Rolling bridges

HK’s sub­way op­er­a­tor has a big­ger role to play in build­ing and link­ing com­mu­ni­ties than just trans­port­ing mil­lions of com­muters, MTRC chief Lin­coln Leong tells So­phie He.

China Daily (USA) - - FRONT PAGE - Con­tact the writer at so­phiehe@chi­nadai­

Oper­at­ing a sub­way sys­tem is more than just trans­port­ing mil­lions of com­muters each day. It’s also a mat­ter of link­ing and build­ing com­mu­ni­ties.

MTR Cor­po­ra­tion (MTRC) — Hong Kong’s sub­way op­er­a­tor — is not just about con­vey­ing mil­lions of peo­ple a day. Its sig­nif­i­cance is in build­ing and link­ing com­mu­ni­ties, says Chief Ex­ec­u­tive Of­fi­cer Lin­coln Leong Kwok-kuen.

Con­nect­ing com­mu­ni­ties is the ser­vice the com­pany pro­vides, and with it comes a high qual­ity of ser­vice.

Since its es­tab­lish­ment 41 years ago as a gov­ern­men­towned statu­tory body to meet pub­lic trans­porta­tion needs in one of the world’s most con­gested cities, MTRC now moves more than 5 mil­lion pas­sen­gers each day in Hong Kong, tak­ing up nearly half of the city’s pub­lic trans­port mar­ket share. It has also spread its wings around the world, hav­ing won deals to op­er­ate rapid tran­sit sys­tems in ma­jor cen­ters, in­clud­ing Bei­jing, Shen­zhen and Hangzhou on the Chi­nese main­land, Lon­don and Syd­ney.

The com­pany’s ser­vice de­liv­ery, which is de­fined by its on-time per­for­mance, is 99.9 per­cent, says Leong. What it means is that a com­muter, who trav­els to and from work ev­ery day, would only en­counter a five-minute de­lay over a pe­riod of twoand-a-half years’ com­mut­ing and that, in many ways, is a lead­ing world stan­dard, he ex­plains.

Be­sides bridg­ing com­mu­ni­ties, MTRC builds them. It comes back to the com­pany’s busi­ness model, which is the “rail and prop­erty” model that cov­ers rail de­vel­op­ment and all res­i­den­tial projects atop and ad­ja­cent to MTR sta­tions and de­pots, says Leong.

“Over the past 30 or 40 years, we have com­pleted more than 40 very large scale projects in Hong Kong. So, it’s bring­ing com­mu­ni­ties to­gether through a high qual­ity rail-trans­port net­work, as well as build­ing com­mu­ni­ties which would be lever­ag­ing our rail and prop­erty model, and I think these are our key con­tri­bu­tions to the peo­ple of Hong Kong.”

Go­ing for­ward, Leong says, MTRC’s three-pronged strat­egy is to sup­port its vi­sion of con­nect­ing and grow­ing com­mu­ni­ties. First and most im­por­tant is en­hanc­ing its busi­ness lo­cally. Se­condly, build­ing up its brand rep­u­ta­tion in and out­side of Hong Kong; and thirdly, grow­ing its busi­ness be­yond the city.

In terms of the com­pany’s con­tin­ued growth in Hong Kong, “Rail Gen 2.0” is a big part of that, he says, ex­plain­ing that it’s the next gen­er­a­tion of MTRC’s net­work de­vel­op­ment.

To­ward this end, the com­pany is build­ing four new rail lines — the Ex­press Rail Link, the Kwun Tong Line Ex­ten­sion, the South Is­land Line East and the Sha Tin to Cen­tral Link. It’s also striv­ing to im­prove its ex­ist­ing net­work in Hong Kong.

“We’re buy­ing new trains, there’s a lot of talk about the 93 new trains. Mean­while, we are re-sig­nal­ing eight lines in to­tal. If you in­clude the work we are do­ing for the Sha Tin to Cen­tral Link, that would add more ca­pac­ity by re-sig­nal­ing, we can run trains more fre­quently, which would add about 10 per­cent ca­pac­ity on each of the lines be­ing re-sig­naled.”

Grow­ing prop­erty base

Cur­rently, the rail net­work cov­ers about 220 kilo­me­ters, in­clud­ing the light rail net­work, with more than 50 kilo­me­ters to be added by “Rail Gen 2.0”.

Grow­ing in Hong Kong also means grow­ing MTRC’s prop­erty busi­ness. The com­pany has 13 shop­ping cen­ters with roughly 2.5 to 3 mil­lion square feet of rentable space. Ac­cord­ing to Leong, the shop­ping cen­ters would grow by 40 per­cent over the next five to six years.

There will be two new shop­ping cen­ters — one in Tai Wai and the other at LOHAS Park. There will also be an ex­ten­sion of the shop­ping cen­ter on Ts­ing Yi, plus ex­tend­ing that at Telford. On top of that, MTRC has teamed up with de­vel­op­ers as part of its rail and prop­erty busi­ness model to build new res­i­den­tial apart­ments.

“Over the next five to six years, we’ll be build­ing some 16,000 flats that will be de­liv­ered to the mar­ket. There are sites that had been ten­dered out in the past 18 to 24 months, and we’ll be work­ing with var­i­ous de­vel­op­ers to build those, thus giv­ing a big boost to Hong Kong’s res­i­den­tial hous­ing sup­ply as well.”

On the cor­po­rate side, strik­ing a bal­ance be­tween dif­fer­ent stake­hold­ers has al­ways been a task for MTRC, Leong ad­mits.

“One of my pre­de­ces­sors said the com­pany has two ‘birth cer­tifi­cates’. One says we are to pro­vide a high qual­ity trans­port sys­tem in Hong Kong, while the other, which came af­ter the com­pany was listed as a com­mer­cial en­ter­prise, is to achieve rea­son­able re­turns for share­hold­ers.”

But Leong be­lieves that, over­all, the com­pany has man­aged to bal­ance the in­ter­ests of var­i­ous stake­hold­ers rea­son­ably well.

Firstly, there’s a bench­mark rule for all the ma­jor met­ros around the world. One of the key fac­tors is af­ford­abil­ity in terms of the cost of a jour­ney for a pas­sen­ger as a per­cent­age of com­muters’ medium house­hold in­come.

Most af­ford­able sys­tem

In this re­spect, MTRC runs one of the most af­ford­able metro sys­tems in the world. An­other fac­tor is its fare struc­ture verses lo­cal in­fla­tion, as well as the in­crease in the medium house­hold in­come.

“From 2008 to 2015, our fares had risen by an av­er­age of only 2.9 per­cent an­nu­ally. Hong Kong’s in­fla­tion rate was 3.5 per an­num, and the av­er­age house­hold in­come had gone up by 4.6 per­cent per an­num.”

Leong says that, from that per­spec­tive, af­ter 2008, when the fare ad­just­ment mech­a­nism was in place, it has achieved its pur­pose, with fares hav­ing been raised be­low the in­fla­tion rate and house­hold in­come. This en­cour­ages and pushes MTR to be more ef­fi­cient.

The fare ad­just­ment mech­a­nism was in­tro­duced af­ter the “rail merger” in 2007, re­plac­ing the fare au­ton­omy MTRC had hith­erto en­joyed. In short, the com­pany can ad­just its fares ac­cord­ing to a for­mula based on pub­licly avail­able sta­tis­tics.

MTRC has agreed to an early re­view of the mech­a­nism, so a re­view will take place a year ear­lier than sched­ule.

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