MRT Update: Will old habits die hard?

TRANSIT took note of this comment on the MRT project which was featured in The Edge Financial Daily.

Rafizi Ramli, the Chief Executive of the Selangor Economic Advisory Office, writes a very interesting series of comments and raises many questions about the MRT project which are similar to questions and concerns that TRANSIT has.

His premise, “Old habits die hard” reminds us of the articles written by Moaz Yusuf Ahmad of TRANSIT in the early days of the LRT extension proposals – Moaz then argued that our attraction to LRT (now MRT) would overwhelm our judgement and would be used against us to rush into infrastructure mega-projects that would not resolve existing problems with public transport and would only create more challenges ahead.

The MRT: Old habit dies hard (The Edge)

Rafizi Ramli
Tuesday, 25 January 2011

Malaysia is a nation in haste. It is in our habit that we rush things, more often than not paying the price of the rushed decisions later down the road. Even when I was still an accountant managing finance operations, I always lamented our society’s obsession with speed at the expense of quality and thoroughness. Luckily we are such a rich country that we can still afford the price for the mistakes done due to the rushed decisions. For how long we can do this is anybody’s guess.

Of all the mega projects recently announced by the government recently, the mass rapid transit (MRT) is undoubtedly the project with the highest financial, social and economic impact. With an initial price tag of RM36 billion, it is expected to lessen the public transport woes in the Klang Valley considerably when it becomes fully operational in 2017. Malaysians have long called for an integrated public transport system in the Klang Valley to alleviate the traffic problems, so when the project was announced naturally it was received with a cautious sigh of relief.

It is unfortunate that the failure to present a solution to lessen the public transport woes sooner is now used as an excuse to hasten the decision making on the project, especially when we are looking at a financial commitment of epic proportion (by the national standard). It is deja vu all over again, with the government rushing the decision and project.

TRANSIT Says:

The comments from Rafizi above introduce the issue very effectively. Even in the past when the government was considering introducing either Aerorail or LRT into KL, the decision-making process was very long while the process of planning etc. was very short and rushed.

The result, as can be seen, is an LRT line (STAR, now Ampang Line) that avoids the major public transport routes (Jalan Tunku Abdul Rahman and Jalan Ampang), has a negative visual impact on central KL, and does not carry as many passengers as hoped for.

The following set of comments refers to the financing arrangements for the MRT project, which as TRANSIT notes, have not been finalized.

I was made to understand that Gamuda-MMC had spent millions of ringgit to complete the study and engineering design of the proposed MRT project. It went to the government with the engineering design — and it is this design that was adopted in full by the government under this “project delivery partnership (PDP)” arrangement. The price tag of RM36 billion is therefore a result of a study and engineering design commissioned and directed by Gamuda-MMC.

Under the PDP arrangement, Gamuda-MMC will act as a project management consultant (PMC) and a turnkey contractor to deliver the project. This will give it substantial influence and power to award packages to subcontractors, while the full financing will come entirely from the public funds.

TRANSIT Says:

The description of the financial arrangements for the project, such as they are, is worrisome – simply because MMC-Gamuda was appointed the turnkey contractor without any kind of transparent selection process.

In addition, it becomes clearer and clearer that the nation will be forced to pay the cost of the MRT project, potential overruns and any other “details” that go into the project.

The next section asks some interesting and important questions about the MRT – and these questions (many of which reflect our own questions about the project) are the reason why this article interested us.

Let’s go through a few hypothetical scenarios.

How sure are we that the RM36 billion price tag for the construction (excluding rolling stocks and several other packages) are not inflated to build in the financial buffer and to mitigate the risk for Gamuda-MMC? What guarantee do we have that an army of value engineering experts and quantity surveyors have been employed by the government to comb through the proposal and engineering design to ensure it brings the best value for money for the public?

Are we certain that the RM36 billion is the full cost of the project, or only for a few packages of the project? If the RM36 billion only covers the cost for a few packages, what is the full sum of the project?

