Friday, March 23, 2007


I was at a seminar today, on the topic of regulation and competition. The seminar was keynoted by Mr Lam Chuan Leong, who was very impressive throughout the seminar. He spoke with great clarity, cutting aside through all the chaff to strike at the main point of the matter, and sprinkled interesting anecdotes liberally. Basically, a very impressive person!

Anyway, his responses aside, one other speaker's point struck me. This person commented that Singapore had a very interesting system of liberalisation without privatisation and offhandedly remarked that this was "contrived competition". Now, Mr Lam noted that even if two competitors were Temasek-owned, they nonetheless competed vigorously - a point which I tend to agree with.

But I had another thought. See, I was in UK when the train network when down due to poor maintenance. Some commentators had noted that the failures had come X years after privatisation, and that X happened to correspond to the maintenance cycle of the tracks. Combined with evidence of sloppy maintenance of the tracks, it pointed to privatisation and resultant cost cutting pressures as the reason for the breakdowns.

So I'm thinking that in any privatised system which forms part of the national infrastructure, this is a serious problem. That is, every private company, profitable or not, experiences cost cutting pressures and is tempted to chop some basic maintenance off. And the advantage of having a GLC owning it is, the GLC is just a teeny weeny bit more invested in making sure these bad things don't happen to the infrastructure.

Just a thought...

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