SHANGHAI, Dec 25: Shanghai has turned to a Singapore group to help turn around its ailing public transport sector, forming a joint venture bus company, industry and government officials said on Thursday.

The Shanghai Number Two Public Transportation Co said it had formed a 100 million yuan ($12 million) joint venture with Singapore Bus Service (1978) Ltd to operate bus services in parts of the city.

The Singapore firm holds 49 per cent of the venture.The Shanghai public bus service industry overall lost more than 500 million yuan in 1996 and further losses were recorded this year, officials said.

The municipal government extended 84 million yuan in subsidies to local bus companies this year, against 164 million in 1996, officials said.

Shanghai Number Two Public Transport said it posted a 30,000 yuan profit in 1996 but that included 14.31 million yuan in subsidies. The company said it received subsidies of 7.3 million yuan this year.

Shanghai Number Two is the second local bus firm to team up with a non-mainland partner.

Shanghai Pudong Kwoon Chung Public Transportation Co was set up in 1996 as a joint venture between the Shanghai Pudong Public Transportation Co and Hong Kong's Kwoon Chung Bus Group Co.

"We plan to introduce more foreign funds to the local public transport sector in the next few years," said an official with the Bureau of Public Utilities Administration in Shanghai.

"The Shanghai government will cancel subsidies to public bus companies in 1998 and that means these bus firms must try to survive in the market by themselves," the official said.

Officials said foreign companies would bring in capital and expertise needed to help the local public transport sector. "Local bus service firms relied too much on government subsidies before," said deputy general manager Shen Jixiong with the Shanghai Pudong Kwoon Chung Public Transportation Co.

"The introduction of foreign funds will become a trend as foreign companies have modern management needed to help local firms compete," he said.

Shanghai Pudong Kwoon Chung was among the few bus firms which generated profits in 1997, he said.

The firm, in which a 51 per cent stake is controlled by the Hong Kong Kwoon Chung Public Transportation Co, is expected to post around four million yuan profit in 1997, Shen said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.