RM2b for KTMB revamp

By Sharen Kaur

Published in NST on April 1, 2016

KUALA LUMPUR: KERETAPI Tanah Melayu Bhd (KTMB) will receive RM2 billion allocation from the government to restructure and be more efficient as a train operator.

   

  Under the Government Transformation Programme, listed and unlisted government-linked companies will undergo restructuring in various stages, including KTMB, to operate more efficiently.

   

  The restructuring of KTMB, which is in the business of providing freight, intercity and commuter train services, among others, is to help the company turn profitable.

   

  It is expected to start immediately and take about two years to segregate the business of KTMB.

   

  The RM2 billion funding would come from the Finance Ministry while the Transport Ministry will oversea the matter and ensure that KTMB is on the right track to profitability.

   

  KTMB's debt had risen to more than RM2 billion despite attempts to cut cost and increase revenue.

   

  Since KTMB's corporatisation in 1992, its audited collective revenue as of December 31 2013 was RM7.4 billion. However, during the same period, it recorded collective losses amounting to RM2.5 billion.

   

  KTMB needed a turnover of RM650 million to RM700 million to break even but is only getting slightly more than half of that, currently.

   

  "Every year the government is pumping between RM200 million and RM300 million into KTMB but still, the company is not making money. At today's situation, KTMB is not able to do anything.

   

  "The restructuring, which is something the former president of KTMB, Datuk Elias Kadir had been working on, is a major step for KTMB to focus on its core business of transporting people and goods. It should be able to increase ridership and cargo," said sources.

   

  A source said the cargo business had dipped from over five per cent of total market, five years ago, to below one per cent.

   

  Currently, KTMB operates and maintains the infrastructure involving some 1,600km of single and double tracks in Peninsular Malaysia, as well as stations, yards and bridges.

   

  KTMB also operates and maintains the rolling stock (comprising the high-speed electric train, locomotives, trains and coaches).

   

  It is understood, after the restructuring, KTMB would only become a train operator.

   

  At the time this would allow a second operator to come in, something which the government had already announced.

   

  Meanwhile, the maintenance of the infrastructure and rolling stocks would come under the purview of Railway Asset Corp (RAC), which is wholly-owned by the Transport Ministry.

   

  Those assets, including landbank worth around RM50 billion collectively, were acquired by the government over a number of years and parked under RAC. As a train operator, KTMB will have to lease the infrastructure and rolling stocks from RAC and pay them track access fee and leasing fee, said the source.