Singapore’s train duopoly SMRT halted stock trading today and market speculators are saying that the government Land Transport Authority (LTA) will be announcing a takeover of assets, including the trains and buses.
Under the new Rail Financing Framework introduced in late 2015, SMRT will have the option to sell all its trains, buses and other physical assets to the government under a market value of S$2.4 billion. The nationalisation of the public transport company will be a U-turn policy of the Singapore government after it first privatised the company sixteen years ago in 2000.
Singapore’s sovereign wealth fund company Temasek Holdings currently hold 55% of SMRT shares and is likely to profit immensely from the sale to the Singapore government. However, the payment made in current taxes by the LTA will end up going to the national reserve, which is unknown even to the President, through Temasek Holdings. Temasek Holdings reportedly lost over 9% or S$24 billion in the most recent financial year. The sale will boost Temasek Holdings’ profits, saving face for its CEO, the wife of Prime Minister Lee Hsien Loong.
SMRT have been burdened with unsolved breakdowns happening as frequent as fortnightly. Recently the company and the Transport Ministry faced heavy criticisms for covering up the return of 26 defective China-made trains. SMRT CEO Desmond Kwek, a former army general parachuted into his position, may be fired.