Kaohsiung MRT bleeds cash

I’ve been wondering if we would hear anything about the Kaohsiung MRT system during this election cycle, and here it is.

The Control Yuan is investigating the finances of the Kaohsiung MRT, and it has found that the KMRT is hemorrhaging money.  In the year that it has been open, the KMRT has lost NT 7b, and it is quickly running out of cash.

KMRT is officially a private business, but it is, of course, closely tied to the city government.  If the private business goes bankrupt, the city government will be left to bail out the mess.  So if the KMRT runs out of cash, fails to pay bondholders, or something else, the taxpayers can’t just ignore it as if it were a bank. [1]

The Control Yuan doesn’t seem to be accusing anyone of wrongdoing.  The basic problem is simply that not enough people are riding the KMRT so revenues are too low.  (The KMRT is a beautiful system, with gorgeous architecture, nice, shiny trains, and lots of elbow room.  But while having the whole train to yourself can be enjoyable, it makes for a financial disaster.)  I’m not sure whether the population density is too low, the lines were built on the wrong routes, people don’t habitually take mass transportation in Kaohsiung, or people simply haven’t adjusted their lives and transportation habits around the KMRT yet.  It might be something else, too.  However, the Kaohsiung MRT is clearly not part of the everyday lives of Kaohsiung residents the way the Taipei MRT is.

Anyway, one thing I have learned from Taipei politics is that the MRT has political consequences.   On the positive side, you get to spread around lots of contracts worth trainloads of money constructing the system.  On the negative side, once it is built, only negative political credit is possible.  If the system operates perfectly and makes a profit, no one gives you credit.  (Example: Does Mayor Hao get any credit because the Taipei MRT is rolling in profits?  Of course not! )  However, if anything goes wrong, the blame is swift and sharp.  The MRT is a tangible issue that voters can see and understand.  We might not understand the intricacies of health care reform, but everyone can understand a derailed train, a crowded and dirty station, a corruption scandal, or a construction delay.

So I expect to hear a lot more about the Kaohsiung MRT over the next two months.  I don’t think this will be sufficient to derail Chen Ju’s re-election bid, but it might eat into her margin significantly.


[1] That was intentional.

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7 Responses to “Kaohsiung MRT bleeds cash”

  1. Klaus Says:

    The main problem is that there are too many scooters on the road and gas is too cheap. As long as nobody feels the need to turn off the motor when waiting at a red light for more than 60 seconds, gas is too cheap.

    I recently went to Cambodia, a poor country with very low wages. Gas is more expensive there than in Taiwan!

    But forcing Taiwanese to give up their scooters would be akin to imposing a general speed limit on German highways, i.e. political suicide.

  2. Okami Says:

    The problem is that it’s more inconvenient to take the MRT than to use a scooter or car. K-town isn’t as dense and crowded as Taipei. When you look at the Taipei MRT, you can make a very good argument about where each line stops and starts. I doubt you could do that with the K-town MRT.

    Your car space in K-town is also easier to find and a hell of a lot cheaper than Taipei.

  3. Henry Kim (office) Says:

    This is a fascinating point you are making. Remember that Shugart argues that pork is different from clientelism or corruption because it generates public goods?

  4. frozengarlic Says:

    Henry, I’m not sure which fascinating point I am making. Maybe you could flesh that out a bit.

    One of the things I keep thinking about is that if I were to blow a lot of money, I would rather burn 7b operating a money losing MRT system than 9.5b on a one-time flower festival. But that’s just my preference, and the MRT will likely continue to lose money next year and into the future. That doesn’t mean it isn’t worth it.

  5. Islander Says:

    I heard the buses in Tainan are not doing well either with very low ridership. The locals don’t seem to like the buses or public transportation. I think the mentality toward public transportation is just different in the South. It’s the how people in LA don’t like public transportation but people in NY rely on it. The density of the cities make a big difference.

  6. hai_tien Says:

    I would be curious to know how long it took the Taipei MRT to start turning in a profit. IIRC, the system was under-utilized during its first couple of years. I found some info on ridership, though nothing on revenues:

    http://www.trtc.com.tw/ct.asp?xItem=1058535&CtNode=24549&mp=122031

    Personal anecdote: I remember taking the Danshuei line to and from school back when it first opened, where you could easily find open seats even during rush hour. More than one taxi driver called the whole MRT project a boondoggle that should have been spent on new freeways (where have I heard that before?)

    It took a few years before more people started riding the Taipei MRT, spurred no doubt by the reduction in fares, the implementation of the EasyCard system, which made MRT/bus transfers much easier (anyone remember the paper transfers you had to stamp yourself coming out of the MRT station?), as well as new residential and commercial developments along the lines. It’s possible that the recent exodus of Taipei-ites into the suburbs serviced by the MRT might also have had an impact.

  7. Steven Crook Says:

    Nobody has mentioned what I believe to be a major factor cutting into public transportation use in south Taiwan – weather.

    It seldom rains in the south between October and May and it’s usually warm, so scootering is a pleasure. It’s often plenty hot, so people don’t want to wait at bus stops or walk more than the 20m or less between their parked scooter and the shop/office they’re heading to.

    Steve
    http://bradttaiwan.blogspot.com

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