Malacca government steps forward on public transport with RM7.7mil compensation and takeover plan. Will they learn from RapidKL? (Update #1)

Update #1: Updated with more letters & articles

TRANSIT took note of the following interesting news – the Malacca state government is stepping forward with plans to compensate 10 existing public transport operators in the state with RM7.7 million, with a plan to for state-owned operator Panorama to take over the operations from the private operators on February 1st of this year.

New Panorama Melaka midi-bus. Image courtesy of Jom Naik Bas!

The takeover proposal appears to forestall the warnings from the Malacca Omnibus Operators Association that they would be forced to stop services on February 1st.

Malacca to give RM7.7mil compensation to ailing omnibus operators (The Star)

26 January 2012

MALACCA: Malacca’s ailing omnibus operators will get RM7.7mil in compensation from the state.

Chief Minister Datuk Seri Mohd Ali Rustam also announced Thursday that the state-owned agency, PMTC, would fully take over the stage bus operations from Feb 1 while the current dilapidated buses used by ten operators would be replaced in stages.

The memorandum of understanding between the state government and Malacca Omnibus operators was signed at Dewan Seri Negeri.

TRANSIT Says:

So, the state government is paying RM7.7 million to buy old buses from these bus operators, which they will then turn around and use on the existing public transport routes while the buses are replaced over time.

That basically sounds to us like the process by which Intrakota and later RapidKL were created – pay good public money to buy up near worthless private assets, buy new bus chassis at an inflated cost with a ‘too-short’ timeline, leading to:

  • contracts for Malaysian bus assemblers;
  • a need to purchase new buses in a few years;
  • public complaints about the loss of competition.

Hopefully, the Malacca government and SPAD will have learned from the mistakes made by RapidKL & Prasarana in the past. One wise step to take would be to take the purchase of new buses out of the hands of Panorama Melaka Cultural & Tourism (and the state government) and put the purchase in the hands of national infrastructure company, Prasarana.

Why? Because first of all, Prasarana knows what buses to buy, thanks to their 5 extra years experience in purchasing buses. Second, Prasarana is the national infrastructure company, with the right financial backing to get the buses at a great price. Third, it is best to keep the purchase of buses neutral and focused on the improvements, not potential opportunities.

TRANSIT also believes that the Malacca Government needs to develop a concise and effective public transport plan that builds on the major corridors that need to be served – namely the existing Malacca town buses, Malacca – Ayer Keroh route (including the proposed Malacca Tram), and the intercity services connecting Malacca town to Alor Gajah and Tampin (where it can link to KTM train services including possible future ETS.

From the article, there is more info to come. In the meantime, take a look at the articles after the jump, which detail the situation in Malacca and the way that the plan came together.

Related Stories:

Help for 10 Malacca bus firms (The Star)

23 January 2012

By R.S.N. MURALI
murali@thestar.com.my

MALACCA: The state government has agreed to form a consortium comprising all 10 ailing bus companies in Malacca.

A reliable source from the state government said the agreement was struck during a meeting between the Malacca Omnibus Operators Association and Chief Minister Datuk Seri Mohd Ali Rustam recently.

“An amicable solution has been formulated, in which the state government has agreed to establish a consortium. [TRANSIT talked about a consortium of Malacca bus operators some years ago. We even gave it a name – Consortium of Malacca Bus Operators (or COMBO). Do you like the name?]

“This will halt the association’s plan to stop services from Feb 1,”he told The Star yesterday.

The source said all 10 operators would continue to enjoy profits although they would come under one body managed by the state government.

[TRANSIT: It is not an ideal situation, but if the public gets an opportunity to give feedback and sees improved service, it is tough to complain. Especially considering that few other state governments have managed to do anything to restore bus services, let alone preventing shutdowns in the first place – which to be fair, is not exactly a state government responsibility. Thanks SPAD for putting the state governments between a rock and a hard place, forced to step in when they haven’t any existing responsibility!]

He said another meeting was expected to be called next week to fine-tune the agreement, which would lead to the formation of the consortium.

However, the source said that the quantum of shares allocated for each of the operators under the new consortium has yet to be ascertained and would probably be discussed during the second meeting after Chinese New Year break.

[TRANSIT: Instead of a consortium, the state government should create a local public transport organizing authority and hire the bus operators to provide services under one brand. That’s how it works in London, most other cities in the UK, as well as parts of Australia & New Zealand, the USA, Canada, Jakarta, Seoul, Santiago, Curitiba, Bogota, etc. etc. etc. The local public transport organizing authority should include members of all stakeholder groups, especially public transport users.]

He said the public transport ticketing system, routes and fares would also be reviewed.

“The state will also draft measures to help keep bus services afloat, particularly on unprofitable routes in the rural areas,” he added.

It was reported that Malacca stage bus operators had threatened to halt their services from Feb 1 in protest over the state government’s failure to solve the concessionaires’ woes.

The impending strike was aimed at forcing the state government to pay compensation to the ailing bus operators as promised in July.

In November, the state government had agreed in principle to buy all 10 stage bus companies, which served about 130 routes in order to alleviate their financial burden.

Malacca Omnibus Operators Association president Razali Endun said the bus operators had suffered huge financial losses as much of their earnings were used for maintenance of their ageing fleet, besides paying salaries to about 1,500 staff.

TRANSIT Says:

We want to see solutions, but we want a major step forward with real consideration for public transport users – not government & public transport operators sharing the same table.

Also important is leadership from SPAD. Instead of telling the public transport operators and state governments to work together & find their own solutions, we need to see leadership from SPAD, setting an example for others to follow.

