Difficulties hopping on a bus in rush hour, delayed buses, scarcity of bus frequency – these were some of the complaints voiced by residents that forced the government to revolutionise the bus service in 2011 with a so-called ‘Administration-led’ model, in which the authorities pay the companies to provide service.
Seven years later, on the heels of bankruptcy of a bus operator, controversy about the illegality of bus concessions, and the latest proposed merger of two bus companies, public discontent about the bus service remains – or grows even stronger. But with the expiry of the bus service contracts this month the authorities have so far kept mum on details of the future service, a stance political observers label “irresponsible”. With some condemning the current model as the worst, critics are demanding a bigger say for the public in the future bus service.
Although the service contracts of the city’s three bus operators will expire on July 31, the government has declined to reveal any information as of late June about the future service, reasoning that any announcement could interrupt ongoing discussions with the bus companies. A dispatch from the Chief Executive in mid-April reveals that Secretary for Transport and Public Works Raimundo Arrais do Rosário was authorised to sign ‘amended contracts’ with Transportes Urbanos de Macau S.A.R.L. (Transmac), Sociedade de Transportes Colectivos de Macau, S.A (TCM) and New Era Public Bus Co. Ltd.
This means that the government has no plan to open a tender for the bus service in the near future and that the three bus firms will likely see their respective contracts extended.
“Right now the government doesn’t seem like it has any particular plan for the [future] bus service,” laments legislator Au Kam San. “The attitude of officials is like they are satisfied with the service and always highlight the growth of bus passenger traffic . . . It seems the government only relies upon passenger traffic to assess the success of the service.”
Expressways
Some of the key goals of the current ‘Administration-led’ model are to gradually ameliorate the bus service and attract more people to use public transportation. According to figures from the government, esdaily average bus passenger traffic exceeded 586,000 in the first quarter of this year, nearly two-thirds more than the daily average traffic of over 361,200 in the August 2010 to June 2011 period.
MOP110 million
Total revenue of three bus companies per month
In the face of rising passenger traffic, also linked to the growth in the number of visitors to the city, hopping on a bus has become even more challenging. Official data show the territory received over 32.61 million tourists last year, surging 30.6 per cent from 2010.
“Upon the renewal of the bus service contracts, the government has to think how to further streamline the city’s bus routes and set up more expressways exclusively for buses in a bid to enhance service efficiency,” said Mr. Au.
Apropos the ‘Administration-led’ model the lawmaker commented: “As officials are sitting in the office it is inevitable that the government has fewer insights compared to the operators, which is evident in some of the decisions [made over the past seven years].”
Finance first
Ron Lam U Tou, president of local think tank Macau Synergy Association, is more critical about the current service model, censuring it as “the worst outcome”.
Referring to the recent controversy surrounding raising bus fares, he noted: “The government has raised bus fares for the sake of cutting costs in the budget. But that’s not what the government envisioned when it introduced this model, The model now is the worst: it’s a so-called ‘Administration-led’ model but the social benefits are outweighed by the financial performance.”
The authorities unveiled a new bus fare scheme in April, in which the bus fare paid with cash was raised to MOP6 (US$1.25) from MOP3.2-6.4, while the bus fare paid with MacauPass, supported by government subsidies, was increased to MOP3 from MOP2-3. The government said this could save MOP150 million a year in subsidising the bus companies.
“The model now is the worst: it’s a so-called ‘Administration-led’ model but the social benefits are outweighed by the financial performance,” laments political commentator Ron Lam U Tou.
Under the ‘Administration-led’ model all the bus fares had been originally collected by the government, which then paid the bus companies to run the service. But following a hard-hitting report by the Commission Against Corruption, which also conducts the functions of Ombudsman here, on the conditions of contracts in 2013 all bus fares are now collected by the bus operators, while the government also subsidies the service.
According to information released by the Transport Bureau last year the total revenue of the three bus companies amounted to MOP110 million a month, 28 per cent of which came from bus fares, while 72 per cent came from government subsidies.
Ongoing merger
Mr. Lam complains that the current calculation of subsidies for bus operators is not transparent and fully accurate as the authorities only provide subsidies based upon the bus fare it forecasts the bus companies would receive.
“The government should make changes to this model and consult the public,” he fumed. “But it looks like the government doesn’t plan to make any changes or engage with the public . . . It’s totally irresponsible.”
He noted that it is also “illogical” to approve the merger of TCM and New Era right before the expiration of their service contracts, saying: “The officials have so far failed to explain what social benefits this merger will bring, and [the merger] will definitely give the government less bargaining power during the negotiations for the renewal of contracts.”
“Currently, the public does not have any say in the bus service, a role that should be strengthened and stated in the new service contracts,” says Chiang Chong Fai, president of the Public Utilities Concern Association of Macau.
The Administration announced in May that it had approved the merger of the two bus companies controlled by Chinese state-owned conglomerate Nam Kwong (Group) Company Limited, given the small market size of the city. The merger is expected to be completed before their current contracts expire in July. Neither operator immediately responded to enquiries about the progress of the merger and new service contracts.
“Both TCM and New Era are under the same [business] group so [the merger] will not have any big impact upon the service,” says legislator Leong Sun Iok, urging the government to provide more reasoning behind this merger.
“The government’s decision to enhance the number of bus operators from two to three [in 2011] was to introduce more competition to the market and boost bus service quality,” he said. “It should address clearly whether this [merger] . . . could harm public interests.”
