Review of MTR Fare Adjustment Mechanism

174.         The MTR Corporation Limited (MTRCL) is a public utility of which the Government has a shareholding of about 77%. Although a listed company, the MTRCL is not just another private enterprise. Over the years, it has been supporting the development of the Government's mass transport policy, and is granted the right to carry out property development projects above stations along railway lines. We fully understand the public expectation that, with railways as the backbone of our public transportation system, the MTRCL should run its business in a prudent and fair manner, provide fast and convenient services, and charge reasonable fares.

175.         In accordance with the Operating Agreement signed in 2007, the Government is conducting a five-yearly review of the Fare Adjustment Mechanism with the MTRCL. Our objective is to incorporate service performance and profitability of the MTRCL, as well as public affordability as additional factors for consideration in the Fare Adjustment Mechanism. These are factors the Government has taken into account when considering fare adjustment proposals put forth by franchised public transport operators. We believe the MTRCL should be no exception.

176.         We hope that the Government and the MTRCL will arrive at a "win-win" agreement in the early part of this year so that the community can share the fruit of MTRCL's success, whilst laying a more solid foundation for the next stage of strategic development.

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