Don’t miss the bus

WITH the establishment of the newly formed coalition government and one that is led by Pakatan Harapan plus other key aligned parties, there are indeed many pressing issues that the government needs to address and one of them is our under-utilised rail network.

Despite massive investments that Malaysia has made over the years, traffic jams, according to some reports, have reached a stage that is unbearable for drivers as millions of Malaysians spend a longer-than-expected time on the road commuting from home to their desired destinations, be it for work or to run errands and vice versa.

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For some, the time spent on the road can easily be at least a couple of hours a day, if not more.

Of course, for the folks in the Klang Valley, we do have the public transport system in the form of rail services.

These include the Light Rail Transit Ampang Line (LRT1), LRT Kelana Jaya Line (LRT2), the KL Monorail, the KTM Komuter line, the Mass Rapid Transit Kajang Line (MRT1) and Phase 1 of the Mass Rapid Transit Putrajaya Line (MRT2).

However, these lines are not achieving their desired ridership, even in the current endemic state. Based on the latest data, the ridership of the three main lines – LRT1, LRT2 and MRT1 – is shown in the chart.

Between the period from the second quarter of 2020 (2Q20) and right up to early 3Q21, the nation’s capital was basically in lockdown and fewer commuter movements were seen.

From the peak daily ridership of almost 650,000 in 4Q19 for all three lines combined, ridership fell to a low of just under 106,000 in 3Q21.

As the economy opened, ridership improved and in 3Q22, ridership more than tripled to about 466,000 per day for the three lines.

However, this was still well below the peak ridership as the recent 3Q22 was just 72% of the daily ridership seen in 4Q19.

Addressing low ridership

There have been comments made by some that the public transportation system has been shunned by commuters due to fears of the Covid-19 spread, as most of our public transport system can be overwhelming at peak hours and the likelihood of close contact is indeed higher.

Hence, it has been argued that the public felt more comfortable driving their vehicles to commute and that has also driven the demand for used and new cars.

With petrol subsidised to the tune of more than RM1 per litre, the relatively cheap petrol does not help the situation either, as commuters do not feel the pain of higher transportation costs to the extent they switch to public transportation.

However, this may change soon as the newly formed government is looking at various issues, including targeted subsidies.

As we are aware, if fuel prices are increased in line with the actual retail price, there could be some spill-over effect, as commuters may switch to public transport, purely based on cost savings.

From MRT2 to MRT3

The Greater Kuala Lumpur (GKL) public transportation system achieved a new milestone as Phase 1 of the MRT2 line was opened in mid-June 2022.

Connecting Kwasa Damansara to Kampong Batu, Phase 1 covers a distance of 17.5km involving 12 stops.

The entire MRT2 line, covering a distance of 57.7km, is expected to be ready next month and this will add another 40.2km involving 24 more stations as well as potentially four provisional stations.

Early data for the first two weeks of operations showed that ridership for the new line was under 25,000 per day, while in 3Q22, ridership fell to just over 20,000 per day.

According to Mass Rapid Transit Corp Bhd (MRT Corp), the MRT2 construction cost was approximately RM30.5bil, translating to RM529mil/km.

In comparison, MRT1, which connects Sungai Buloh to Kajang with a total distance of 46km and with 31 stations, cost RM21bil or RM457mil/km.

Both the above cost excludes rolling stock, land acquisition, finance cost, and other costs, which probably adds another 40%-50% to the construction cost.

While we have spent so much on rail transportation, the return on investment, even on ridership, is indeed a sore point.

For example, MRT1 ridership was estimated to be at 442,000 per day in the first year, but the peak ridership in 4Q20 and right before the pandemic hit the nation, ridership was just under 190,000 per day, which is not even half the forecast.

For MRT2, ridership is expected at 522,000 but as the line is only expected to be fully operational in March next year, ridership is not expected to hit the target anytime soon, as actual data will only be known after a year of full operation.

Nevertheless, if we do not solve the real issue with respect to ridership, we are unlikely to see the target achieved, even after one or two years of full operations.

Not done with the MRT2 line, we are now embarking on a new Circle Line or MRT3. This line is expected to cover a distance of 51km with another 31 stations.

At a construction cost of RM31bil or RM608mil/km, the MRT3 will be the most expensive line to be built for GKL.

Inclusive of other costs, including the land acquisition cost of RM8bil, the cost per km is expected at RM1bil/km as the total cost is envisaged at RM50bil based on Finance Ministry estimates.

MRT Corp reported a net loss of RM3.67bil in 2021, unchanged from the preceding year’s loss of RM3.67bil.

To date, MRT Corp has accumulated losses to the tune of RM56.66bil, and this was financed by the government’s contribution amounting to RM57.26bil.

The impairment losses are arrived at by writing off whatever investment was made to build the MRT1 and MRT2 lines.

Up to the end of December 2021, based on MRT Corp’s financial statements, the rail company has completely written off in its books the RM24.81bil spent on the MRT1 line and RM31.25bil spent on the MRT2 line.

MRT Corp’s revenue in 2021 was just RM32.3mil, which was not even enough to cover the operation cost of RM67.3mil.

Getting back on track

In most developed cities, from Singapore to Busan, Melbourne to London, and even from New York to Tokyo, an established rail network is supported by other modes of transportation to ensure the issue of last-mile connectivity is solved.

Here, buses, and not just buses that act as feeder buses to the rail stations, play an important role in moving commuters. These buses are reliable, punctual, comfortable, affordable, and most importantly, have a high frequency.

Our current bus network is insufficient to cater to the demand of the Klang Valley as we lack connectivity. The bus network is unreliable in terms of timing and frequency while the options available are limited.

For example, the feeder bus network that serves the MRT1 line is rather unpredictable in terms of timing, as the waiting time can be anywhere between 10 and 15 minutes.

For the MRT or LRT trains, at the station, depending on the hour, trains arrive between four and six-minute intervals at peak hours and seven to 10-minute intervals at other times and on weekends.

The recent shutdown of the LRT line was a stark reminder that we need to ensure our public transport system has near-perfect reliability to ensure commuters are not left stranded and productivity and time lost can be significant.

Buses and more buses

What GKL needs is a bus network that connects many destinations, and, in most instances, these buses will also serve the MRT stations as well.

Hence, instead of having just two feeder buses serving a station, we should be looking at five to eight different bus routes that serve multiple MRT stations.

A bus network has a larger reach and can serve as last-mile connectivity for commuters. We should not miss the bus to change the way how we move people across a vast network of roads, which can complement the rail network efficiently.

In conclusion, we need to address the pain points of our public transport system to increase ridership.

At the same time, we also need to revisit the investment value that we are putting up for MRT3 and whether the cost associated with it is going to generate the intended outcome as MRT1 figures, as far as ridership figures are concerned, have not matched expectations despite years of being in operations.

While rail investment may not give the government a reasonable return on investment due to the nature of these investments, they should at least be able to cover the operational cost to ensure that they do not burden the government in the form of additional subsidies.

Pankaj C Kumar is a long-time investment analyst. The views expressed here are the writer’s own.