Some democrats would have supported the legislation if the amendments they proposed to introduce a penalty system for failures in service, strengthen regulations on safety and performance standards, require installation of facilities such as platform screen doors, set up a new railway development fund, and to restrict new property development rights etc. had been endorsed in the legislature. The government disagreed with the amendments mainly because they would have made the merger less commercially attractive to the MTRC Limited. After the government bill was passed intact, the merger proposal was endorsed on 9 October by over 82 percent of the MTRC Limited minority shareholders attending the special shareholders meeting (though the turnout rate was only 25 percent). The merger conditions were seriously questioned by some minority shareholders and an international advisory service for institutional investors, in particular on the reduction of the Company s fare

3 264 Epilogue autonomy. However, many more individual shareholders eyed the short term capital gains expected on the news of the merger being approved. Before the shareholders meeting, the MTRC stock price was soaring while Chinese capital flooded into the Hong Kong stock market. Another controversial merger condition of minority shareholders concern was the government s increased control over railway property development and future railway financing as explained in Chapter 11. In this regard, the MTRC appeared to gain an initial upper hand at the negotiation table. About a week after the merger in December 2007, the government announced the decision to subsidise the MTRC to construct the Hong Kong Island South Line by way of granting property development rights. Part of the land granted was originally reserved for public housing. This is the old way of railway financing favourable to the MTRC but not sufficiently transparent or accountable to the public. This partly reflects the reluctance of (or inconvenience for) the government to adopt a new way of railway financing, and partly suggests the further enhanced bargaining position of the MTRC monopoly. The MTRC used to enjoy fairly high regard from the community (especially in comparison with the KCRC). Now being a railway monopoly, it would be the sole focus of public attention and scrutiny in railway matters. Unfortunately, just three days after LegCo passed the merger bill in June 2007, a serious incident occurred an Ngong Ping 360 Skyrail cabin fell off during a brake test conducted in non-operating hours. Though no passenger was affected, this was perhaps the worst operational mistake on the MTRC s safety record. The public was shocked. The HKSAR government was embarrassed because Ngong Ping 360 was a major tourism initiative. The international media, which seldom reported on Hong Kong, covered the incident. The government ordered immediate suspension of the cable car system and an expert investigation into the incident. The MTRC set up its own investigation panel. In September 2007, the government reported that criminal investigation was being conducted because the Skyrail staff was suspected to be in breach of the safety legislation for aerial ropeway system. Since the opening of Ngong Ping 360 in September 2006, the performance of Skyrail was so unsatisfactory that the MTRC Limited decided to cease the partnership. The Company internalised the cable car management by acquiring the Skyrail and setting up a new subsidiary company. The re-opening of Ngong Ping 360 was planned for early The incident reminded us why the MTRC forerunners had chosen to internalise all the skills of railway construction and management instead of adopting the possibly less expensive outsourcing approach, a strategy that the Company turned to after the listing. Today, the challenges for the MTRC are far more complex than in the 1970s. The MTRC Limited is a listed company of mixed public-private ownership, mixed legal framework, mixed business in railways and property development, and subjected to conflicting objectives of public interest and

4 Epilogue 265 private profit. It seeks to expand its railway networks and diversify business to a wide range of non-railway matters in Hong Kong as well as overseas where the political and policy environments are diverse. More problematically, a complete merger with the KCRC management, which is of different corporate culture and history as well as operations and railway systems, would take a few years. As explained in Chapter 11, although the merger may facilitate a more integrated railway system in the long-term, the economic benefits of merger will not be tremendous. The government expects the MTRC to ensure that the controversy-plagued history of KCRC will not repeat. Meanwhile, the public, quite rightly, has once again raised its expectations for the MTRC Limited now the railway monopoly to deliver a more accountable, transparent, efficient and reliable public railway system than before.

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