Tuesday, March 17, 2015

Singapore Inc. - Taxi

Public Transportation is quite ok in Singapore. Although the reliability could be better, overall, Public Transportation seems to be ok.

I am however not really happy about oligopoly of the public transportation. It seems like the government, PAP, and many of the Temasek owned companies are in cahoots when it comes to making profits from the public.

SMRT and SBS seems like a riskless private company as the infrastructure is paid by the government and they get to keep much profits, raise fares despite breakdowns and lower oil prices. The CEO is an Army general who does not seems to add much value to the company, yet earning millions a year.

The Taxi system seems to be a mess as well. It is even hard to predict how much the trip is going to cost due to ERP and surcharges. The same culprits are in the game, NTUC etc, and taxi operators (almost like a oligopoly) charging taxi uncle about $120 to $140 taxi rental a day. (This adds to about $50k a year) So if a Taxi cost $120k, then the operator can break even in 3 years?

Much of the risk is upon Taxi drivers, the $1000 deposit withheld when they get into an accident, pay rental everyday, and not guaranteed customers. Taxi passengers pay for booking fees and even the booking system is profitable for taxi operators.

The most handworking taxi driver only take home about $2k plus a month. And perhaps the taxi operators can make the same amount per taxi as well because of their high costs? I assume LTA is regulating Taxi, yet allowing the operators to make so much money? Why can't Taxi drivers own their own Taxi?

If the lifespan of a Taxi is 7-8 years, say the cost of taxi is $140k, should the rental be set to around $2000 a month? If there are about 30,000 taxi drivers, they would be able to make easily $1 - $2k a month from the lower rents. This would allow them to save up more as they do not have CPF and other savings yet standard of living in Singapore is high.

It seems like many of these companies that have monopolized the market are just out for profits. They seemed to be run with the public servant mentality -- do as little as possible, just to get by.

I feel that companies that are funded by GIC or Temasek holdings should have a primary focus to better the lives of Singaporeans before making unreasonable amount of profits off hardworking poor Singaporeans.

-- Iron Bowl

No comments: