Friday, January 6, 2012

Our transport system, a financial mismanagement or lacking the operational knowhow

A few years ago, Mahathir commented that if the  amount of money given to the bumiputras, were to be given to the Chinese, they would have turned any  business venture into a success.  I do not know what his motives were for saying that, just like he once said that 90% of the income tax were paid by the Chinese.  Were these to spur the Malays to work harder or were they said to make the Chinese look more like some money-grabbing freaks.  Now what have this got to do with our transportation system that have gone awry?

Back in the 60s and 70s, when many of the bus companies were managed by the Chinese and the Indians [mainly the Chinese], companies like Toong Foong, Len Seng and Foh Hup, to name three, were operating profitably.  Taking into account that during those days, the commuters were less in numbers compared with today and furthermore, the road infrastructure, especially those used by the so-called 'stage coach'-es, were atrocious.  There were pot-holes galore from KL to Singapore or to Penang, not forgetting that sometimes, there would be some sink-holes especially in the Perak area.  The type of seats used were the most uncomfortable I ever come across, and many of us ended up at the end of our journey with an aching hiney. Today, the commuters have increased many folds and the roads, I mean, the highways are now so much better.  It is now like a breeze travelling to either Singapore or Penang, or even to the East Coast.  So what went wrong?  How could these bus companies be facing loses of such magnitude?  I believe it is in the way they manage the business, simply put - planning and control.

But within the Malay-sian context,  there is this lacklustre attitude in managing the business knowing very well that at the end of the day, government bailouts will be inevitable.

Perhaps, you can only find the strange phenomenon, in which a businessman is not required to bear business losses while a bidder with the highest bid does not necessarily win the bid, in Malaysia.

The government recently approved a RM400 million fund to assist stage bus companies which are facing financial problems in continuing their operations. The Land Public Transport Commission (SPAD) is expecting 200 applications.
Why are urban bus companies closing down one after another? Would it be a bad precedent for the government to save them?
The move of saving these companies is meant to take care of the people’s interests. If the bus services are suspended, the people would have to suffer the consequences. However, since the government’s assistance is only a temporary solution, they should identify the reasons of the losses or the problem will never be completely solved.
The stage bus industry has gone through its heyday in the 1960s and 1970s and is now a sunset industry. In the 1980s, the industry was led by Chinese operators. However, urban bus companies were instructed to merge, resulting in only two out of eight bus companies left in Kuala Lumpur. Under the New Economic Policy (NEP), the Commercial Vehicle Licensing Board (LPKP) also required 30 per cent Bumiputera equity.
Perhaps it was profitable, government-linked companies have also joined the bus industry. The government subsidised RapidKL, operated by Syarikat Prasarana Negara Bhd (Prasarana), causing some bus companies to be unable to compete and face losses.
The plight of public transportation is derived from the absence of a good planning. Bus routes of different companies are not converged and the quality of services has not improved, resulting in the loss of passengers. Other factors include the development of national cars and inactive handling of traffic congestion problems. Instead of providing assistance to private bus operators, the government is actually competing with them. Ironically, RapidKL is also suffering huge losses.
The market space has been reduced after government-linked companies joined the bus industry. However, management has not been improved, causing difficulties to themselves, as well as to others. The plight of the bus industry is actually a microcosm of other important areas. How is the economy going to transform without removing these drawbacks?
However, many people do not learn from the decline of bus industry. Instead, they expect the government to provide indefinite subsidies. For example, some people take Proton as a national business and refuse to sell it to foreign companies. They deliberately ignore the fact that Proton needs a capable foreign partner to enhance management and technology, and walk out of the plight.
The Malay Chamber of Commerce Malaysia (DPMM) also opposed the move by Johor Corp (JCorp) and CVC Capital Partners Asia III Ltd to buy out QSR Brands Bhd and KFC Holdings (M) Bhd (KFCH) to avoid the KFCH from falling into the hands of foreigners, claiming it is a violation to the NEP.
The DPMM proposed to seek RM1 billion of funding from several Bumiputera-linked funds and companies, including Felda Holdings Bhd and Amanah Saham Mara, to buy out QSR Brands Bhd. If the takeover is successful, the Malaysian market will be further closed, affecting the confidence of foreign investors.
The entanglement of business and politics will cause more companies to withdraw from Malaysia and the country will be the one to suffer losses.
What is there to be proud of being a kampung champion waiting for the government’s aid?

1 comment:

  1. The condition of public transport is derived from the lack of good planning. Bus routes by different companies.

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