The biggest private bus operator, Datuk Mohd Nadzmi Mohd Salleh, talks about the challenges in the business and what needs to be done to overhaul bus service
RUNNING a private bus operations in the Klang Valley today is not a viable business, says Datuk Mohd Nadzmi Salleh, the biggest private bus operator. Nadzmi, who had bought the privatised Kumpulan Kenderaan Malaysia Bhd (KKMB) from Mara Holdings in 1997, says he has suffered “millions of ringgit of losses” in the running of public “stage” and express buses.
“I regret venturing into this business,” says the chairman of Konsortium Transnasional Bhd (KTB) in a candid interview with StarBizWeek recently.
Among the factors that has made bus operations non-profitable over the years is the escalating cost of operations including purchase of buses and rising staff salaries.
The government-imposed cap on ticketing prices has been another issue why it is difficult to sustain the business.
However, he reckons that the biggest blow to private operators is the situation since 2004 when RapidKL ventured into the business of operating buses. “In almost all our the routes that we ply in the Klang Valley, we are up against RapidKL,” says Nadzmi, who is also chairman of Proton Holdings Bhd since January this year.
To be sure, it has long been the grouse of operators like Nadzmi that they are in a disadvantageous position, having to compete with the government-owned RapidKL
RapidKL, or Rangkaian Pengangkutan Intergrasi Deras Sdn Bhd, is owned by Syarikat Prasarana Negara Bhd, which in turn is 100% owned by the Finance Ministry.
Another significant problem is the lack of drivers, as there are so many companies wanting to hire them as well as lack of controls over how ticket sales is managed, says Nadzmi.
Nadzmi says the Government should tender out specific routes to private companies, with the most suitable candidates chosen. In return, the operator is paid a fixed fee per km that they run, which includes the operators’ cost plus a profit margin.
Ticket sales on the other hand should be entirely in the hands of the Government, using prepaid tickets.
“All revenue should go directly to the Government. While the Government may not necessarily make a profit from this (after paying the operators’ fixed fee) it would certainly not be making the losses Prasarana is enduring today. So the Government will be paying less to subsidise public transport.”
To ensure that operators provide a high quality of service, certain key performance indicators or a customer service index can be created to ensure that bus companies do their jobs well.
Interestingly, Nadzmi’s plans are not too different from those of the recently-formed Land Public Transport Authority or SPAD.
But Nadzmi had earlier expressed his disappointment about not being included in the urban public transport laboratory that had come up with plans to revamp the public bus sector.
Nadzmi has also played a key role in the development of the Express Rail Link service and has been the executive chairman of ERL Sdn Bhd since its started operations in 2001. The ERL remains the only major private sector-driven public transport project that does not needed to be bailed out by the Government.