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Asian Journal of Case Research 1(2): 163 – 182 (2008)
Keretapi Tanah Melayu Bhd
MOHANI ABDULa*, YAAKOB IBRAHIMb AND GOH MING HUNc ABSTRACT
The case discusses problems faced by Keretapi Tanah Melayu Berhad (KTMB) in alleviating its revenue. Although several strategies have been introduced like the computerized ticketing and reservation system, introduction of innovative reservation system via telephone, the “e-Ticket” and the Touch “n” Go system in reducing the queuing time for passengers, the KTMB still experiencing hefty losses. Besides an acute price-war in the road haulage industry, KTMB also has to compete with the road transport industries for freight and passenger traffic. Hence it needs to identify the problems, taking corrective actions that will enable to lead KTMB back to profitability. Keywords: Freight services, inter-city passenger services, commuter train services.
Keretapi Tanah Melayu Berhad (KTMB) is a private limited company, incorporated and domiciled in Malaysia. The company is wholly owned by the Minister of Finance Incorporated, a corporate body established in Malaysia. The principal activities of KTMB are to operate the railway transportation and the provision of related railway services in Peninsular Malaysia and Singapore. The company operates these activities pursuant to a licence issued by the Minister of Transport. KTMB began its first operation on a 12.8 km stretch between Taiping and Port Weld in 1885. Today, KTMB’s rail network spans 1,661 km from Padang Besar (North) to Singapore (South) and to Tumpat (East). KTMB is principally involved in the business of rail transportation – operating, maintaining and managing the system to serve its main business segments. However, KTMB also acts as the manager for railway property vested with the Federal Land Commissioner and
Faculty of Economics and Management, University Putra Malaysia Graduate School of Management, Universiti Putra Malaysia *Corresponding author. Email: email@example.com, Phone: 603-89467645
Asian Journal of Case Research (AJCR)
the Railway Asset Corporation and as the Project Manager cum Adviser to the Government for Government funded railway related infrastructure projects. In addition, KTMB through its subsidiaries and associate companies has business interests in parcel distribution, haulage, property, car parks, cargo terminals and fibre optic telecommunications.
KTMB has always been the nation’s established player in the logistic industry, moving passengers, goods and services throughout the railway network in Peninsular Malaysia and Singapore. Its rail network strategically links and helps to develop the industrial growth centres in the hinterland to the seaports such as Penang Port, Port Klang, Port of Tanjung Pelepas and Tanjung Pagar. It also connects cross-border movements of freight between Singapore, Malaysia and Thailand. KTMB’s mission statement is as follows: • • • KTMB is to be competitive and responsive to market needs. KTMB must achieve its goals through a highly trained and motivated workforce using modern technology and process innovation. KTMB must provide reasonable profit and long-term growth to its shareholders.
STRATEGIC ROLES OF KTMB
En. Mohd. Salleh Abdullah, the Managing Director of KTMB remarked, “KTMB continues to focus on providing safe, efficient and reliable integrated rail services with greatly improved services for both passengers and goods. KTMB is committed to becoming a respected and significant total land transport solution service provider.” In this connection, KTMB has pursued strategies in its core competency areas such as Freight Services, Intercity Passenger Services, Commuter Services and Property. However, its core rail business consists of 3 businesses; namely Passenger Train Services, Commuter Train Services and Freight Services.
