Should the private sector lead in the public transport?

By S BIRRUNTHA / Pic By ARIF KARTONO

THE country’s public transport can be liberalised and managed by the private sector with companies to determine the need and demand.

Institute for Democracy and Economic Affairs senior fellow Dr Carmelo Ferlito said the public transport segment remains very traditional in nature.

“The case is more complicated because we have a consolidated situation in place.

A liberalisation can happen only in time and step by step. Liberalisation does not simply mean privatisation, but opening the market to competition.

“And competition can only benefit customers. Of course, it would be necessary to monitor the competition which can bring along adequate services.

“So, in the case of public transport, I see the possibility for a gradual opening to the market to favour consumers, promote better entrepreneurial decisions and relieve the government from financial burden,” he told The Malaysian Reserve (TMR) in an email reply.

He added that when private sector operates outside the market, it is more difficult for the government to identify emerging needs and appropriate answers, especially in terms of prices.

“However, the government could decide to operate beyond market logic, if the provision of a certain service at a ‘political price’ is considered strategic.

“It goes without saying that such services, when provided with a loss, are financed either by increasing taxes or debt.

“We have to distinguish between private initiative and legal-institutional framework.

“To let the private initiative to lead an industry does not mean to leave that industry without an adequate reference legal framework,” he said.

He said e-hailing has emerged as a new solution to a certain need before any legal framework.

“For e-hailing, certain issues will need to be taken care of from an institutional perspective. We have to understand that the service achieve a great success due to its flexibility.

“Although in some aspects, the legal framework will become necessary, it is important to know that businesses have to be private at any cost,” he added.

E-hailing has becoming a key part of the country public transport. Recently, there were reports of e-hailing services using buses. Indonesia’s Gojek is expected to enter the race in Malaysia despite the over 40 ride-hailing operators in the country.

Rakuten Trade Sdn Bhd VP for research Vincent Lau expressed that public transport should be driven by the government in consultation with the private sector.

“I honestly think the public transport sector should always be spearheaded by the government as it is meant for the public’s wellbeing.

“Because if it is led by the private sector as the whole, I think a lot of social initiatives and profitable rules will not be there.

“For instance, if you see for the train service by Rapid, the government provided RM100 unlimited travel pass for 30 days, which is beneficial for the daily commuters.

“So, I am not sure if the private sector will be able to provide such incentives,” he told TMR.

He added that the government should align with the private initiatives especially in terms of commercial aspect.

“They should work on how best they can deliver to the people. It is important to let the commercial part to be the driving factor.

“However, for the e-hailing sector, it has to be managed by the private sector, because it is customer-based business and it is very competitive.

“So, it should be left to the entrepreneurship to run the sector. The government can facilitate and supervise regularly, but they should not impede the whole thing,” Lau said.

Lau also said there has to be a balance in terms of managing the transport sector since it is a social responsibility from both private and the government.

He said at the same time, the government subsidies are very important to help boost and improve the public transport service in the country.