Thursday, May 11, 2006
Privatisation may help get KTMB back on track
M'sian govt seeking to reduce financial burden: official
Business Times
The Malaysian government may let the private sector take over the management of national rail company Keretapi Tanah Melayu Bhd (KTMB) as it seeks to reduce its financial burden in developing railway infrastructure, says a report in Malaysia's Business Times, citing a government official.
It quoted the government official as saying that the government is pumping at least RM300 million a year to subsidise KTMB's operations.
This does not include the money needed to develop the costly infrastructure.
The official said that to ensure KTMB is viable, the government will have to privatise the loss-making company.
But to do this, it will also have to revamp KTMB and streamline its operations and assets to further attract interested parties.
'The government wants the private sector to more efficiently develop the railway infrastructure to cut operation costs. If this is the direction forward and if the plan materialises, KTMB will only need to pay track access fees for the usage of the railway infrastructure,' said the official.
'The fee is not worked out yet, but the offer will make KTMB more efficient as a service provider for transporting goods and people as it will have a fixed operation cost,' the official added. It is believed that government-linked companies like Scomi Group Bhd and UEM Group are likely to bid for the privatisation plan.
YTL Corp Bhd, a company controlled by the family of Francis Yeoh Sock Ping, is also expected to bid.
YTL is a shareholder in the firm which built the Express Rail Link, a train linking Kuala Lumpur to the KL International Airport in Sepang.
KTMB was corporatised on August 1, 1992 under the Railways Act 1991, and placed under the management of the Renong Bhd-led consortium Marak Unggul Sdn Bhd on August 1, 1997.
Renong owns 50 per cent of Marak Unggul, while DRB-HICOM Bhd has 25 per cent and Bolton Bhd holds 20 per cent. The remaining 5 per cent is held by Jasa Meta Sdn Bhd.
In 2001, the government decided to put the privatisation of KTMB on hold after it rejected a proposal submitted by Marak Unggul, which had managed it for four years.
Industry observers cited Renong's debts as the reason. Also, Marak Unggul was to have injected RM100 million into KTMB when it took over, but it did not do so.
The pertinent issue, however, was that KTMB at that time had been sustaining losses of more than RM400 million from 1996 to 2000.
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Mr. Smith said...
KTM should have links to all major cities in the country but it not expanded its network for ages. With correct forsight and planning it should be able to make money.
There can be links between towns in a state.
With soaring petrol price people would prefer cheaper, reliable and efficient mode of transport. But then in Malaysia efficient and reliable are non existant.
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SpiceUpYour Life said...
Can the Bodowi government just explain this theory of privatisation.
If KTMB is making losses during the Government administration, which businessman with sound mind would like to take over the "loss making" company.
But each time when a company is privatised, it will make huge profit. Don't this proof that all this while the government are mismanaging the funds in all those privatised company.
It's uphill task because this is car country, KTM is not efficient, what I afraid is when it privatised, it meets the same scenerio like LRT putraline,somebody milk off goodies and then later sell it back to gomen when cannot sustain, end story- in the name of national service, taxpayer money come back to rescue, this movie look familiar?
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dart said...
spiceupyourlife says:
"If KTMB is making losses during the Government administration, which businessman with sound mind would like to take over the "loss making" company. "
Elementary my Friend. It is KTMB's massive LAND BANK they're after.
Not least of all, the one at Tanjung Pagar in Singapore!
If past PIRATISATION project is any indication, the modus operandi will be as follows:
1) Make a bid, including negotiating the "percentage due".
2) Take management control of KTMB.
3) STRIP THE ASSETS! This can take many forms, from JV agreement to develop certain pieces, to long term lease to subsidiary companies at peanut prices, to outright sale, (purportedly) to finance new CAPEX, or even for working capital purposes.
4) After 4-5 years, declare KTMB "operationally" non-viable.
5) Negotiate for its return to the Government (again) complete with "percentage due."
6) Complete cycle. Government takes back KTMB, less the assets which had been stripped.
7) The players (official and un-official) laugh all the way to the BANK.
8) Last but not least, Malaysians will give BN the mandate to carry on!!!
Private sector will also need funding and will rely on some Government Contract or guarantee to secure the funding.
What is Gomen CAPEX borrowing becomes Private Sector CAPEX borrowing. What becomes of the CAPEX loan repayment of Gomen becomes running OPEX payment to the private sector to repay the Private Sector CAPEX loans plus profit.
Whatever terms financial people wants to coin,in layman economics, its all the same bull shit.
The only hope is Private Sector will manage the CAPEX borrowings better and run the privatised businesses more efficiently.
But hey! Does'nt seem to work for MAS. Did it work for the LRT's?
Hang-on - Provided the privatisation is let out competitivey and to competent parties. But how to assure that?
Another "piratisation" project? I think it's proven that "piratisation" has caused hardship to the people and when they fail...the government has to absorb the loses...simply because bumiputra will always enjoy the "privilege" of bailout!
The cabinet has to find out whether the privatisation will make our neighbour laugh. KTM was allowed to operate in Singapore base G 2 G agreement.Otherwise they will acquire our KTM land.
this privatisation talk on ktm smells of stale perfume.
in the long run the profit potential is just not there.however, there are a lot to
exploit and wealth to make before then.our job is to ensure that gomen do not short change our coffers.
Whatever said and done...some bumiputra involvement will be there...if you care to look deeper! No "piratisation" is carried out without bumiputra participation!...simply because piratisation was one of the ways the government hand over control to the bumi! Of course, other races will also get a tiny bit of the cake...just for show.
