TRANSIT took note of this very interesting interview in the NST with SPAD CEO Mohd Nur Kamal, discussing the bus transformation plan and proposals for implementation of improved bus services.
It is interesting to note that SPAD is learning from London and will be applying their knowledge in Kelantan.
26 February 2012
Mohd Nur Kamal, chief executive of the Land Public Transport Commission which just turned 1 in January, tells Tan Choe Choe that his agency is looking at several options but more time is needed to come up with the best solution to the national bus crisis.
Question: The bus crisis — why was it allowed to spiral so out of control?
Answer: Part of it was the mandate in the set-up of the organisation. The Commercial Vehicle Licensing Board (CVLB) was back then with the Ministry of Entrepreneurial Development. Their mandate was to nurture entrepreneurs, and not so much making sure public transport was run systematically; enough supply for the demand at the time. So we learn from our mistakes, that that may not be the right focus now. It could be because back then there weren’t enough bus operators, but now it’s different. Now it’s about making sure that things are run systematically, service is provided and in such a way that it encourages public transport usage. If not, we will have a situation like we have now in Kuala Lumpur at 8 o’clock in the morning.
Question: Why did it take so long for action to be taken — action that seems would not have come about without the interference of the prime minister?
Answer: Actually, it is a very complex situation where there are no clear-cut solutions (or) answers to it. It involves a lot of money, for one thing, and the other, it is about economics. Whether you allow free market or you allow for regulated market. The situation is there already. We have a situation where revenue is lower than operating costs. These bus companies have managed to stay as long as they have, but the market situation was just not conducive.
The revenue side — primarily because of a drop in ridership. People are more affluent, they have cars, it’s easy to buy motorcycles and the fares are regulated. So these, coupled with huge increases in operating costs, to just quote some figures — vehicle costs have gone up 50-70 per cent in the last 10 years, diesel prices have gone up 200 per cent, tyre costs, 200 per cent, spare parts costs, 300 per cent more — have contributed to a very difficult situation.
But the government is not to be blamed. We don’t make all these costs go up. At the same time, we have to be responsible enough to maintain fares that are affordable enough for people to take public transport. It’s not an issue of the government not doing anything. The prime minister intervened by creating Land Public Transport Commission (SPAD). We were entrusted to help him figure out how to address not only this, but public transport in general, because he sees this as a key thrust to move the country forward. We cannot have the economic transformation that we planned if there’s not enough mobility in our cities and mobility between rural areas and the cities. And it also cannot attract enough foreign direct investment (FDI), unless we systematically fix our cities.
Question: How do we do that?
Answer: We’re looking at several models for the long term. Because right now, the revenue risk is on the operator. The operating costs are borne by the operator and they have used this situation to come up with excuses to run the operation the way they like. They “pajak” to drivers, who then run it the way they like, which is not good for public transport because we need scheduled services. We need fixed routes so that people know what to expect. They can take public transport if they know the bus will be on time and going on a specific route. But now, especially those who “pajak” their buses to other drivers, run only during peak periods. They clog up traffic by parking by the roadside in the middle of the city , until the next peak period arrives for the people to go home. This cannot go on.
Question: The government has approved a fund of RM400 million to assist stage bus companies. Is this a short-term plan?
Answer: Yes, it is an interim solution to keep the bus operators afloat while, at the same time, we are exploring several options, analysing to see which one works.
One solution may not fit all so we may have to carve it, depending on specific market conditions, depending on the characteristics of the city and (whether) it’s a medium-sized city or rural area.
Question: What about SPAD’s Bus Transformation Plan (BTP) — is that the long-term plan you are looking at?
Answer: Yes, that gives the high-level direction and from there, we have identified the options. This Bus Transformation Plan is part of the Greater KL-Klang Valley land public transport master plan. It looks at the urban situation and outlines several strategic thrusts. That is at the public feedback stage. Part of the problem is that we don’t have data. We don’t even know how many actually ride the buses because we are depending on bus operators to report and some will be open to report, (while) the majority will just keep quiet.
Question: When is the deadline for public to give feedback on the BTP?
Answer: It’s not set yet because there are two parts to this. One is the Greater KL-Klang Valley, that’s the first regional public transport master plan (already on website), but we are also working in parallel on a national, macro-level public transport master plan. We are finalising that. Once we’re done, we’ll put it up for public feedback as well.
Question: I understand it looks at the London model for bus transport?
Answer: It’s one of the solutions that we’re looking at. You see, rather than operators concentrating on picking up, making sure that their revenues are maximised in terms of fighting for passengers, it’s better that they focus on operations. They know exactly how much it costs to run, and they know exactly when to run and where to run. In London, it’s like that. All the red double-decker buses are operated by many different companies. They don’t worry about how much revenue from fares they will collect because all that money will go to the government agency, Transport for London. All they know is that they run certain routes, certain frequencies a day, they will get those based on the number of kilometres that they run.
So we are looking at that as a potential solution. Then it doesn’t matter if it’s a government-owned company or a private entity, as long as that route is specified, we’ll tender the route and see who can run it at the best possible cost. If it’s a heavy route and we require many buses, we may open it up for multiple companies to run. But they don’t have to worry about how much in fares they collect.
