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On December 12, 2007, the history of Hong Kong railways turned to a new page. The operation of all railways systems was merged under MTRC Limited. The KCRC ceased to be a railway operator and was restructured into a government entity holding the KCR railway assets. Today, the challenges for the MTRC are far more complex than they were in the 1970s. MTRC Limited is a listed company of mixed public-private ownership, mixed legal framework, mixed business dealings in railways and property development, and it is subject to conflicting objectives of public interest and private profit. It seeks to expand its railway networks and diversify business to a wide range of non-railway matters in Hong Kong as well as overseas where the political and policy environments are diverse. More problematically, a complete merger with the management of the KCRC would take a few years.

Part III of this book compares the experiences of the MTRC and the KCRC in new railway and property development. This chapter compares the strategies and experiences of new project governance of the MTRC and the KCRC. Differences in project management strategies and political situations account for the KCRC's public controversies in railway projects. Both corporations went through an internationally unique experience during the Sino-British row over new railways; and they did not deal with those challenges in the same way for different reasons. In particular, both the Airport Railways and West Rail cases were related to Sino-British diplomatic tensions over Hong Kong's political transition but handled very differently.

The book examines the struggles to success, and the controversies and dilemmas of the Hong Kong railways through the political-corporate history of the MTRC and the KCRC. In many ways, this history of Hong Kong railways reflects the socio-political struggles of the city during its modernisation over the past three decades. People in this exciting city are always busy catching up with fast-changing developments. But somehow similar issues and problems keep repeating themselves. The rest of this chapter explains the relevant analytical framework and concepts adopted in this book, the book's structure and outlines the critical issues affecting Hong Kong railways. The analysis and evaluation in this book focuses on the perspectives of the public interests of railway governance.

Part II of this book contrasts the organisational history of the MTRC and the KCRC with a focus on their corporate governance arrangements and issues. This chapter compares the establishment, legal-formal governance arrangements and a history of organisational transformation of the two railway corporations. It explains that a basically similar legal-formal model was applied to both the MTRC and the KCRC but specific government policy differences put the two corporations on different paths in the years to come. Four specific topics are discussed: the historical public debates on the organizational transformation and corporate governance from the 1970s to the new millennium; how the MTRC model was adopted and modified in the establishment of the KCRC in the early 1980s; the year 2000 when the MTRC was restructured into a listed company; and the formal mechanisms of accountability and public control of both railways.

This chapter gives a parallel review on the controversy-plagued corporate governance of the KCRC. It argues that the operating environment and tasks of the KCRC were indeed not the same as the MTRC due to differences in the specifics of government policies. The KCRC corporate leadership also responded differently in meeting the various internal and external challenges, which sometimes created controversies and even scandals. This discussion contrasts the experience of the KCRC with that of the MTRC as regards to business focus, financial history, board governance, and corporate leadership and highlights three major public controversies in its corporate governance.

This chapter highlights the challenges to their profitable property development model especially in the last few years, the emergence of environmental issues in new projects since the late 1990s, and how different responses from the MTRC and the KCRC led to contrasting outcomes. Their extensive involvement in both railway and property development had profound impacts on the urban and rural environments in Hong Kong in both positive and negative ways. As in other aspects of corporate and project governance, the KCRC experienced more controversies whereas the MTRC turned some of the public concerns into its own business interest.

The main themes of Part IV concern how the MTRC and the KCRC confronted operational challenges and handled the social benefits and costs in relation to the passenger interests. This chapter looks into the evolving politics in three aspects of passenger interest: railway fares, passenger choice through competition, and passenger convenience through collaboration among railways and other transport operators. The discussion recounts the political tug-of-war on fare autonomy, how and why in recent years the government tried to change the policy that it had defended for decades, and changes in the politics of transport competition and collaboration. Again, the MTRC and the KCRC did not always respond to the challenges in the same way.

Part V of this book reflects on the past and looks to the future. This chapter concludes the book with the key factors explaining the differences between the MTRC and the KCRC. It discusses the dilemmas of the current railway model, introduces key reform options gleaned from international experience and finally examines the intriguing politics and challenges of the “merger” reform. The discussion reflects on how the ideas behind the merger came about politically; analyses the rationales and implications of the policy changes, and the winning and losing parties in the deal; explains the complexities of the decision that needs to be made, and why gaps for a new and better railway model for Hong Kong are yet to be filled by the government's merger reforms.