Commentary: Do we praise RapidKL or do we bury them?

TRANSIT sent the following letter to the Malaysian media yesterday afternoon regarding the recent announcement from Minister in the Prime Minister’s Dept. Nazri Abdul Aziz about a “review” of the role of RapidKL.

The letter touches on the reality within the public transport industry and urges the ministers to wake up to the reality of the situation.

TRANSIT invites you to give us your feedback on the letter and respond to this question:

Do we praise RapidKL, or do we bury them?

Dear Editor

Last week, Minister in the Prime Minister’s Department Nazri Abdul Aziz raised the ire of many public transport users when he commented that the Prime Minister’s Department would review the status of RapidKL and RapidPenang, two “government-linked operatorss” that, according to some, have an unfair advantage in the public transport industry.  At the same time, the bus operators repeated their demand for a 100% increase in fares – possibly forgetting that they already had received a 30% increase since the Balik Kampung period of October 2008.

Among members of TRANSIT, the announcement set off a firestorm of protests and condemnation.  Many members of TRANSIT have benefited from the presence of RapidKL in the market (especially when compared to the other bus companies) but we were also wary of RapidKL’s existing weaknesses.  We were faced with a serious dilemma. To borrow from Shakespeare’s Julius Caesar, we asked ourselves if we should praise RapidKL or bury them.

Many members argued that it was the CVLB that needed to be reviewed, not RapidKL.  TRANSIT spokesperson Muhammad Zulkarnain Hamzah went ahead and put his thoughts into a finely-written letter that reflected on the poor state of the entire industry, and urged the Minister in the Prime Minister’s Department to reconsider his statement to “review the role of RapidKL”. Others thought that the attention should be focused on the poor quality of service throughout the industry.

This letter aims to set the record straight about the state of the public transport industry.

Firstly, it must be made clear that Rangkaian Pengangkutan Integrasi Deras (Rapid Integrated Transport Network) aka Rapid and sister company RapidPenang are both Sendirian Berhad-private limited companies.  This means that they are private companies just like any of the dozens of other bus companies operating in Malaysia. They answer privately to their owners and not publicly to their shareholders.

The difference is that both of the “Rapid” companies are 100% owned by the Ministry of Finance. The Ministry of Finance is a government Ministry and therefore, RapidKL Sdn. Bhd. and RapidPenang Sdn. Bhd. are “government-linked.”

There are benefits to this arrangement.  Many of the capital costs (such as the purchase of new buses) are actually paid for by big-sister company Syarikat Prasarana Negara Berhad (National Infrastructure Company Limited) aka Prasarana, which allows RapidKL and RapidPenang to focus on operations.  In contrast, the other private bus operators have to rely on loans from banks to cover their capital costs.

Regarding operations, it has also been said that RapidKL and RapidPenang get a 50% operations subsidy from the Ministry of Finance.  Again in contrast, the other private bus operators have to rely on the farebox revenues to cover their operations costs.

On the surface, the system does appear unfair – but this is because RapidKL and RapidPenang and Prasarana are not traditional public transport operators – they represent an experiment in the future of public transport in Malaysia. What RapidKL and RapidPenang need to do is set the record straight about the rules of this experiment – but they always seem to maintain an “elegant silence” about the role that they play.

Secondly, it needs to be made clear is that RapidKL and RapidPenang have to face costs that their competition does not face.  RapidKL and RapidPenang pay their operators with salary (RM1500-RM2000) and benefits – instead of using the plainly illegal ‘pajak’ system where a bus is leased out on a daily basis for a fee. RapidKL and RapidPenang have to operate money-losing ‘social’ routes while the other operators can focus on profitable routes.  RapidKL and RapidPenang are expected to operate on fixed frequencies instead of moving when the bus is full. They have to maintain a website and electronic ticketing system and control centre whereas most of their competitors do not.

When all of these factors are taken into consideration, is it appropriate to say that RapidKL and RapidPenang have an unfair advantage?

It should be clear by now that the problem is not with RapidKL and RapidPenang – but with the industry as a whole.  The CVLB and the other operators are in need of review as well.

When Minister in the Prime Minister’s Depatment Nazri Abdul Aziz takes all of these factors into consideration (as he definitely should), he will realize that RapidKL and RapidPenang are the most successful examples of public transport service in Malaysia – from both the revenue and the customer satisfaction standpoint.

Once he understands this, the next step is to find out how to fit all of the other operators into the system.  In order to accomplish all of these changes, TRANSIT recommends to Nazri that the government should:

• Create a Local Public Transport Authority that will take control of the bus routes in the Klang Valley and package them into “areas” (they can borrow RapidKL’s 6 “Areas” for this)
• Ensure that each packaged “Area” includes both stage bus and local shuttle bus routes to allow the profitable routes to cover the costs of the less profitable routes.
• Work with the local councils to build the other infrastructure needed for a successful public transport system including bus lanes, busways, bus hubs, and staging areas.
• Allow the Local Public Transport Authority to give out these bus routes using open tender to stimulate competition.
• Reduce the waste of resources and increase accountability by allowing bus operators to operate exclusively on a route for a fixed period of time (under the contract) – this will spread public transport out to reach more areas and more people.
• Pay the operators an appropriate fee for their services during this contract period.
• If satisfaction is low, work to improve it.  If that fails, the Authority can re-tender the contract.

The benefit of these suggestions is that it would extend the umbrella of protection to all of the bus operators by reducing their capital costs, stopping the illegal ‘pajak’ system and encouraging companies to start paying fair wages to their employees, and allowing fares to rise to a reasonable level but increasing the quality of service at the same time.

Sincerely

Moaz Yusuf Ahmad

Advisor, The Association for the Improvement of Mass-Transit (TRANSIT)

TRANSIT

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