Development in the rail sector is only relevant in Peninsular Malaysia. Apart from a short tourist line between Tenom and Kota Kinabalu in Sabah, operated by Sabah Railways, there are no other rail services in East Malaysia. The rail sector in Malaysia can be divided into 3 main areas: Freight Services, Intercity Passenger Services and Urban/Sub-urban Passenger Services. The growth of KTMB’s Intercity Passenger Services has largely been overshadowed by the rapid development of toll highways in Malaysia. This situation has led to 164
CHARACTERISTICS OF MALAYSIAN RAIL TRANSPORT
Keretapi Tanah Melayu Bhd underinvestment in both coach rolling stocks and better tracks. In order to attract commuters back to rail services. The situation got worse when the 2 services of the Express Rakyat was suspended in July 2001 and remained non-operational in 2002. Azman Shaharbi. “The completion of the North-South Highway Passengers and the operational limitations resulting from the construction of the RawangIpoh Electrified Double Tracking Project have made a great impact on the performance of the Intercity. 213 services on Saturday and 177 services operated on Sunday and public holidays. Table 1 Services Provided by KTMB Types of Trains Intercity Commuter No. In addition. of Train Services 16 Express trains 8 Local trains 206 Commuter Train Services 213 Commuter Train Services 177 Commuter Train Services Freight 42 Freight Trains Source: KTMB (year: 2002). the Intercity and Regional Passenger Services account for one third of KTMB’s total operating revenue. Salleh commented to En. “We have made lots of improvements in the Intercity Passenger Trains. 12 services on the East-Coast and 2 services transversing from west to east. we have introduced air-conditioned buffet coaches and the new finest class coaches i. KTMB runs 24 Intercity Passenger Trains daily. KTMB’s own ‘hotel-on-wheels’. Azman replied. Mohd. “The cancellation of the day express service.” He added on further. On Monday. Frequency of Services Daily Daily Monday to Friday Saturday Daily Sunday and Public holidays KTMB operates 24 Intercity and Regional Passenger Services nationwide that comprise 10 services along the West-Coast corridor. Express Sinaran and the tough economic and market situation which is too intense to 165 INTERCITY PASSENGER SERVICES . Currently.e. the Malaysian Government has proposed to invest in modernizing the entire rail network in stages. which serve 39 stations and halt along the Rawang-Seremban and Sentul-Port Klang sectors (Table 1). En. why did the revenue of Intercity Passenger still declining?” En. Yet. the Finance & Administration General Manager of KTMB. 6 January 2003 in the Yearly Planning and Management meeting. there are 206 Commuter Train Services operated daily between Monday and Friday. KTMB also operates Freights Trains supporting key maritime industry players in international container movement with the launching of containerized Landbridge Services between Klang Valley and Bangkok. consisting of 16 express trains and 8 local trains.
to attract foreign tourists to travel by rail during their vacation in Malaysia.” En. The “Visit Malaysia Rail Pass” was relaunched in September 2002. “KTMB will continue its effort to turn rail travel as a preferred mode of public transportation. i. struck his mind. e-mail and website which is known as “e-Ticket”. linking the 2 major urban centres of Peninsular Malaysia. One such joint venture was launched in September 2002 between KTMB and Impiana Hotel.28% in revenue to RM68.” Then the programme to construct electrified tracks between Ipoh and Rawang. KTMB Commuter Services and KTMB Intercity Passenger Services Converge. Putra Light Transit. Among the efforts that had been made were the improvements in the computerized ticketing and reservation system and the introduction of innovative reservation system via telephone. he wondered whether KTMB would be able to compete in the transportation market. additional seating facilities at stations and directional signage will be our priority”. some measures have been implemented to enhance its operational efficiency and quality of customer service. However. facilities for the disabled. further improvement would be made on the quality of services in terms of speed and reduced the travel time with smooth and comfortable journey. KL Monorail. Salleh. especially popular among tourists and students. The Sentral Station is equipped with modern facilities and it is an integrated transportation hub in the city where the Express Rail links trains to KL International Airport (ERL). Electrified train services would be operated between these 2 cities at better frequency and higher speeds. The “e-Ticket” is an alternative method of purchasing train tickets via Internet. En. Mohd. The passenger traffic statistics of KTMB are shown in Appendix A.e . Travelling time is expected to be reduced to 2 hours based on a route speed of 160 kmph. Azman said confidently.35 million as compared with preceding year corresponding period revenue. With the completion of the Rawang-Ipoh Double Tracking Project. Several promotional activities were carried out throughout the country. Joint promotions and strategic alliance with the players in the tourism industry such as tour agencies and hotels were also held to promote rail services for travel to various tourist destinations. STAR Light Rail Transit. The provision of public amenities such as lengthening of platforms.Asian Journal of Case Research (AJCR) compete with the road transport along the North-South Highway also lead to our losses.Kuala Lumpur and Ipoh. The new travel times and frequencies would make rail travel between Kuala Lumpur and Ipoh more economical. which operates a chain of hotels in Malaysia 166 . viable and practical. In facing the challenging circumstances. Another important development of Intercity Passenger Services was the opening of the Sentral Station in Kuala Lumpur on 16 April 2001. murmurred to himself. The Intercity Passenger Train Services recorded a decrease of 5. “I’ve been wondering if it is a good move for KTMB to continue with its programme of refurbishing the third class coaches that ply to the East Coast.