We do not need 10 solutions to the public transport crisis in Malaysia, one for each state. We need one effective solution, based on best practices, applied everywhere.

SPAD: Meet state government to settle woes (The Star)

9 January 2012

PUTRAJAYA: The Land Public Transport Commission (SPAD) has urged the Malacca Omnibus Operators Association to meet the state government to resolve its financial woes.

SPAD chairman Tan Sri Syed Hamid Albar said the problem could be settled if the group discussed the matter so that an agreement could be reached.

He said there was a need to review the public transport system in the state.

“We need to examine the whole system, including the ticketing system, routes and fares, among others, to improve the current situation. Bus operators should also be financially ready to compete with one another,” he told The Star.

The Government, he said, had come up with short-term measures to help keep bus services, particularly on unprofitable routes in rural areas, afloat.

On Dec 19, the Government pledged a RM400mil fund to support troubled stage bus companies. SPAD began receiving applications on Jan 3.

Stage bus operators in Malacca had threatened to halt their services from Feb 1 in protest over the state government’s failure to solve the concessionaires’ woes.

Malacca Omnibus Operators Association president Razali Endun said 10 of the concessionaires decided to halt their buses after no financial lifeline was rendered as pledged by the state government.

“The impending strike was aimed at forcing the state government to pay compensation to the ailing bus operators as promised in July.

“We have waited for the monetary assistance until Dec 31 but there was no response from the state government,” he said.

….

TRANSIT Says:

This article, from July 2010, talks about the early plan for a RM36 million proposed compensation plan.
Malacca bus operators seek dialogue on proposed RM36mil fund. We also took note of the following information from Bernama:

  • RM5.4 million was for 110 buses, RM1.8 million for 118 workers and an additional RM500,000 in compensation.
  • The operators are Syarikat Perusahaan Kenderaan Hj Aziz Bin Alias Sdn Bhd, Syarikat Town Bus Service Bhd, Syarikat Malacca Omnibus Service Sdn Bhd, Syarikat Bas Tai Lye Sdn Bhd, Syarikat Patt Hup Transport Sdn Bhd, Syarikat Bas Tuah Sdn Bhd, Syarikat Batang Bus Sdn Bhd, Syarikat Salira Transport & Tours Sdn Bhd, Syarikat Roda Juara Sdn Bhd and Syarikat Bas Wira Sdn Bhd.
  • RM8.8 million assistance from the Melaka Foundation, Chief Minister Incorporated, Malacca Historical City Council, the state government, Hang Tuah Jaya Municipal Council and Syarikat Air Melaka Bhd. [TRANSIT: 8.8 million? What happened to 7.7 million? What happened to the 1.1 million?]
  • Bus services would now be handled by PMCT Sdn Bhd, a subsidiary of Chief Minister Inc, under the name Panorama.;
  • Among the improvements to be made are: replacing all the buses, introducing computerised ticketing and expanding bus routes from 80 to 141, including to rural areas;
  • 10 Panorama buses [TRANSIT: See photos here] had begun operations while the rest would come in stages within one year;
  • The buses were leased from SCOMI Special Vehicle Sdn Bhd at a cost of between RM10,000 and RM13,000 each a month.

More articles & letters:

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4 thoughts on “Malacca government steps forward on public transport with RM7.7mil compensation and takeover plan. Will they learn from RapidKL? (Update #1)”

  1. Will the State governement hand it now to professionals or lease the operations to another single company to manage it ans then watch it collapse again They should get residents to have a say in the management on the routes etc. They should go back to the very same people who need the bus services more than the “professionals” sitting in their air-con rooms and planning with their car mentality. The residents and even the drivers of the buses should be consulted FIRST.

  2. Transit has been consistent in advocating for the re-organisation of PT, which includes the establishment of a Local PT Organising Authority (LPTOA), which will tender out routes for bus companies to operate, but different companies may share the same branding if they so wish. This way, existing bus companies will stay in the business, instead of seeing their share of business taken over by some GLCs.

    I guess it goes without saying that this tender process must be repeated every few years. Also, the LPTOA must take into consideration the service quality (frequency, driving etiquette, pricing, comfort etc) of individual companies.

    I assume in this case, bus companies must calculate how much they can make from collection throughout the contract period, before deciding which route to bid for.

    However, what if the routes are not profitable? Unlike in London or HK where most people travel by public transport, I guess beyond KL, many Malaysian routes have been unprofitable for a long time, thus the low frequency, low service quality, and finally operators throwing in the towel and calling it a day.

    We have plenty of those, perhaps many in rural Kelantan, Pahang, Kedah, Sabah, Sarawak are money losers. Undeniably there will surely be some commuters, but fares they contribute can never cover the overheads. In that case, which company will bid for them?

    Then we are back to square one isn’t it?

  3. Based on what I hear from my relatives who make it a point to use public transport in Malacca, they say that the service is “hopeless”. They live in Kelebang, which was previously served by numerous buses plying the northern coast route and never had to worry about long wait times. Now, however it seems that their wait along the main road can easily go up to 30 minutes or more. This doesn’t bode well…. A Public Transport Authority is what is needed, not another company operated by Chief Minister Inc.!!! But then again, this is just something else that Ali Rustam has gotten his hands on.

    1. Hopefully, the Malacca government and SPAD will have learned from the mistakes made by RapidKL & Prasarana in the past. One wise step to take would be to take the purchase of new buses out of the hands of Panorama Melaka Cultural & Tourism (and the state government) and put the purchase in the hands of national infrastructure company, Prasarana.

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