The Malaysian Reserve

Prasarana should consider assets divestment

Last year, Prasarana recorded a loss of RM2.5b despite posting a higher revenue of RM846m (Pic by Ismail Che Rus/TMR)

Assets divestment to private firms can be a win-win move for both the company and the public, says Ramon

By ALIFAH ZAINUDDIN / Pic By ISMAIL CHE RUS

Prasarana Malaysia Bhd should sell some of its businesses to private-run companies to ease its financial constraints, said former Ministry of Transport secretary general Tan Sri Dr Ramon Navaratnam.

The cash-strapped state-owned public transport operator is working to put itself back on track after inflated costs on several key projects left the company saddled with debt, which led to the recent payment of employee salaries via a government bond issue.

Ramon said the divestment of some Prasarana assets to private firms would be a win-win move for both the company and the public as gains and better transport services can be expected.

“Why not? It must be somebody who can manage it and do good business. Public interest must remain guarded. If the private sector takes over, there must be some checks on profit. That can easily be worked out by the government. There are modules to follow around the world,” Ramon told The Malaysian Reserve recently.

Prasarana is the asset owner and operator of Malaysia’s light rail transit (LRT) networks, the KL Monorail, mass rapid transit, Sunway BRT (bus rapid transit) and bus services in Kuala Lumpur (KL), Penang, Kuantan and Kamunting.

It is a wholly owned entity under the Ministry of Finance. The ministry recently appointed three new executives to restore the company’s financial health. The new appointments include DRB-Hicom Bhd group director of organisational support Datuk Mohamed Hazlan Mohamed Hussain as CEO, as well as Ang Yoke Kee and Muhammad Nizam Alias as group COOs.

Mohamed Hazlan took over after Prasarana’s former CEO Masnizam Hisham’s three-year tenure was cut short due to severe cost overrun on the LRT Line 3 (LRT3) project.

In a Facebook posting, Masnizam said she was given the role with sufficient cashflow that would only last for three months.

She said the company had undertaken various initiatives which had resulted in a cost saving of RM175 million as at July this year. This will help to ease Prasarana’s losses by RM200 million by the end of the year.

“This is not a matter for Prasarana alone. It is a question of whether we want the public sector to take over and run all the infrastructure in the country. It is not Prasarana’s fault, the philosophy is wrong. Do you want to be competitive and efficient, or do you want to look after some people?” Ramon said.

Last year, Prasarana recorded a loss of RM2.5 billion despite posting a higher revenue of RM846 million.

Its income was mainly derived from the sales of tickets and ancillary services, such as advertising space on trains and at bus stations.

Finance Minister Lim Guan Eng said in July that poor management by Prasarana had inflated the cost of the LRT3 project — including land acquisitions, fees and interest — to RM31.5 billion from the initial estimate of RM9 billion when it was launched in 2015.

The Cabinet has since directed Prasarana to cut the LRT3 project cost by half to RM16.6 billion by reducing the number of train-sets, shelving five stations and pushing the project deadline to 2024.