Commuter rider-ship peaked in 1998 because of the Commonwealth Games. KTM Commuter Services have become an increasingly popular mode of travel in the Klang Valley. Intercity Passenger Services were promoted at several exhibitions and travel marts such as the NATAS Travel Fair/Discovery Malaysia/Let’s Go Malaysia in Singapore and the MATTA Travel Fair/Domestic Travel/Cuti-Cuti Malaysia Road Show in Kuala Lumpur. seminars and workshops had been conducted throughout the year. KTMB Commuter has implemented the Touch ‘n’ Go system whereby a prepaid electronic purse system for payment of ‘low value high volume’ transactions that will reduce queuing time for passengers buying tickets from the counters or the ticket vending machines. providing seamless integration with other existing Klang Valley rail operators such as PUTRA LRT and STAR LRT and also ERL as well as the KL Monorail.2 million since it was launched. 167 .7% from RM20. KTMB’s participation in the “Hari Bertemu Pelanggan” and the “Smile Campaign” were some of the examples of KTMB’s commitment towards forging better customer and public relations. It provides reliable and convenient suburban commuting. Salleh Abdullah in the last meeting.5 million in 2002. approximately 212 trains operates daily serving 40 stations and halts along the Rawang-Seremban and Sentul-Port Klang lines. Rider-ship had increased by 7. The extensions of commuter service that have been planned for the future are as follows: • • • Sentul to Batu Caves (7 km) by 2005 Rawang to Tanjung Malim by 2005 A rapid train service will also be added from Rawang to Ipoh by 2005. COMMUTER TRAIN SERVICES In 2002. As explained by En.9 million in 2001 to RM22. Situated in the central of business district. The Commuter System ferries 65. Since the Commuter Service started operation on the 3 August 1995. Mohd. KTMB had invested in improving its facilities at various stations and its on-board trains. the Commuter Services have minimized walking distances to less than 500 meters to either shopping complexes or private and public offices located within the vicinity stations. Additionally. the Commuter Services achieved a record revenue of RM50.000 passengers daily.Keretapi Tanah Melayu Bhd and Singapore. In line with the Government’s objective to enhance the integration of public transportation system in Klang Valley. several in-house training programmes. with comfortable and spacious air-conditioned coaches and in some areas. To further increase KTMB’s participation in tourism industry. as part of the efforts to upgrade quality-services to meet customer satisfaction.
Chemicals and Bulk Cargoes (20%). The maritime container market is diversified with a mixture of goods being shipped by containers. However. such as foodstuff and electronic perishable items. This was achieved against a backdrop of operational limitations in the form of the daily 10 hours line block imposed throughout the year under review because of the Rawang-Ipoh Electrified Double Tracking project. The inclusion of the refrigerated wagons into its fleet marked the introduction of a new innovative freight service enabling goods. As reported by En. both the Domestic Container and Landbridge Freight Services remained as the main source of revenue. Greater efforts have been made towards meeting customers’ needs and requirements with a view to forging effective customer relations and business partnerships. the haulage of freight by train. This was followed by Cement Cargo Services (20%) and other services such as Food. Mohd. but 168 KTMB’S FINANCIAL HIGHLIGHTS . Azman Shaharbi in the meeting. Butterworth and Bangkok. KTMB also aims to effectively position its freight services locally and regionally through a concerted marketing strategy. The Freight Division remained as the major contributor to KTMB’s total revenue in 2002. One of the moves towards capturing the container business is rendering the Landbridge Freight Services between Port Klang. FREIGHT SERVICES En. Salleh Abdullah expressed his dissatisfaction with the financial results of KTMB as presented by En. In terms of product segmentation. according to En. especially of bulk commodities is more cost-effective than by any other modes of transport.Asian Journal of Case Research (AJCR) KTMB operates approximately 42 freight trains daily with a primary focus on the maritime container market. to be transported in refrigerated containers. KTMB had also acquired 55 Bogie Reefer Flats (BRF’s) and 2 Power Generating Cars (PFC’s). In a continuous innovative programme. KTMB sees a future in container traffic and is gearing towards capturing a major slice of the container business. MMC Engineering Sdn Bhd. KTMB has acquired 195 new Bogie Container Flats (BCF) from a local manufacturer. which recorded a combined percentage of 60% of the total freight revenue. Moving forward. but continued to face losses and we might miss our yearly bonus in the future. to boost its haulage capacity. it would be worst if he was fired. the Finance & Administration General Manager of KTMB. “The financial results of KTMB have not shown much improvement. Azman Sharbi in the meeting. In order to expand the revenue base for freight.” Deep in his thoughts. In addition. Azman Shaharbi. “KTMB Group managed to reduce its losses from RM163 million in 2001 to RM125 million in 2002. the Government finances railway links to strategic ports giving rail a competitive advantage.
