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SPAD Chairman talks on MRT financing plan

SPAD’s Chairman, Tan Sri Syed Hamid Albar told The Sun newspaper on the bane on using public transport. TRANSIT feels that the representatives of the people, not limited to those from SPAD or MoT, must learn to endure door-to-door return trip via public transport (read: this involves walking to bus stops, riding buses to another bus/rail stops, and changing to other train/bus lines, all during rush hours, instead of being merely chauffeured via special cabs to KLIA Ekspres) before they can claim that they understand the plight of an average public transport user.

Nonetheless, TRANSIT is happy to learn on the SPAD Chairman’s acknowledgment on lack of connectivity between transit points. TRANSIT hopes that he and his comrades will focus on fixing the current pedestrian and feeder network problems and push for more funds to build plenty of Bus Rapid Transit and Expressway Rapid Transit corridors in all major urban areas in Malaysia, rather than heeding to external demands to build only three lines of MRT in KL alone, and risk all Malaysians to foot the RM43 billion debt.

RM43 billion for very few MRT lines in KL, or hundreds of BRT lines all over Malaysia?

I know what public transport is like: Syed Hamid
Tan Yi Liang

KUALA LUMPUR (Oct 20, 2010): What does someone who is chauffeured around in a luxury car know about the woes of the average commuter?

This question was posed to Land Public Transport Commission (LPTC) chairman Tan Sri Syed Hamid Albar today, who replied: “I use public transport once in a while.”

Syed Hamid was quizzed by this reporter on the observation that many of those overseeing public transport were unaware of the realities of public transport as they themselves relied on chauffeur-driven transport.

“If you build schools, it doesn’t mean you go to the school you built. But it is important for us to try the service so that we have a better feel of it. When we get back, we get the feedback from people and we know the wishes of the people,” he said after launching the KLIA Express VIP Service at KL Sentral here.

However, Syed Hamid insists he is getting enough of the feel of the average commuter who faces delayed and crammed trains and buses, overcharging cabbies and lack of connectivity.

“I use public transport once in a while … taxis and others. This is the reason why we need to improve public transport. From my place, there is no connectivity. The interconnectedness of public transport must be improved. It must be more efficient,” said Syed Hamid, who had spoken earlier of his experiences travelling by train from Kuala Lumpur to Johor.

Asked when he took the trip he spoke of, Syed Hamid said he took it “30 years ago”.

Later, the former home minister said amendments to existing acts and the establishment of the Land Public Transport Act will be ready by early next year to give more bite to the LPTC.

“We are taking action in preparing towards the coming into force all the ancillary acts that will allow us to play a regulatory role and absorb government units,” he said. At present, LPTC’s powers come from the Public Land Transport Commission Act.

“We cannot enforce certain things such as investigations and giving operators certain licences, but, we are working very closely with the relevant departments such as the Railways Department and the licencing boards,” he said.

On the proposed Mass Rapid Transit (MRT) system, which carries an estimated RM40 billion price tag, he said this is an indicative cost and that the bulk of the infrastructure costs have to be borne by the government.

“So the government has to think of its own financing. When you talk about the ERL, you are talking about private companies. Even Prasarana is a company incorporated under the Companies Act, they have their own budget and their own financing,” he said.

“It is different with the MRT as the government has to get the funding approved. There are various mechanisms to reduce cost. When the whole plan is out and when the public knows exactly where we are going to get the money, it will be easier to discuss.”   (The Sun)

Public transport enforcement and monitoring needs stewardship from the local authorities. As infrastructure mains to be part and parcel of a public transport system,  factors which include urban transportation corridors, mass transit routes, and multimodal interchanges have to be taken into account towards proper operation of transit terminals in order to achieve an effective and efficient urban transport system fully integrated with future land uses. These infrastructures will mostly fell under the jurisdiction of the State and the Local Authorities.

TRANSIT believes interface and collaboration between transit authorities from both the Federal and the Local levels are important, and that full absorption of government agencies and departments not exclusively related to transport governance will detonate turf wars that will benefit no one. For instance, it is impossible for SPAD to determine which bus routes should stop at which bus stops, or to summon enough officers to enforce all no-park zones in bus terminals all over Malaysia!

From the best practices around the globe, transit operations are directly handled by public transport organising agencies or authorities, which refer to a public or publicly-owned organisation with a legal responsibility to plan or regulate public transport services in a specified geographic area. It is envisaged that SPAD becomes the blueprint provider for regional-level transport authorities to base their plans, strategies and initiatives on.

Talking about the MRT infrastructure costs which the Chairman admitted have to be borne by the government, it is imperative for us consider whether the current users of Kelana Jaya line, Ampang line and Sri Petaling line LRTs together with the monorail want to continue using the same rail services if the average ride fare is increased from RM 1.70 to RM8.74.

We wish to highlight that contrary to SPAD Chairman’s statement that the MRT project is unlike the previous LRT project due to Prasarana being self-financing, Prasarana’s debt inherited from KL Monorail’s, PUTRA LRT’s and STAR LRT’s infrastructures are of the general public’s concern due to Prasarana’s bonds are guaranteed by the government. In other words, Prasarana’s loss trickles down to the rakyat, whether the rakyat lives in Greater Kuala Lumpur or Greater Kinta Valley or Greater Bakun Valley.

When Prasarana was grilled by the Public Accounts’ Committee on the heavy losses incurred by the company, Prasarana’s then CEO Dato’ Idrose admitted that fare has to be raised to RM8.74 for the bonds to be redeemed by the time they mature.

Dato’ Idrose mulled on clever land-use strategies implemented in Hong Kong and other cities with excellent rail systems to recoup the high investments on the rail infrastructures. Unfortunately, in those cities, rail alignments and construction came prior to the development of the surrounding property areas which are now being served by the rail systems. In other words, Prasarana is proposing a revenue-generating framework to channel property taxes and revenues from real estates surrounding the rail stations towards paying the bondholders.

Our question posed weeks ago remains unanswered: Can such density-altering framework be implemented in tandem with the MRT proposal which carries a conservative RM43 billion price tag when nothing has been done to rectify the distortion in the way the present LRT infrastructure benefit the few developers and owners of lands near the existing stations compared to the larger taxpayer and constituent base?

Public Accounts’ Committee’s Proceeding Report No. 37 2009, Page 15-16

Tuan Alexander Nanta Linggi: But do you price it right then? Now, it is not just about the volume, the number of riders. You see?
Dato’ Idrose bin Mohamed: Pricing.
Tuan Alexander Nanta Linggi: In terms of if we makes it very cheap; memanglah people would just jump onto this. Again is about financial aspect of it.
Dato’ Idrose bin Mohamed: At the moment kalau kita kira kita punya purata tambang sekarang is about RM1.70. Kalau kita hendak betul look into the viability of the thing, we may have to charge RM8.70 maybe. We cannot…
Tuan Pua Kiam Wee: [Menyampuk]
Dato’ Idrose bin Mohamed: But because public transportation is satu tanggungjawab sosial kerajaan dan juga untuk memastikan tambang itu pada tahap minimum untuk membolehkan lebih ramai rakyat mengguna pakai ataupun menggunakan pengangkutan awam.
Tuan Pengerusi: Saya hendak tahu whether Prasarana has studied the experience of other countries. Soalan tadi relevan. Di mana dalam dunia ini public transport company makes money, Singapore; London; Japan?
London in 1997, I remember London train apologized were make profit for once, for that year. Japan saya dimaklumkan even Shinkansen dia punya bullet train itu it makes money. I wonder whether you have got information like that for…
Dato’ Idrose bin Mohamed: Yang Berhormat kalau mengikut hala tuju Prasarana, we have done some studies on MRT di Singapura and MTR di Hong Kong dan lain-lain negara. Mereka sebenarnya mendapat pendapatan tambahan daripada Area Road Pricing, contohnya di Singapura, surcharge parking, congestion charge di London dan pembangunan hartanah untuk membiayai sebahagian daripada kos perkhidmatan awam. Contohnya di Hong Kong, 50% of their income actually come from the rental of the properties. That actually finances the ini. Di Paris umpamanya, companies that have more than nine employees have to pay 3.4% tax for public transport – is a law.
So these are the things that we are studying at how France is doing up, how Mexico is doing it and we will actually present this to MOF. That means moving forward, we have to find an alternative financing for public transport either we go for Area Road Pricing or we go for parking surcharge or we go for property development that is around the station. So that the station that is being developed can be developed into a community area, can be adjacent and a property subsidies the public transportation. Then you can charge a low and minimum cost to the public. That is a way forward…

Public Accounts’ Committee’s Proceeding Report No. 37 2009, Page 17-18

Dato’ Idrose bin Mohamed: First Sukuk iaitu RM2 bilion. Ini adalah tujuan untuk mengambil alih operasi KL Monorail dan juga menambah tren aliran KLJ tadi itu. Jadi, dalam to raise this bond of RM2 billion, kita telah melalui proses iaitu mendapat persetujuan dan kelulusan kerajaan. Kedua, kelulusan Lembaga Pengarah untuk belanjawan lima tahun. That means we have a rolling plan of five years.

