When the Government and its Ministers and Wives Are in Business, Business Comes First Not Consumers

State-owned ( but actually Ho Ching-controlled) CNA reported yesterday on a new Bill (the Point-to-Point (P2P) Passenger Transport Industry Bill) tabled in Parliament to regulate the private car-hire industry.

I was immediately struck by a sentence near the end of the report which said that LTA intended to regulate not only the operators but the fares they could charge. According to LTA, this was to prevent operators from artificially lowering prices to gain market share.

Regulating prices when there is a natural monopoly created by economies of scale or high barriers to entry may be necessary. This is typically the case for utilities like water or power generation though even in these cases there is more scope for competition than may be immediately obvious. In any case the regulator normally seeks to prevent companies raising prices by for instance setting a price cap.

It is difficult to see why the LTA and the Competition Commission of Singapore (CCS) would want to prevent operators from lowering prices. In a competitive market firms lower prices to gain market share. They are able to do so because they are able to gain an efficiency edge over their rivals through innovation and productivity gains. LTA now wants to prevent this from happening.

However their ostensible rationale for doing so is suspect. A company may attempt to gain a monopoly by lowering prices, making its competitors unable to earn a profit and driving them out of business. It may be able to do so because it has deep-pocketed shareholders who are willing to absorb the short-term pain or because it is more efficient. However if it then raises prices it risks new entrants to the market. Where barriers to entry are low then a seeming monopolist with a very high market share may not actually have that much pricing power because any price rises will within a short space of time lead to new competitors and an erosion of market share.

This is probably the case with the ride-hailing industry. Though Uber initially had very high market shares this quickly attracted local competitors in markets like China and India. In China Uber eventually ended up selling out and taking an equity stake in its competitor. Despite its retreat it is still not profitable and faces new competitors in its major markets such as the UK as well as EU restrictions driven more by a desire to hobble American tech firms in favour of local ones.

As Singaporeans are aware Uber also sold out in Singapore in the face of competition from Temasek and Softbank-backed competitor Grab. The CCS made a feeble attempt to prevent the merger but the companies treated them with contempt and went ahead. As a result of the loss of competition both riders and drivers have suffered as the merged entity has a near-monopoly. It is not clear whether the Indonesian ride-hailing firm Go-Jek can be an effective competitor.

So the LTA regulations seem aimed more at ensuring that there will be little or no competition for Grab and the taxi operators, most of which are either Government or PAP-owned (through NTUC). Uber’s retreat has been bad for consumers in Singapore and the new regulations will make it worse. Singaporeans will end up with the usual oligopoly with the hidden hand of the Government so as to maximise prices and profits for the companies it owns or for the PAP-associated companies like Comfort Delgro which has several ex-PAP MPs and connected parties on its board.

We do not know how much Temasek owns of Grab but clearly it has a vested interest in maximising its profit and thus boosting its share price prior to flotation. We also do not know who the other shareholders are though it seems reasonable to suspect that well-connected members of the PAP elite may have been early investors. Though the Government refuses to disclose how much or under what formula Ho Ching is paid maximising the value of Grab and shoring up the profits of the taxi operator (SMRT) it owns would boost the profits of Temasek and it is safe to assume would increase Ho Ching’s earnings.

So forgive me for my cynicism if I suspect that the LTA, like other Government agencies, is not motivated primarily by the welfare of Singaporeans but by the interests of Government or PAP-controlled companies and, indirectly, the members of the PAP elite who have appointed themselves to run them. And at the top sits the PM’s wife. Lets only hope that one day we can clear the fog of disinformation and fakery that the Lee family have erected. My dad was fond of wearing a T-shirt which said: “And ye shall know the truth and the truth shall set you free” (John 8 v.23):

(Coincidentally those words are the unofficial motto of the CIA and inscribed into the wall at CIA HQ at Langley.) Hopefully Singaporeans will not have to wait till the end of the world to know the truth even though it feels as though the PAP will still be in office then and a member of the Lee dynasty sitting on the throne.

 

Kenneth Jeyaretnam

* The author blogs at https://kenjeyaretnam.com/.

 

 

 

 

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12 Responses to “When the Government and its Ministers and Wives Are in Business, Business Comes First Not Consumers”

  • NotMyProblem:

    Now I see why prices only go up and never come down, that was because someone is controling it and ensure prices can only go up.

    For the 70%, are you smart enough to realise how it affects use? You still get it?

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  • PAP HUM KA CHAN:

    They have been doing this for many decades. If they could they would want to own other countries too.

