To awaken the sleeping (and sluggish) giant…

The emergence of other rail service operators such as LRT and MRT has ‘dwarfed’ KTMB’s reputation as it strives to stay afloat and respectable among its competitors


FOR over a century, railway services in the country have transformed tremendously.

What started out as a simple 13km route for miners is now 1,000 miles (1,610km) of tracks carrying millions of passengers.

The first rail track services began in 1885, between Port Weld and Taiping in Perak, which was once the heart of the tin-rich Larut Valley in Perak.

The simple and straight-forward route was developed by the national railway company — Keretapi Tanah Melayu Bhd (KTMB).

The locomotives were initially powered by the traditional steam technology. After the country’s independence in 1957, dieselpowered trains which were more efficient took over the tracks.

From that point onwards, the train has become rather important to Malaysians, particularly for long haul journeys.

In 1995, the first KTMB electric commuter began its operation in Malaysia, connecting commuters from the central region of Klang, Selangor to Seremban, Negri Sembilan.

This, of course, was long before the popular KTM Electric Train Service (ETS) began its operation from KL Sentral in Kuala Lumpur (KL) to Padang Besar, Perlis and Padang Besar to Gemas, Negri Sembilan.

Today, KTMB’s trains run on the company’s routes that cover some 1,655km, carrying over 30 million passengers and six million tonnes of cargo annually.

The 135-year-old organisation is now the holding company for a host of subsidiaries that are in railway- related businesses, including property, train catering, rolling stock maintenance, provision of haulage and freight forwarding, as well as warehouse management and office space.

However, the emergence of other rail service operators like light rail transit in the late 90’s to the recent mass rapid transit, as well as the upcoming multi-billion East Coast Rail Line (ECRL) and KL-Singapore high speed rail, has somehow “dwarfed” KTMB’s reputation as it strives to stay afloat and respectable among its competitors.

Kamarulzaman has pledged to strengthen KTMB’s internal organisation, fulfil users’ satisfaction and deliver the organisation results to its stakeholders

According to KTMB’s 2017 Financial Report, its total liability was recorded at RM1.95 billion over, only RM731 million assets reported.

Its year loans and borrowings also hit almost RM473 million.

In short, the Ministry of Finance (MoF) Inc-owned corporation now relies rather heavily on government coffers.

According to the Auditor General’s Report 2018 Series 2 issued in December last year, KTMB’s accumulated loss as of Dec 31, 2018, stood at RM2.83 billion.

To cushion this impact, former air force engineer Datuk Ir Kamarulzaman Zainal was installed to take charge of KTMB and manoeuvre the company to a new direction.

The 57-year-old corporate man has more than 13 years experience in Malaysian-Industry Government Group for High Technology and 20-over years in the army. He has also been on the KTMB’s board since 2016.

In an-hour-long interview, Kamarulzaman shared his vision, as well as challenges and expectations that he is facing to drive the country’s oldest railway operator forward.

Be Realistic (and Practical)
Kamarulzaman admitted that he has a herculean task to turn around KTMB and bring it in the black.

After all, in general, public transport services are not typically measured by the return on investment.

For the longest time, the oldest railway company has always been scrutinised heavily by the public. The complaints could sometimes be scathing. The brickbats would keep pouring in — from the delays of the Komuter’s system in the Klang Valley, the group’s underutilised tracks to the unprofitable routes including the East Coast services, everyone seems to have something to say about KTMB.

The shareholders are certainly concerned and if the issues are not addressed, KTMB will continue to bleed and the government would have to continue pumping more capital.

Kamarulzaman said the main aim now is to reduce KTMB’s reliance on the government.

He said the rail company will have to embark on innovative ways to sustain its operations, while being prudent in procuring new assets.

The strategy also includes diversification in non-rail fare revenues and to expand more on the cargo segment.

Kamarulzaman said the turnaround programme would take some 10 years to be fully realised.

He added that a study is currently being conducted to understand how KTMB could thrive and ultimately break even.

“With the strategy, we want to be a respectable and reputable railway organisation, at least in the Asean region by 2030,” Kamarulzaman said after presenting his 100-day report card to KTMB’s senior officers at the company’s headquarters in KL recently.

He said findings from the study are expected to be announced this year.

Challenges with RAC and RNAA
Apparently, KTMB has been relying too much on train tickets sales.

The audit also found that the loss was due to KTMB’s inability to make its own decision, particularly regarding the company’s asset management.

The railway operator will still have to rely heavily on its Komuter business activities to remain afloat

Much of the loss was also attributed to the formation of Railway Assets Corp (RAC) in 1992, which was assigned as the owner of all KTMB assets under the Transport Ministry supervision, originally set to chart a better growth for rail industry in Malaysia.