Salleh further questioned.68 39.21 Freight 97.2 83. Azman Shaharbi (Revenue at the Group and the Company level is shown in Table 4).15 5.35 Source: KTMB Annual Report Year 2002. Table 2 depicts the revenues for the financial years 1998 up to 2002 for Intercity Passenger Services.76 45. Freight Services. En. KTMB was facing funding shortfall as a result of deferred operating expenditure in addition to loan repayments and capital expenditure.83 Property 31. while Table 3 depicts the volume of freight handled by KTMB for these financial years. Losses from railway operations were expected to increase mainly due to the reestablishment of deferred maintenance of rolling stock and railway infrastructure.45 38.36 72.48 4.2 28.41 42.9 94.49 4.16 75.34 78. 169 .15 71. “Why did the Group’s turnover decline from RM382 million in 2001 to RM364 million in 2002?” He was a bit surprised when he saw the accounts which were handed by En.76 75. En. Property and Commuter Train Services. Table 3 Volume of Freight Handled by KTMB (Million tonne) Financial Year 2002 2001 2000 1999 1998 Volume of Freight 3.5 30.8 4. Mohd.61 Source: KTMB Annual Report Year 2002. He also added that the operating revenue was expected to decrease largely due to the loss from freight services during the construction period of the Rawang-Ipoh Double Tracking Project. Table 2 Revenue Analysis by Strategic Business Units (RM Million) Financial Year 2002 2001 2000 1999 1998 Intercity 68.Keretapi Tanah Melayu Bhd the Group turnover declined from RM382 million in 2001 to RM364 million in 2002”.36 32.38 Commuter 49. Revenue was recognized when it was probable that the economic benefits associated with the transaction would flow to the enterprise and the amount of the revenue could be measured reliably. Azman Shaharbi also explained that KTMB remained severely undercapitalized and over-leveraged.16 101.91 41.
932 112.156.089. 2001 and 2002 (RM) Group 2002 Freight service 2001 2000 2002 97.096 382.801.” Further.333 -280.678.419. Azman Shaharbi then replied.222 -8.830. this is due to the reduction in revenue mainly from the Intercity and Freight Services.385.029 278.950.645 -32.796.267 -168.806.695.553.382 Passenger & commuter 115.462 115.629 278.128 17.885 -12.280.808 269.876.218.033.695. he added that at the Company level.436 -69.745 115.552.650 -76.445.919.562 15.Asian Journal of Case Research (AJCR) En.6 million in 2002 as shown in Table 5.943 13.711.387.388 160.082.324 160.763.689 364.993 -34.773 12.191 -64.657. There is an acute price-war in the road haulage industry and this has adversely affected the Group’s haulage business.280.247 17.684 31.850.760 44.135 150.462 services Property rental Parcel & mail services Sales of developments properties Claims from the Government for uneconomic Services Total 34.678.941 13.161. 2001 and 2002 2002 Revenue Other operating income Construction cost recognised as expense Changes in inventories Staff costs Depreciation Fuel and energy Other operating expenses Loss from operations 364.307.139.387.514.573.907.159.994.447 170 .277 Company 2001 101.445.376 17.688.792. “Oh.545 -34.417 32.985.664.985.760 42.980 2001 382.387.774.177 2.838 Source: KTMB Annual Report Year 2002.782 -175.961.327 -65.298. This improvement was achieved despite the slight reduction in revenue from RM278.781 31. Table 5 Consolidated Income Statements for Financial Year 2000.895 -152.648 2. operates by KTMB’s subsidiary.552.112 -203. Multimodal Sdn Bhd.801.842 28.862.354 13.9 million in 2001 to RM278.029 34.914 -7.682 2000 94.672.159.667.076 349.367 2000 349.060 -57.338 28.109.907 -198.608 31.870. there was a significant reduction in the net loss from RM189 million in 2001 to RM141 million in 2002.922.553. Table 4 Revenue at the Group and Company Level for the Financial Year 2000.474.353.096 53.280.155.908.932 112.689 32.417 30.834.583 -111.754.592 2.745 115.076 53.