Then, kelulusan Lembaga Pengarah, Terma Utama dan Request for Proposal. Kemudiannya kita dapat perakuan daripada Kementerian Kewangan. Seterusnya, pelantikan bank, peguam cara dan pemegang amanah. Selepas itu, mendapat kelulusan untuk jaminan kerajaan ataupun the government guarantee for the issuance of the bond. Selepas itu, kita mengeluarkan Surat Cara (Term Sheet) Terbitan Bon. Kemudian terbitan dan pembahagian bon. RM2 bilion was raised untuk mengambil alih KL Monorail.
Tuan Pengerusi: KL Monorail ini yang mana satu, ya?
Dato’ Idrose bin Mohamed: KL Monorail daripada Titiwangsa yang melalui Jalan Sultan Ismail.
Tuan Pengerusi: YTL buat, bukan?
Dato’ Idrose bin Mohamed: Bukan, bukan.
Tuan Pengerusi: Siapa?… [Bercakap tanpa menggunakan pembesar suara]… Monorel yang rodanya jatuh timpa orang itukah?
Dato’ Idrose bin Mohamed: Yes, yes. That’s the one… [Ketawa] Okay, okay… [Bercakap tanpa menggunakan pembesar suara]… Pengangkutan awam memerlukan perbelanjaan yang besar. Pengangkutan awam juga merupakan tanggungjawab sosial kerajaan dan pendapatan daripada tambang adalah terhad dan rendah. Purata tambang sekarang ialah RM1.70. Purata tambang RM8.74 perlu dikenakan untuk menebus balik bon. Jadi, pengangkutan awam merupakan keperluan asasi dan tambang harus tidak membebankan. Kadar tambang perlu pada tahap minimum untuk menarik lebih ramai rakyat menggunakan pengangkutan awam.
Hala Tuju Prasarana. Kajian SUPERB iaitu Sustainable Urban Public Enterprise for Rail and Bus. Kita telah merujuk kepada model MRT di Singapura dan MTR di Hong Kong dan serta lain-lain negara. Pendapatan tambahan seperti Area Road Pricing ataupun Electronic Road Pricing (ERP) di Singapura, surcharge parking, congestion charge dan pembangunan hartanah untuk membiayai sebahagian daripada kos pengangkutan awam. Mencari pembiayaan alternatif yang perpetual dan tidak memerlukan penebusan bon pada tarikh matang oleh kerajaan. Sebagai contoh REIT untuk hartanah dan bon awam untuk infrastruktur pengangkutan awam.
Untuk makluman, Prasarana telah membayar dividen sukuk sebanyak RM88.2 juta pada bulan Mei dan November 2009. Jadi, purata interest dan dividen yang perlu dibayar oleh Prasarana adalah lebih kurang RM300 juta setahun. Bon yang telah diterbitkan sehingga sekarang iaitu sehingga 1 Disember 2009 ialah sebanyak RM9.1 bilion. Ini tidak termasuk bon yang telah ditebus dalam tahun 2008.

Let us pray that SPAD, under Tan Sri Syed Hamid Albar’s leadership, in spite of the surrounding political pressures, will wisely forge a greater future for public transport in Malaysia.

SPAD Chairman lead the congregational prayer during the recent SPAD’s Raya Open House (TRANSIT archive)

2 replies on “SPAD Chairman talks on MRT financing plan”

[…] TRANSIT is surprised to learn on the NST’s front page coverage of Prasarana in the past few days. We are talking about massive involvement of taxpayers’ money on projects with undoubtedly similar progression and implementation pattern that we’ve seen with the STAR, PUTRA and KL Monorail lines. With Prasarana’s bonds guaranteed by the government, it is surprising to learn on the lack of scrutiny on the effectiveness of the transit projects’ undertaking. […]

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