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annis said...
Japan Railway is one of the most profitable and cash rich company in the world. But KTMB is making losses simply because people here doesn't appreciate the convenience of train.
Imagine, there is ONLY one service to Butterworth every day and only 3-4 services to East Coast and Singapore, whereas, the potential customers are at least 10 millions daily. Of course, some investment is needed to upgrade track and station, but then if the money is good, go for it.
Last time around, UMNO decided NOT to modernise KTM because most of express buses are owned by UMNO politician and surely they will tutup kedai once KTM upgrade.
But again, as what happened in highway and other sectors, this will be another piratisation.
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Waris Tok Naga said...
In the current political climate, I must say NO to Privatisation. Too many questionable practices but who cares what I say; for on the other side of the fence, there are hordes of people who firmly believes that making MONEY, lots of money, will solve all our problems.
hmmm, might change my mind if KTMB decides an upgrade to bullet trains. At 110kph, the North South Highway is kinda slow eh? ... anyway, careful driving over this Wesak break, peace.
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Ibn Abd Halim said...
Once the KTMB is privatised it'll be piratized. Instead of being on the track it'll be derailed. Then there'll be bail-outs at the expense of the rakyat. Another 'kenduri' for cronies?
Yah ... SRT workers/officers/tip brasses would FROWN upon the idea of privatization unless they GET what they REALLY want
1) New Maintiance center to Replace Makkasan to improve qulaity of fleet maintianace
2) Massive double tracking
3) New route to Chiang Rai, Rayong and even Phuket and Nakhon Phanom
4) Red line networks to function as both BKK Commuter networks and SUvannabhum Aiorport Link
50 Benefits from New Makkasan Center alogn with the boost of the land lease
Yah ... SRT workers/officers/tip brasses would FROWN upon the idea of privatization unless they GET what they REALLY want
1) New Maintiance center to Replace Makkasan to improve qulaity of fleet maintianace
2) Massive double tracking
3) New route to Chiang Rai, Rayong and even Phuket and Nakhon Phanom
4) Red line networks to function as both BKK Commuter networks and SUvannabhum Aiorport Link
50 Benefits from New Makkasan Center alogn with the boost of the land lease
Do you know what I'd really want in 20+ years' time?
1. Railways technology research & development institute
2. Massive steelworks (technology and capital)
3. A locomotive factory
4. Maglev trains
as for the short term, I agree with you. We really need a station in Phuket and Rayong. And then highspeed rail (300+) comes next.[/quote]
1. Railways technology research & development institute ->
2. Massive steelworks (technology and capital)
3. A locomotive factory
4. Maglev trains
My Responses:
1. Need to be REINVIGORATE the SRT Technical to school to be t par with KMITL ... need cooperates with JR Group and JICA to do this down and dirty job
2. Massive Steelwoks -> Let Sahaviriya do ths down and dirty jobs since they can manage the massive importation of iron ors and coal to load into theri caergo ships to their propose steel mills in Bang Saphan ... they Sahaviriya hasd successfully to implement such a giant steel mills ...
Otehrwise, better encoragign the existign still mills such as Siam Yamato to make heavy invesment on the rolling machine to turn steel chunks into logn rails ....
3. Locomotive & Rollign stocks Factory -> Bingo! That's excatly the new version of Makkasan Maintiance center should be. Better learn from Idonesia railway whcih manage to get the license from GE to produce locomotives ....
4. Maglev? Man, Are YOU NUT?! That will push much STRESS and STRAIN on thsoe workers as well as researchers tto such extend that it can break their neck alive!
better get more pragmatic approach to slove existing problems wtih very good results
5. Revitalize the Hotel/Resttaurant Section to improve the service quality would also help ... Just relyign on outsourcing alogn with contracting ALONE will NEVER work to imptrove service quality .... I can testify for that! !
Well, that is why I said 20+ years time I'd like to see us have maglev. Perhaps by that time it will be a commercially viable technology, thus, it is a factor we should keep in mind.
After reading your posts for a while, I have concluded that your share the same thought as a foolish billionair who wants the builders to construct 3rd floor of his house ONLY while asking the builders NOT to lay the foundation pins, and construct the 1st and the 2nd floor .... After all he want to live in the 3rd floor ...
Umm...can you say with all certainty that in 20+ years time maglev technology will be as cheap and readily available as the Skytrain is now?
Your analogy fails to win any logical argument. So let me repeat what I originally said loud and clear, in twenty OR MORE years' time (which is in the future by the way), IF, MagLev has become a viable technology that we can build on.....
I'll be glad to live on my third floor in a space station counting my money.
Could our country produce or even mass product materials needed for MAGLEV such as Supercoductors (both ceramic and metal ) along with special coolants (eg. Liquid Helium and liquid Nitrogen) to stabilize superdonductivity at all ...
Furthermore, I still doubt if we have other relating technologies to ensure good maintianace of the MAGLEV fleets alogn with the track ...
FAILTURE to maintian the rollign stock and tracks with superconductors will deteriorate the service without doubt ...
Hope this will clearify what you are askign for!
Last edited by Wisarut on 26/11/2006 10:16 pm; edited 1 time in total
Well, If we can make proper maintain of tracks/rollign stocks of wheeled railway, they we could go to the neex tep ... High Speed passenger trains/cargo trains .... Nedxt on the line may be MAGLEV .... it has to go as step by step as I insist
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