699.1282 1.0136 1. GDP per capita.542) (2.262.960 (2.600 -82.823 -163179002 -27.349.2096 NA NA DEMAND FOR RAIL PASSENGER TRANSPORTATION GDP per capita at the beginning RM 3.1147 . net Share of profits/(losses) of associates Profit/(loss) before taxation Taxation Subsidiaries Associates Net profit/(loss) from ordinary activities Minority interest Net profit/(loss) for the year Source: KTMB Annual Report Year 2002.646.749. GDP per capita is forecasted to increase to RM75.Keretapi Tanah Melayu Bhd Finance costs.2147 1.565.124 -55.0. A 30-year time-series data (from 1970 to 2000) on total passengers by service class was used to compute the growth of KTMB’s rail passenger traffic.355.2821 0. This series was regressed against growth of GDP to obtain the required elasticity estimates.496.1766 .1.251 -82. The demand elasticities are presented in Table 6.705 -120. 171 .958 -11.0719 NA RM 9.773.770.395. AGN Research Associates Sdn Bhd has been hired to analyze the relationship between economic growth and passenger rail demand.123.723 -5.204.1105 1. -51. The elasticity is assumed to linearly decrease over time and reaches the specified elasticity in the year 2037.162 -125.866.203. In this regard.374 The demand for rail passenger transportation services as explained by En.3 1980 – 1990 1.903.e.180. Table 7 provides the expected rail passenger demand elasticity for all categories of rail services.0000 . i.075.051 7.326 -4.381.015) -163. GDP Growth Rate and GDP per Capita 1970 – 1980 First class Second class Third class GDP growth rate 0.1612 8.128.45 1970 – 2000 0.311.974 20.07 1990 – 2000 0.769.738 -77.251.532 15.014 7.941 -152.980 in the year 2037.825 25. Table 6 Rail Passenger Demand Elasticity.65 period (2000 constant prices) Source: AGN Research Associates Sdn.0.418) -125.4335 NA RM 6.555.286 11. Bhd.852) (2. Azman Shaharbi is chiefly determined by income level.867 (8.
211 819. the following considerations had been taken into account: • • DETERMINANTS OF DEMAND FOR INTERCITY PUBLIC TRANSPORT IN MALAYSIA The Third Outline Prospect Plan.560.746. under 3 different scenarios are shown in Table 9. The baseline scenario 172 .001 0.0719 RM 17.069.000 .868 1.1.767.a for the 10-year period of year 2001 – 2010.072 2011 92.854 97. It was also noted that income and population are among the most important determinants of demand for transport.974 2037 92. Hence.292 3.697 3.0136 1.373 4. Bhd.214.204 Source: AGN Research Associates Sdn.135 2037 0.652 354.5 % p.507 1. in forecasting rail passenger traffic.2000 .877 2021 92.983 6. the annual growth rate assumptions for the Peninsular Malaysian economy.Asian Journal of Case Research (AJCR) Table 7 Forecast of Rail Passenger Demand Elasticity and GDP per Capita for 2000 and 2037 2000 First class Second class Third class GDP per capita at the beginning period (2000 constant prices) Source: AGN Research Associates Sdn.751.571 5.752 4.0 % a year.1. 0. The Vision 2020 forecast of GDP growth for the year 2001-2020 is 7.158.980 A summary of the forecast of rail passenger traffic (without Double Tracking Project) is presented in Table 8. Thus.681. OPP3 (2001-2010) has forecasted that the Malaysian economy will grow at 7. Table 8 Forecast of Rail Passenger Traffic for Selected Years from 2001 – 2037 2001 First class Second class Third class Total 91. Bhd. In deriving the growth prospects for the Peninsular Malaysian economy. Table 9 and Table 10 provide the Annual Growth Rate Assumptions for Peninsular Malaysia for year 2001 to 2037 and population targets under the 70 Million Population Policy respectively.972. one must be able to forecast the gross domestic product (GDP) and the increase in the population size of the market.367 6.5000 RM 75.
