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Budget 2010 – TRANSIT’s statement (updated)

Updated with links to the 2010 Budget Speech in English and Bahasa Malaysia!

In light of the announcement of the 2010 Budget on October 23, at 4pm, TRANSIT asked people to comment on what they think is important for the 2010 Budget.

Unfortunately, we did not get much feedback – so we went with what we know. We hope you like it. As always, feedback is welcomed.

You may also wish to see our comments on the DAP Alternative 2010 Budget here. The full text of the Budget speech 2010 can be found here in English and Bahasa Malaysia.

RE: Just in time for the 2010 Budget (the Auditor General’s Report for 2008)

The members of TRANSIT appreciate the timing of the release of the Auditor General’s Report for 2008, at the beginning of this week. The Auditor General’s Report for 2008 is a report of government activities that took place in 2008 and most often, it is a helpful investigation of wastage, project delays, poor project management and organization.

Each report should be taken as a wake-up call for governments and government-linked organizations to improve their performance.

The timing of the release of the 2008 Report is ideal, because the Prime Minister has made it clear that Malaysia needs to improve in performance management and delivery. And of course, at the end of this week the Prime Minister will present the 2010 Budget, which will indicate how the government intends to collect taxes and spend money over the upcoming year.

The Auditor General’s 2008 Report has focused on 3 areas of poor management in public transport, namely: the purchase of 26 buses at a cost of 10.5 million for the Rapid Terengganu bus service, (which never got off the ground); the delays and overspending of the Rawang-Ipoh double tracking and electrification project (which has the dubious distinction of being completed 6 months late and still not having operational trains); and finally, the losses at Prasarana and RapidKL.

The members of TRANSIT upon reading this report responded with a collective “I told you so” – because we were aware of these issues and warning against these problems quite early on. And given what has happened over the past year with KTMB (service breakdown at KTM Komuter) and Prasarana (little transparency in the planning for the LRT extensions), we assume that there will be a lot of interesting material in the Auditor General’s 2009 Report.

TRANSIT has debated about creating a “wishlist” for the 2010 Budget. Instead, we have produced a “want” list, a collection of the items that we have been commenting on for the past year.

1) Better use of public money

The government needs to invest in public transport in ways that will increase the efficiency of the service – so that it costs less and has more benefits for more people.  Wastage and delays and poor organization (as described in the Auditor General’s Report) are the enemy of good public transport and an enemy of the economy.

The delay in purchase of trains for the Fast Train Service, KTM Komuter and KL Monorail, and the issues with the quality of buses purchased by Prasarana are simply unacceptable. The waste of time and additional costs of congestion have dragged the economy down and reducing our overall productivity.

2) Better organization and regulation of public transport

The presence of 13 different agencies regulating public transport, the weakness of the CVLB in terms of enforcement, and the boldness of the Metrobus ‘lawsuit’ demonstrate clear weaknesses in the organization and regulation of public transport. And while the government has indicated that it is ready to create the National Public Transport Commission (the emphasis on public transport was suggested by TRANSIT), every day of additional delay is a day when public resources are wasted and productivity is lost through congestion.

The government must make a significant effort to increase enforcement and move forward with the Land Public Transport Commission, in whatever form.  By the end of 2010, the CVLB should be disbanded and replaced by the Land Public Transport Commission.

3) National and Local Standards for public transport

While the presence of the Land Public Transport Commission is welcomed, we must remember that public transport operates best when it is monitored, regulated and organized on a local or regional level.  Our vision for public transport in Malaysia has always focused on National Standards and funding and general planning and regulation, with the majority of regulation, oversite, planning, and operations taking place at the local level.

Our support of the decentralization of public transport is the foundation of our argument for the presence of a Local Public Transport regulator / authority in the urbanized Klang Valley, Penang, Johor Baru and Kinta Valley.

We believe that an urban public transport authority will bring together the 4-stakeholder groups – the government, civil service, operators, and user’s groups in a Public Transport Council. This council, headed by a government figurehead (the Federal Territories Minister in KL, an executive council member in other areas) would own the assets, plan the service, raise the funding (with support from the federal government) and hire the operators. They would also collect the money and receive the feedback on the service.

4) Incentives for public transport

The public have been told again and again to use public transport. They have been told that it is cheaper, better for the environment, more efficient, good for reducing congestion, etc. But the public also sees that there are few incentives towards using public transport. Cars and petrol and parking are cheap and are seen as a given cost. Private cars (and motorcycles) are convenient (offering the preferred point to point service) and private, which is a huge advantage in the eyes of many Malaysians.

The only way to improve the demand for public transport (which will encourage the government to improve the supply) is to increase the number of incentives for public transportation. That means that the government and operators should look at the big 3 features (reliability, frequency and quality) of public transport and work to improve them.

The government should also encourage Malaysians to shift towards public transport with incentives like improved rapid transit, tax credits for the purchase of public transport passes, requiring operators to provide college and university students with discount passes, and credits for not taking the car. Once these are in place, the government can start looking at the “stick approach” using area road pricing and taxes.

5) Reduce Unnecessary Competition

Nadzmi Salleh, a Director of Proton and the Konsortium Transnasional Berhad (KTB) has gone on record saying that public transport best operates as a natural oligopoly with few firms providing the services.  The government must understand this feature of public transport and find ways to reduce the unhealthy competition generated by the entrepreneurial model of public transport (which we are currently seeing in Malaysia).

There is a place for competition in public transport, but it should be competition to serve the public. Operators should compete to win contracts from the local Public Transport Council (which should also include a seat on the council for the duration of the contract) by providing the best service for the passengers and providing improved value for the community and for the economy.

The government should look at ways to encourage public transport operators to consolidate their operations, either by forming Local Public Transport Councils or Consortiums which will manage public transport at a local level.

TRANSIT wishes to remind the government that cooperation and enforcement are the key to improving public transport (and the community and the economy). We hope that the promises and efforts from the government towards public transport will have a positive effect on the economy and that we will see these improvements soon.

And, as you can imagine, we hope that the money the government spends in 2010 (as indicated in the upcoming budget) will not be subject to delay or wastage or mismanagement – so that we do not dread to see the Auditor General’s Report for 2010.


Moaz Yusuf Ahmad
on behalf of TRANSIT

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