Question: The lack of data — wasn’t this highlighted to the bus operators when they met you to find a solution to their problem?
Answer: Yes, but they still don’t want to give the data. Some don’t even know it themselves. Also financial data. So we are using this interim bus fund to make it a condition for them to give us data.
Question: Hence your application process for the fund lists out all sorts of documents that are needed.
Answer: Yes, that’s why it’s a bit more onerous for them because we are using this trust fund in a two-pronged way, to make sure that the service continues and to get what we need. It’s necessary because we can’t operate blindly and pick an ultimate long-term solution without knowing the real situation. So we don’t spend money unnecessarily and over-prescribe when the problems are small or under-prescribe when the problems are big.
Question: Is there any favourite model or proposal you favour as a long-term solution?
Answer: We are assessing potentially different models for different areas. Ultimately, we need to reduce the amount of money that the government has to pay while meeting the needs of the public. At the same time, we want operators to run at maximum efficiency, then we will benchmark across domestic players as well as international. We have to look at route optimisation. We have to re-configure the routes. It cannot be too many players plying the same routes and not enough plying other routes. That’s why it takes a long time because we have many areas to cover.
We’re designing an umbrella solution for most of the country. But in Kelantan, we are looking to experiment with a slightly different solution. This has elements of the long-term solution. It’s easy because Kelantan has only one operator. Plus they have the infrastructure in place — it’s cashless and has GPS (Global Positioning System) on-board.
Question: You mean Kelantan is conducive for us to immediately try out the London model?
Answer: Almost. They use prepaid tickets, which are sold in shops everywhere. The revenue will go to a fund which we control and will be used to pay them based on the kilometres they run. We are negotiating to explore this in Kelantan. For other states, there are still other variables to look into, so it’s more difficult to experiment. If it works, then we will implement it elsewhere. The key for Kelantan is using this to increase service levels. Do you know schoolchildren there don’t take school buses? They get on stage buses to go to school. The service is key to the well-being of the people there. If negotiations go well, we can expect it to happen in March.
At the end of it, what matters is the public. This whole programme is not about helping bus operators. It’s about helping the rakyat, and we never forget that.
Question: The state government of Malacca has signed an MOU (memorandum of understanding) with the Malacca Omnibus Operators’ Association to take over bus operations in the state. How do you view that development?
Answer: We can’t make a judgment call at this point because it depends on what will be the outcome. Does it promote public transport, does it promote cost efficiency? Depending on the incentives that are given, in some instances, it’s better for private operators to run. In some instances, public-owned companies are better. It goes beyond the model itself. It goes on the details, the mechanics of it. If it’s not managed well, it doesn’t matter who owns it, it’s still going to be bad.
Question: I understand that there will be a monitoring mechanism put in place to ensure those who take the money will comply with certain performance standards. What are the key performance indicators?
Answer: Yes, it will be part of the agreement that we will sign with the operators, to specify which routes, what will be the frequency, and so on. They will have to agree and sign the agreement before we can distribute the fund.
Question: What if after they get the money, they still say it’s not profitable for them to operate?
Answer: Then we have to re-look it; is it because of the ridership or because of operation costs, were they efficient enough? If we think that the amount is reasonable and some other companies can operate, then we have to agree on a separation and get somebody else in.
Question: If that is what happens, and if they cannot deliver, they don’t have to pay back the money?
Answer: We’re paying the money on a progressive basis, based on services rendered. We’re not giving them a lump sum upfront for the whole year. That would be too dangerous. Because we are very, very careful with the money. This is public money, we are protecting it and we are minimising any potential for it to be abused. It’s not about being punitive. It’s about understanding what the real problem is. If the economics really cannot sustain it, then we have to do something else.
Question: How many bus operators have applied for the funds?
Answer: Thirty-five out of 153. Some are still collecting data. Some do not run themselves, but give it to other people to run on a “pajak” basis so they know they don’t qualify because these are the people who are getting the fixed amount per day anyway. We want to help the genuine operators, those who we want to grow and develop together to become real players in the long-term. There will be more. Some are still collecting data.
Question: How many do you expect to come forward?
Answer: Hard to say, at least 100. There’s no deadline for the fund application.
Question: When will you have a firmer proposal on how to end this crisis?
Answer: We expect to go to the government before the fund runs dry (laughs). Before the end of this year. I don’t want people to think that we are working on one thing at a time, in isolation. Our first major news was MRT (mass rapid transit). And then we were working on the Urban Rail Development Plan. Then we rolled out a Bus Transformation Plan, and then there’s going to be a Taxi Transformation Plan. All these things are being considered comprehensively and we want to convey to the public that the solutions are being done together, holistically and comprehensively.
Question: A Taxi Transformation Plan? That’s new. When is it going to be out?
Answer: It’s coming. (laughs).
We obviously will have a lot to say about the interview and give our feedback through the media and perhaps directly to SPAD CEO Mohd Nur Kamal. As always, we at TRANSIT want your thoughts, opinions and feedback on the interview and the SPAD proposals.