5 Myths About The SMRT Buyout Debunked

By now you would have heard about Temasek Holdings’ offer to take public transport operator SMRT private. Going by the comments and buzz online, we think some people are still hazy about what’s what and what’s going to happen.

via gov.sg
via gov.sg

Here, let us help.

Myth 1: It’s finally happening! SMRT is being nationalized!

Hold your horses folks! If the Government was nationalizing the industry, the Government would be the ones running the train services. In this case, the New Rail Financing Framework (NRFF) will see private operators providing the rail services while LTA takes care of the operating assets (trains, signaling system etc) This is the new way forward and not so much a “long overdue corrective to a major policy mistake”.

Myth 2: Ho sey liao! After the buyout, SMRT won’t need to answer to shareholders.

Don’t play play, SMRT will have to adhere to new Maintenance Performance Standards (MPS) and these KPIs are in place to ensure high reliability and availability (ie time between train incidents and breakdowns). And to meet these enhanced standards, SMRT has to hire even more staff moving forward.

Myth 3: SMRT’s operating license should be shorter! Why not make it 5 or 10 years instead?

LTA will already be shortening operating licenses from 30-40 years under the previous framework to 15 years under the NRFF. The re-tendering will happen even more often and make the industry more contestable. But it shouldn’t be too short a time frame which would erode some of the competitive advantages that come with having a longer operating license.

Myth 4: Buyouts usually come with headcount cuts. How many will be retrenched?

The SMRT management has given its assurance that no SMRT staff will lose his or her job, following Temasek Holdings’ offer to take the public transport operator private. Mr Melvin Yong, Executive Secretary of the National Transport Workers’ Union (NTWU) also posted a Facebook message that the rail operator had given the union assurance.


Myth 5: Don’t say I never tell you – Temasek Holdings will buy SBS Transit too!

Discussions with SBS Transit are still ongoing as to how they would also fit into the NRFF but the last we heard, no one’s buying them out. Don’t quit your day job to be a trader. ;)


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