What is the development concept for the MRT stations? While the government is expected to acquire the land necessary and pay compensation accordingly using the public funds, who will own the MRT stations and the prime land surrounding each MRT station? If each station development is going to be awarded separately, will the government award each station and the land bank around the station to the highest bidder?

How can we ensure transparency and avoid a conflict of interest when the PDP (Gamuda-MMC) is expected to be the leading bidder for the underground package?

Even if a proper tendering process is instituted, what guarantee do we have that the public pays for the bare minimum that it requires for a satisfactory and integrated public transport system — not an overblown project that is designed and implemented with the developers’ need in mind, because the public had given Gamuda-MMC the blank cheque.

In all of this, what is the role of the Land Public Transport Commission (SPAD) and how can it ensure that we pay the right price for the MRT system that we are building? Will the cost balloon to RM50 billion by the time the project is completed?

And there will be intense competition to grab the stations most strategically located and the landbank surrounding them, most of which will be decided by way of direct negotiations. In 10 years’ time, Malaysia’s public debt level would have hit the 60% mark (out of GDP) for the first time due to the large debts including funds taken to finance the MRT. In addition, the existing light rail transit and monorail systems continue to make losses each year and consume public funds.

TRANSIT Says:

TRANSIT’s concerns over transparency in the selection of the turnkey contractor selection, the confusing financing, the lack of public consultation (briefings are good but they are not ‘consultation’ and our process does not conform to international best practices) are strong and are not being abated by the news that is coming from Pemandu, SPAD and the government.

The other ‘elephants in the room’ are the questions of what is going to happen with the existing bus services – firstly, we know nothing about the existing and projected public transport demand on these corridors. Anecdotally, we can say that there are many bus routes operated by different companies, and these buses are generally full and operate every 20 or 30 minutes.

However, a route with buses operating at a frequency of 20-30 minutes are not moving significant numbers of people – perhaps no more than 500-800 passengers per hour per direction if we combine all the bus routes – and MRT is designed to move huge numbers of people, 25000-35000 passengers per hour per direction at the very least! In other words, there is a huge gap between what we have and what the government claims that we need.

The second question relates to the existing bus operators and their operations. Are they going to continue to operate as they have in the past or be replaced by feeder bus routes when the MRT network is introduced? In this case, does the government intend to negotiate with bus operators to operate shuttle bus service, or will they try to find ways to avoid antagonizing the bus operators by choosing less-travelled routes (like they did in the past with the STAR LRT)?

The arrival of the LRT did not change the way bus routes have operated in KL – will we still see the same 30 year old services (possibly using 30 year old buses and 60 year old drivers) even after the MRT is constructed?

It seems ever clearer to us at TRANSIT that the government is going to attempt to overlay the MRT line onto existing neighbourhoods in the hope that some of the costs can be cross-subsidized by surrounding the MRT stations with development projects – assuming that the surrounding development will generate enough traffic to make the MRT commercially and economically viable.

In other words, the planning for the MRT does not say much about what will be done to reduce existing congestion, or help existing public transport users in any significant way – unless they are willing to change their travel routes to incorporate the MRT.

The country’s award and running of the LRT and monorail services was a bad experience because it was not well planned and thought out and now we are rushing the MRT project. We might land up with the same problem in the future.

The questions pose need to be answered thoroughly to avoid the country falling into a deeper abyss of debts. The public must not be blinded by the yearning for a fully integrated transport system that we fail to exercise vigilance.

TRANSIT Says:

That just about sums it up. As usual, we need more public discussion and feedback about public transport issues and resolving those issues – which includes the MRT line and MRT network as part of the solution, but not the only solution.

TRANSIT hopes that the public and the wakil rakyat will start asking these important questions of the government and Pemandu – because we only have one chance to get the MRT done right. If things are messed up, we will not have any chance to improve public transport in the Klang Valley or the rest of Malaysia.