Opening Rail Lines to New Operators

Mr Chua Kheng Wee Louis asked the Minister for Transport for upcoming rail lines, whether there are any plans to open the rail market to new operators beyond the two existing operators.

Mr Speaker, ensuring contestability in our rail system is an important consideration for us. Contestability will help spur operators to improve standards and put in more competitive tender bids. Therefore, when we introduced the New Rail Financing Framework in 2016, one of the changes was to shorten the licence period for rail operators from over 30 years to 15 years today.

However, we also need to consider the unique circumstances and characteristics of the rail industry. The rail industry is a highly complex and large-scale system that delivers an essential service. So, we must allow for operators to reap economies of scale even as they maintain high reliability and service standards. So, any decision pertaining to current and new rail lines, will have to continue to balance these key considerations.

Thank you, Mr Speaker. I have just got two quick supplementary questions for the Minister. The first is in relation to my original Parliamentary Question. Am I right to understand that, at this moment, there are no plans to actually bring in potential foreign players to enter the market, just like what the Government did when it comes to the bus business?

The second clarification is, I do hear the Minister's point on the large-scale system, that is, the MRT networks and all. So, given the requirements for economies of scale and efficiencies at the same time, if we are not bringing in the foreign players, would the Government also consider perhaps having just a single operator to manage the entire rail line to achieve those economies of scale?

Mr Speaker, I thank the Member for his questions. In his two questions, I think he has actually traversed the entire spectrum of what could be the industry structure – from a monopoly to competitions. I am not quite sure where he is on the spectrum. But anyway, let me endeavour to respond.

First, we want to really promote competition because of the beneficial impact that it can have – what I have already explained. There is no reason to think, as of now, the equation has somehow shifted in the direction of going towards consolidation.

So, specific to the Members' second question, these are all policy design. So, policy design, as I have emphasised in some previous responses, must be informed by data and the experience and also the evolving circumstances. But, as of now, we think the balance is right in terms of between the need for scale and the benefits that go with it, as opposed to also the desire for greater competitiveness and contestability in our rail system.

As for the involvement of foreign players, I think the way the Member has framed it perhaps may not be an entirely correct characterisation. As I have said, first of all, we have not ruled out, but neither do we have any particular set of considerations that impel us in this direction of bringing in a completely new operator. However, for foreign players to come in, there are other mechanisms. So, for example, through partnerships with local players, so that they can share their expertise and also for some co-mingling of ideas and so on. And that is something that LTA remains open to.