Negligent
The legislator acknowledges, though, that there is not really any competition between the bus operators under the ‘Administration-led’ model, and that the companies do not have any incentive to improve the service given the government subsidies.
“The authorities should promptly announce the details of the renewal of the bus contracts and explain whether there will be any new clauses to boost the service,” he concluded.
Chiang Chong Fai, president of the Public Utilities Concern Association of Macau, suggests the government temporarily extend the contracts of the bus operators for a short period of time so that there will be more time for public consultation. The government temporarily renewed the contract of New Era for 13 months last June so that the contracts of the three bus companies would expire this July 31.
“Under the current service model, the bus companies surely want to make as much money as possible while the government hopes to spend as little as possible [on subsidies],” reasons Mr. Chiang. “Thus, the opinions and ideas of the users – the public – are often neglected.”
Referring to the controversies of bus fare hikes and the changes of bus routes – such as starting/ending the No.25 service from Coloane Village rather than the terminus in Hac Sa Beach which it had originally served for many years – he noted: “These show the government only wants to save costs while ignoring the demands of the public.”
The success of the bus service, in his opinion, lies in public participation, acidly observing that “currently, the public does not have any say in the bus service, a role that should be strengthened and stated in the new service contracts.”
Rollercoaster ride
Before and after its debut in August 2011, the ‘Administration-led’ bus service model has encountered one problem after another over the years – from the bankruptcy of a bus operator to the illegality of concessions.
September 2009 — Government opens tenders for city’s bus service following expiry of exclusive concessions of Transportes Urbanos de Macau S.A.R.L. (Transmac) and Sociedade de Transportes Colectivos de Macau, S.A (TCM). The new service is slated to start on October 1, 2010
2009-2010 — Three bus companies – Transmac, TCM and Reolian Public Transport Co. – submit bids for service but TCM bid submitted four minutes late and rejected by tender committee. Bus company takes case to court, dragging out launch date of new service
August 2010 — Transport Bureau reveals government intends to grant part of service to TCM through direct negotiations, keeping number of bus operators at three while avoiding further delays in new bus service; TCM accepts government decision and withdraws case from court
August 1, 2011 — New bus service launches with three operators, and government hopes so-called ‘Administration-led’ model, in which bus operators are paid by government to run service, can resolve some lingering bus service problems
2011-2012 — Mounting public criticism directed at Reolian for sub-par service and accidents
June-July 2012 — Three bus companies propose increasing bus service charges government pays but request suspended given public criticism
February 2013 — Government resumes handling requests for bus service charge hikes from TCM and Transmac due to improving services, while Reolian’s request continually put on hold
May 2013 — Reolian reports losses of MOP4 million (US$250,000) each month
May 2013 — Commission of Audit publishes strongly worded report detailing mismanagement of Transport Bureau regarding bus service, namely supervision of bus frequency and bus fares
June 2013 — Commission Against Corruption, which also conducts functions of Ombudsman here, probes cases in which bus operators paid by government without providing bus fare records
October 2013 — In wake of Reolian bankruptcy government assumes operation of troubled operator until it finds interested party to take over operation
November 2013 — Corruption watchdog releases hard-hitting report declaring current bus service system ‘illegal’; demands government makes changes reasoning city’s law only allows private companies to operate buses under public service concessions not service provider contracts
July 2014 — A new bus company under Chinese state-owned conglomerate Nam Kwong (Group) Company Limited, which also controls TCM, assumes operation of Reolian, renamed New Era Public Bus Co. Ltd.
September 2015-January 2016 — Government signs amended contracts with TCM and Transmac in accordance with suggestions of corruption watchdog
May 2017 — Government shortens popular Bus Route No 25, in which the final stop in Coloane is changed from Hac Sa Beach to Coloane Village despite much public dissatisfaction
June 2017 — New Era contract extended for further 13 months until July 31, 2018 so that contracts of city’s three bus operators expire at same time
September 2017 — Government reveals intention to hike bus fares
April 2018 — Bus fare hike confirmed and implemented despite pubic dissatisfaction
May 2018 — Government reveals it has approved merger of New Era and TCM under state-owned conglomerate Nam Kwong
Sources: Archives, Transport Bureau, media reports
From profit to loss
The city’s three bus operators have returned varying financial performances under the current ‘Administration-led’ model, according to their latest financial reports published in the Official Gazette.
Transportes Urbanos de Macau S.A.R.L. (Transmac), chaired by Liu Hei Wan, sibling of Executive Council member Liu Chak Wan, is the best performer, reporting profit after tax of MOP46.56 million (US$5.82 million) in 2016. The result was even better than in 2010 – the last full year before the government introduced the ‘Administration-led’ model subsidising bus companies – when profits stood at only MOP14.83 million.
Sociedade de Transportes Colectivos de Macau, S.A (TCM), controlled by state-owned conglomerate Nam Kwong (Group) Co. Ltd., reported a loss of MOP3.41 million in 2016 citing rising labour costs despite more revenue from new routes. This was in stark contrast to 2010, when TCM recorded profits after tax of MOP29.04 million.
Another bus operator under Nam Kwong, New Era Public Bus Co. Ltd., which took over the bankrupted Reolian Public Transport Co., successfully turned the loss-making business around. It reported profits of MOP20.92 million in 2016, up by more than 58 per cent from MOP13.19 million in the previous year.