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  • Rabble-rouser:

    Amusing! The Global Economy is sailing into unknown waters! But one clear implication going forward will be one huge global discontuity: A LOSS OF PERMANENT JOBS! There will be loads of unemployment & a loss of spending power!
    Smart Technology, Artificial Intelligence, Robotics & Automation which are replacing human inputs & hollowing out the various working class stratas including White-collar workers all the way to Upper Middle management.
    Deutsche Bank just laid off 18,000 staff worldwide. And that was just the beginning when you consider the rapid developments in fintech, in technological intermediary platforms like peer-to-peer lending or crowdfunded investing, in Cryptocurrency trading & payments, non-bank cashless payment system, etc.
    One clear feature of the Internet were the Price Discovery mechanism, and the others more ominous, Deflationary Price process & Low Cost Structures using technology. Combined altogether, you would realised that high cost structure eco-systems like S’pore’s are like dinosaurs facing mass extinction.
    Ride-hailing through ride-share apps were just work of last resort for local underemployed/unemployed. But with Autonomous technology just round the corner, it’s going to be extinct soon, then what?
    And as more & more permanent jobs are lost to robots & automation; you think people would have money to hail rides even if it is cheap?
    No one really thinks of these implications because S’pore people are just too busy with their lives to even comprehend the future. But these emerging developments are just round the corner. By the time you realised it, it will be already too late.

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  • He says She says:

    “The relationship between husband and wife should be one of closest friends … Equality may be a fiction but nonetheless one must accept it as a governing principle … A bitter thing cannot be made sweet. Although the taste of anything can be changed, yet poison cannot be changed into nectar … So long as you do not achieve social liberty, whatever freedom is provided by the law is of no avail to you … The Constitution is not a mere lawyers’ document; it is a vehicle of Life, and its spirit is always the Spirit of the Age … If I find the Constitution being misused, I shall be the first to burn it.”

    (Babasaheb Ambedkar, Founding Father of the Republic of India)

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  • Singaporean Kong Come.:

    @PAP HUM KA CHAN:
    They have been doing this for many decades. If they could they would want to own other countries too. Their big fat salary for the past decade never ever come down, even now we r facing depression. they themselves enjoying their fat salary, want U people to work till drop dead. They never has any retrenchment or jobless cases. Only those 80%stupid daft people enjoy retrenchment n jobless.

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  • nothing new:

    pap lies everyday.

    cannot remember even once pap did not lie.

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  • They tried, we lose money.:

    You are right. They tried with our money, buying land and buildings.

    Then they were surprised that they could not change the laws there. In those places, even little mayors are more powerful than the super powerful top one here.

    So we lost our hard earned money.

    PAP HUM KA CHAN:
    They have been doing this for many decades. If they could they would want to own other countries too.

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  • Kong Kong Come Come:

    Yup, investments in India, China. Shares in British and Australian companies. I’m sure there’s more. It’s preety ambiyious for a small nation to gun for world domination.

    They tried, we lose money.:
    You are right. They tried with our money, buying land and buildings.

    Then they were surprised that they could not change the laws there. In those places, even little mayors are more powerful than the super powerful top one here.

    So we lost our hard earned money.

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  • Kong Kong Come Come:

    That’s the perks of being an elite. The rest are just there to take orders.

    Singaporean Kong Come.:
    @PAP HUM KA CHAN:
    They have been doing this for many decades. If they could they would want to own other countries too. Their big fat salary for the past decade never ever come down, even now we r facing depression. they themselves enjoying their fat salary, want U people to work till drop dead. They never has any retrenchment or jobless cases. Only those 80%stupid daft people enjoy retrenchment n jobless.

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  • TruBlu:

    YES,THE TRUTH WILL SET YOU FREE from $lavery to greed and other evils.

    Jesus Christ taught this,so did Buddha and other good Teachers WHO passed by this WAY.

    THE ONLY CERTAINTY IN LIFE IS DEATH.
    THE ONLY THING THAT CAN SET US FREE IS TRUTH.

    BE NOT AFRAID and be guided by the TRUTH.

    THE DEVIL IS THE GREATEST DECEIVER,LIAR.

    by and by,when you go meet your MAKER,you can tell NO MORE LIES!

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  • Bobo:

    TruBlu, guess most electorates also lies like nobody’s business. Do you agree? Most said they cast their votes to support opposition party, but the results told the truth.

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  • IAM:

    The truth is more than a truthful utterance and sometimes a truthful utterance may not be a good thing under adverse circumstances.
    The truth is I AM. I AM the truth, the way and the life. Many lived by the words of Jesus and treated him like great prophet or a divine being. Peter, son of Jonah, was the only exception(when that happens) who saw a rock. Peter was NOT the rock. He saw a rock, not a great prophet. It is upon this rock, upon Peter’s revelation of Christ, the gates of hell will not prevail.

    In Hebrew, the name Jonah means Dove(peace). Son of Jonah means seed of peace.

    If Christianity was premised on “this rock”, the gates of hell would have collapsed.

    But instead, Christianity is a money cow for donations/tithes to serve… mammon or the Man of Sin.

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