Another change in management @ KTMB

TRANSIT was surprised to hear the news this morning that the Managing Director of KTMB has been replaced.

Change at KTMB
By Sharen Kaur
sharen@nstp.com.my
2009/06/05

Sources say Keretapi Tanah Melayu Bhd MD received his service termination letter from the Minister of Finance Inc last month.

Keretapi Tanah Melayu Bhd (KTMB) managing director (MD) Datuk Abd Radzak Abd Malek has been asked to leave the national rail company effective July 31, a year short of his contract.

KTMB Managing Director Keretapi Tanah Melayu Bhd (KTMB) Datuk Abd Radzak Abd Malek has been asked to leave KTMB, a year short of his contract.  He is widely expected to be replaced by current Express Rail Link (ERL) chief executive (CEO) Dr Aminuddin Adnan.
KTMB Managing Director Keretapi Tanah Melayu Bhd (KTMB) Datuk Abd Radzak Abd Malek has been asked to leave KTMB. He is expected to be replaced by current Express Rail Link (ERL) chief executive Dr Aminuddin Adnan.

He is widely expected to be replaced by current Express Rail Link (ERL) chief executive (CEO) Dr Aminuddin Adnan.

Sources said Radzak received his service termination letter from the Minister of Finance Inc (MOF) last month.

KTMB officials declined to comment, but said the company was waiting for the government to make an official announcement.

Radzak, who previously served as KTMB Freight Service Division general manager for 11 years, was appointed MD in place of Datuk Mohd Salleh Abdullah on September 2 last year.

MOF had initially appointed former Pos Malaysia Bhd CEO Datuk Idrose Mohamed [TRANSIT: Idrose is now Managing Director of Prasarana] to take over as KTMB MD, but later rescinded the decision.

Business Times understands that Aminuddin received an offer letter from MOF a few days ago.

He has been asked to take up the role of MD and ensure improvement to KTMB’s financial structure.

“Aminuddin has accepted the offer and will undertake a corporate restructuring upon finding out what went wrong in KTMB.

“He will need some time to study KTMB and meet with the existing board of directors and management before moving to the next step,” sources said.

Aminuddin, who was previously with UEM Group, was not available for comment.

He has been serving ERL, owner and operator of the high-speed KLIA Ekspres and KLIA Transit train services between Kuala Lumpur Sentral and KL International Airport (KLIA), since the project started in 1996.

A source said that former KTMB chairman Tan Sri Lim Ah Lek may also return to the company following Aminuddin’s appointment.

Lim left KTMB in September last year as he was not in favour of Radzak’s appointment as the MD.

Sources within KTMB said there was no proper structure in the company and they feared that it would lose money again this year.

KTMB – which is involved in freight, intercity and commuter train services, and property and advertisement – has been bleeding red ink since it was corporatised in 1992 due to high operating costs, although it did make net profits of between RM9 million and RM15 million from 1993 to 1995.

In 2007, it posted a net loss of RM116.1 million on revenue of RM349.2 million. It is believed that for 2008, KTMB will post a loss of RM150 million on lower revenue.

KTMB is still suffering from high operating costs of RM200 million a year despite efforts to lower expenditure by reducing manpower and stopping non-profitable operations.

TRANSIT Says:

If KTMB is facing problems because of high costs, we really have to evaluate where the problems are.  But we have to do this with understanding.

Railway service is broken down into 3 categories – freight, intercity and sometimes commuter service.  KTMB’s freight division is profitable (as most freight divisions are).  The Komuter service is near profitability (as many Commuter services are).  KTM Intercity service is not profitable (as most intercity service usually are not).

But each of these passenger rail services has a very important role.  KTM Komuter carries 100,000 passengers per day and really could carry more if the service were expanded the way it ought to be expanded.

KTM Intercity service links small towns and communities and makes them accessible to those that choose not to drive.

Even if the costs are high, the services still need to be maintained.  And increasing fares would make the service less affordable for many users.

These factors must be understood in all of these cost cutting measures that are presumably to be taken by the new Managing Director.

We should also consider the following truths:

  • That KTMB HQ is located in a very old building.
  • That KTMB have moved their railway workshops from Sentul to Batu Gajah to save costs, and sold that valuable land.
  • That KTM intercity and Komuter services are at the bare minimum level.
  • That  KTMB is a limited company and publishes an annual report.

So where are the problems? And where are the solutions?

TRANSIT can only say, do not cut costs at the expense of service.  What we need is a real investment in the KTM service as soon as possible.  Maybe it is time for the government to take KTMB back under its wing. Or maybe not.

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