The public transportation issue

Recently, the government of Malaysia had proposed RM7 billion stimulus package to supplement the 2009 budget presented by the current Prime Minister back in August.

This stimulus package, presented by the current Finance Minister was later discovered to be only a hypothetical economic stimulus package.

Hypothetical – according to the Deputy Finance Minister whom made the embarrassing statement one day after the Finance Minister announced the stimulus package in Parliament.

As Datuk Sakmongkol had noted that according to the Finance Ministry, the stimulus package is termed hypothetical because ‘it depended on savings made from the downturn in global fuel prices, and what the government will do with RM7 billion when the situation arises.’

For all intent and purposes, it cannot be denied that the Finance Ministry made a commendable effort to stave of the incoming recession that may hit our shores.

However, there is one area that I feel the Government had grossly misallocated the public money.

The public transportation system.

In the recent ‘hypothetical’ stimulus package, the Government will further distribute RM500 million to strengthen the public transport especially the LRT, Komuter and bus systems in urban areas.

Now, back in August, the Prime Minister had announced in the original budget, an allocation of RM35billion to be pumped in to the public transportation system within the 6 year period of 2009 to 2014.

That is roughly calculated as an average of RM5.8 billion per year. And now, if this hypothetical stimulus package will become a reality, another half a billion will be further pumped into the industry.

What is it about this government and its fetish with public transportation? Since 2004, the government had pumped in more than RM10 billion into the development of public transportation!

And what can you do with this extra RM500 million that you can’t do with the already allocated RM5,800 million for the year?

It is an open secret that the main beneficiary of this allocation is SCOMI Bhd. They are the main supplier of buses and trains for the bus and LRT system in the Klang Valley. RapidKL is the asset operator in Klang Valley while Syarikat Prasarana Sdn Bhd is the asset owner. SCOMI Bhd is also the main supplier of assets for RapidPenang and KL Monorail.

The government had, year upon year, appropriated funds for the improvement of the public transportation in the urban areas. But as all sundry can see, no immediate change was seen since 2004.

Our public transportation system is still languishing in a bottomless pit of train delays, erratic time schedules, low quality buses and awful customer service etc.

What I have come to notice is, the government had taken the wrong strategy in uplifting this problem. They had only focusing on the infrastructure. They thought that they could eliminate these problems by simply providing more trains or more buses.

On the other hand, they had overlooked the much bigger problems facing the operators of the public transportation here.

Chief among the problems is the profit sustainability of the business itself. For far too long the transport operators especially RapidKL is caught between the need to make profits and the need to retain some social responsibility.

The government had neglected the fact that if they had wanted RapidKL to operate within the social responsibility perimeters, the industry need to be heavily subsidised. There is no other government in this world that did not subsidise the day to day operations of its national public transportation company.

But Malaysia chose to minimally subsidise RapidKL. Thus far, the only form of subsidy RapidKL enjoy is through a discounted diesel purchase. This however is not enough to sustain their operational costs. The dilemma now lies with the need to increase their fare structure. A move which by the way was shot down by the government every year due to the social responsibility agenda.

Another problem of the Klang Valley public transport is the myriad of governing bodies having the authority over it. With so many bodies that often that not, have many contradicting views in mapping out the strategy, no wonder public transportation system remain stagnant despite the huge amount of funds it received since the current Prime Minister took over since 2004.

We currently have DBKL, the local councils, JPJ, the police force, Puspakom, Transport Ministry, Finance Ministry, Commercial Vehicle Licensing Board etc (some say up to 14 bodies) governing the public transportation system in the Klang Valley itself. It would be a wonder if even a simple, unanimous decision can be deliberated within a month.

With really high maintenance cost especially in the train transportation system, the asset operator suffers huge cash deficit year on year. It is not economical for the government to turn a blind eye to the plight of the asset operator but at the same time, treating SCOMI Bhd like a golden child.

The asset operator is the pulse and heart of the public transportation industry, not the main supplier of assets. It would be a winning strategy if the main supplier had been honest in acquiring the assets for the usage of the industry. But from observation, honesty is left wanting.

In reality, the problem within the public transportation is only exacerbated by the failure of the main vendor to provide high quality assets.

For instance, what the asset operator had requested in terms of engineering specifications such as bus type and spare parts were not duly met by the supplier.

If RapidKL requested high quality buses from Europe (albeit with much higher price), the supplier will substitute these orders with much cheaper buses from China. As the result, due to the poor quality of buses purchased, breakdowns occur on daily basis. Maintenance costs invariably increase and this is eating up their reserves. At the same time, service level to customer deteriorates further.

And this is where I feel the government had lost its focus. Instead of looking at the root cause of the problem, what the government did was to pamper the vendor with obscene amount of money under the guise of supplying more assets.

Supplying more assets such as more buses and trains will not improve the public transportation as a whole. The industry need to be revamped as a whole.

For a start, there is a need to centralise the governing authority of public transportation under one body. There is an initiative to do this right now. However, a body without the relevant power to deliberate decisions will only be reduced as a token entity in the end. Furthermore, this body must be run by experts; not by politicians which may be blinded with political expediency.

Secondly, the government must make the difficult decision to either let RapidKL operate in a more conducive environment i.e. be able to determine their own fare structure to be more profitable OR to fully subsidise the public transportation industry like what Singapore, UK and Hong Kong are doing right now.

Thirdly, what MAS had done many years ago with the advent of Syarikat Penerbangan Malaysia Bhd may be successful for that particular industry.

But when they separated the ownership and operations of the assets into 2 companies, there was no greedy asset supplier gleefully rubbing his perfectly manicured hands while smoking a cigar in the background at that time.

A new business model must be thought of by the Ministry of Finance to help revitalise the asset operators and also plug the leak that has had our wealth seeping out unnoticed from the nation’s coffers since 2004.

Public transportation system in the Klang Valley had been a thorny issue since the current Prime Minister took over the premiership. It pains us to think that all those money pumped in since 2004 is regarded as sunk cost. Inefficiency and greed must no longer rule the government.

Hopefully, the current Finance Minister knows what he is doing. With RM35 billion and another half a billion promised to the industry, the public must be ensured that right decisions will be made from now on.