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Hong Kong's Rising Transport Prices Are Still a Bargain


The main English paper in Hong Kong carried an editorial on Friday from a fellow Hongkonger named Jessica, who opposes looming fare hikes averaging 5.4 percent on the Mass Transit Railway or MTR (that's subway to most of you others, and the Tube or Underground to the Brits).

MTR Corp. light rail trains in the Yuen Long area in Hong Kong.
Bloomberg|Getty Images
MTR Corp. light rail trains in the Yuen Long area in Hong Kong.

She writes, "Prices in Hong Kong are increasing because of inflation, so the cost of food, clothes and even electricity is going up. Given these extra financial burdens, the MTR Corp should not have been allowed to increase fares."

Jessica and many others don't seem to realize that rising inflation bears down on companies like the MTR as well, as wage demands, power costs and the cost of materials rise.

Indeed, last month legislators unanimously urged the operator to cancel the fare increase. Labor constituency lawmaker Ip Wai Ming accused the MTRC of being greedy after reporting net profits of $1.9 billion last year, 22 percent higher than 2010. "The MTRC asks for a fare rise despite its hefty profit, but we do not see a similar increase in our wages. This is daylight robbery".

If this is robbery, pick my pockets any day.

The costliest journey on the main network (aside from the high speed train to the airport, and the trains to China) is around $3. Try getting a train in the U.S., Canada or Europe to anywhere for that price.

Just getting into a taxi in Japan will cost you $10 before the cab even starts moving. Fares did go up in each of the past couple years, but both hikes were just above 2 percent, considerably less than the prevailing inflation rate.

The MTRC has not bilked the public. When the economy here went into deflation in the late 90's, it kept fares constant, but later, when the economy reverted to inflationary pressures, they kept fares down. Fares are approximately where they were more than a decade ago.

Last year the government started paying a monthly subsidy of $77 a month to households with income of less than $1,282 per month, meaning lower income families benefit from wealth transfers on top of already subsidized transport fares.

So what about that 22 percent increase in profits which netted them $1.9 billion last year? The MTR Corp CEO Jay Walder told legislators that the fare increase would contribute to a stable financial base needed to support $510 million in maintenance and upgrade costs each year.

There's much to gripe about in Hong Kong - the air, the exorbitant cost of housing, but don't complain about the cost of getting from Point A to Point B. It's one of the biggest bargains out there.

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