RAC controls a staggering RM34.5 billion worth of assets — including rolling stocks, signalling systems, railway land in strategic locations and more than 1,600km of railway tracks currently being utilised mainly by KTMB.

As part of the takeover deal, RAC had absorbed KTMB’s RM2.1 billion debt to enable the national railway firm to focus purely on improving its operations and efficiency.

To achieve the growth, both KTMB and RAC also signed a 30-years deal, namely the Railway Network Access Agreement (RNAA) on December 2016, which clearly set out the roles of KTMB as the rail operator and RAC as the rail owner.

As the rail owner, RAC has to bear the cost of maintaining all infrastructure such as track, stations, signalling, electrification, stations, depots, office buildings, staff quarters and major maintenance of rolling stocks, while KTMB will only be responsible on the minor maintenance of all rolling stocks.

All rolling stocks owned by KTMB were supposed to be transferred to RAC and subsequently, KTMB would also lease the required rolling stock from RAC.

Originally set on Jan 1, 2018, RNAA was, however, deferred until now due to failure in consensus between both parties, especially after strong objections were voiced by KTMB’s railway union.

Since KTMB is looking to expand and optimising its non-fare revenue from 3% to 30% in the next 1 years, especially via asset management, Kamarulzaman said RNAA, which is being reviewed, is expected to be done in a fair manner to the railway operator’s business plan.

Kamarulzaman is also not too keen on the idea of allowing KTMB’s track to be used by third party railway operators as suggested by the government’s National Transport Policy 2019- 2030 with plans to liberalise the country’s railway usage mainly for rail freight.

As an alternative, KTMB is currently seeking a Private Financing Initiative from investors to acquire RM1 billion worth of rolling stocks, which will be based on revenue sharing concept.

Kamarulzaman said it would avoid any capital expenditure injection from the government, while allowing KTMB to optimise its own railways without the involvement of other operators.

Revising Fare, Provide New Trains
In 2016, the northern Komuter service between Padang Besar and Butterworth, Ipoh, was opened to the public with tickets charged at 10 sen per km.

Kamarulzaman said the route is fully utilised during the weekend, especially from Thursday to Sunday.

He said KTMB plans to upgrade the train frequency from 48 trips a day by another six trips a day over the weekend, which would also see the upgrade to new sets of cars.

To justify the additional services, Kamarulzaman said KTMB’s board is finalising a proposal to revise the per km rate of the route.

“The rate is too cheap, even half of the bus’ rate. So, we are looking at standardising this, similar to what is being charged by the Klang Valley’s Komuter, at 14 sen per km,” Kamarulzaman said.

As for the east coast services, KTMB’s intercity “loss-making” route is still operational although at a lower frequency and ridership compared to the ETS and the Klang Valley’s services.

Nevertheless, as the national rail carrier, Kamarulzaman said KTMB is expected to provide new diesel multiple units trains for the route soon.

“As the national rail carrier, we still have to provide this service to the people, even though the fares could not compensate the operations.

“We hope the new car sets will offer a more convenient journey to the passengers,” he said.

Revamping Ticket System, E-Wallet Service by Next Year
Last November, KTMB offered 1.2 million tickets for its ETS and intercity Komuter services for journeys between December 2019 and February 2020, mainly targeting the high traffic during multiple festive seasons.

However, a sudden spike of access to the ticketing system has overloaded KTMB’s server, causing delays of up to 30 minutes for ticket issuance.

The glitch got the Transport Ministry’s attention and KTMB was asked to revamp its ticketing processes.

KTMB had since awarded the project to a company, aiming for the major revamp to take place by July this year.

Kamarulzaman said the project would cost less than RM20 million to complete, comprising the installation of gate access machines and ticket vending machines at the stations.

The gate system will be installed at the northern region, while new ticket vending machines will be placed both at the Klang Valley and northern Peninsular.

“After we set this new foundation, we will integrate the system with various e-wallet providers in the country. Discussions had just begun and we target to implement this by second half next year,” Kamarulzaman said.

As of now, travellers are still required to present cash, either at the counter or the vending machines to top up their Komuter Link and Touch ‘n Go cards.

“We estimate that this only represents 20% of the real meaning of cashless. After this, we plan to provide not only e-wallet platform, but also a credit/debit card pay wave machine at the access gate for seamless and smooth journey of our customers.

“This will be very convenient, especially for tourists,” Kamarulzaman said.

As it is, the railway operator will still have to rely heavily on its ETS services and some of its Komuter business activities to remain afloat.

Could this former air force engineer be the right captain to reverse KTMB in the next decade?

In his 100 days report card presented to his senior management, Kamarulzaman already outlined few initiatives and outlook, which he pledged to strengthen KTMB’s internal organisation, fulfil users’ satisfaction and deliver the organisation results to its stakeholders, especially MoF Inc. Only time will tell…