0 6. the growth rate of 7. The Third Outline Perspective Plan. According to the 70 MPP. Table 9 Annual Economic Growth Rate Assumptions for Peninsular Malaysia. Human Resources and Development Planning. 2001 – 2037 Period 2001 – 2010 2011 – 2020 2021 – 2037 Low (%) 7. these figures can be used to forecast Malaysia’s population for the period 2001-2037. Thus.8 46.5 % a year is assumed for the years 2001-2010 is the OPP forecast. Table 11 provides the estimated population of Malaysia for this period.Keretapi Tanah Melayu Bhd contains the growth forecasts that are most likely to be obtained by the Peninsular Malaysia economy.0 5. The most ambitious population forecast for Malaysia was made in 1982.5 5. for 2011 – 2037. AGN Research Associates Sdn.7 33.0 7. 2 – 13 May 1991.0 Source: For 2001 – 2010. the growth rates postulated in the baseline scenario appear to be attainable. Since the annual growth rates implied by the 70 MPP appears fairly accurate and similar to those assumed in the OPP3.0 8. the Seventy Million Policy (70 MPP). 173 .5 6.0 Source: Tey Nai Peng (1991) “The Malaysian Population Policy – Setting for Development Planning in Malaysia” Working Paper presented at the Training Workshop on Population.6 27. On the basis of the record of the Malaysian Government management of the economy and taking into account of the current policy initiatives. the population implied by the 70 MPP for a few selected years is shown in Table 10. In the baseline case.6 39.6 22. Malaysia would achieve a total population of 70 million in the year 2100.0 Baseline (%) 7. Table 10 Population Targets Under the 70 Million Population Policy Year 1990 2000 2010 2020 2030 2040 Population Size (Million) 17.5 High (%) 8. Percetakan Nasional Malaysia Berhad. Bhd.
Table 12 Forecast of Population in the Year 2001-2037 Year 2001 2010 2020 2030 2037 Malaysia 22. This indicates that the forecast of the 70 MPP was fairly accurate up to year 2000 (with a 2 % error margin).46 Source: AGN Research Associates Sdn.2 33 39.46 Source: AGN Research Associates Sdn. INTERCITY PASSENGER SERVICES PRICING MODEL 174 . class offered and supplementary charges.Asian Journal of Case Research (AJCR) Table 11 Population Growth Rates of the 70 Million Population Policy Year 2001 – 2010 2011 – 2020 2021 – 2030 2031 – 2040 Annual Growth Rate (per cent) 2.95 1. Using the above figures and assuming exponential growth provides the annual growth rates of population for Malaysia.7 26.1 21. Bhd.06 2.71 1. The fare rate for KTMB Intercity Passenger Services is Government regulated and is based on the distance between originating and destination stations. Bhd.71 1.06 1.95 1. Table 13 summarizes the fare rates and supplementary charges for the year 2003.3 Peninsular Malaysia 18.06 1.1 43.3 34.2 million. These are shown in Table 12.7 27. The actual population size in the year 2000 was 22.4 31.6 Annual Growth Rate (%) 2.
in comparison to the road network. the technical limitations on train speed on account of track alignment on the nonelectrification of the rail network.Keretapi Tanah Melayu Bhd Table 13 Intercity Passenger Fare Rates for the Year 2003 Class 1 Class st Fare Rates (RM per km) 0.0650 0.00 14. including the KTMB network is located on the west coast of Peninsular Malaysia. Further. the road transport industries are the most pervasive source of competition to the services of KTMB. As reasoned by him. COMPETITION WITH INTER-CITY PASSENGER SERVICES Comparison between Rail and Road Network The investment in transport has provided Peninsular Malaysia with a diversified and extensive transport system in which the road network is most important. Because of the location pattern of economic activity and population.50 4. As commented by En Azman Shaharbi during the meeting. this could be due to some problems. much of the transport infrastructure. KTMB was essentially a single-tracked system which resulted in frequent line blocks and secondly.00 11.00 20. Journey and haulage times on the KTMB thus compared unfavourably with those of road transport. the market coverage for the KTMB network 175 . Firstly. However. The alignment of transport infrastructure means that KTMB has to compete with the road transport industries for freight and passenger traffic.0369 2 Class nd rd 3 or Economy Class SUPPLEMENTARY CHARGES FOR INTERCITY PASSENGER SERVICES Supplementary Charge Lower berth 1 Class Air-conditioned st RM per Pax 30.00 Upper berth 1 Class Air-conditioned st Lower berth 2 Class Air-conditioned nd Upper berth 2nd Class Air-conditioned Express Seater Air-conditioned coach Source: KTMB 2002. The constraints of narrow 1 meter track gauge (width of railway track is 1 meter) and old rolling stock limited the route speed for freight services. Shortages of resources such as locomotives and crews were also contributory factors for the low average train speeds. train speeds on the KTMB network are low.00 4.1500 0.
000 km in 1990 to slightly more than 49. Table 14 Table of Rail and Road Network of Peninsular Malaysia for the Year 2000 Size of Network Road – Total Road Network – 49.137 km Motorcars Motorcycles Taxis Buses Goods Vehicles Other Vehicles Rail . which stretches from Bukit Kayu Hitam on the Thai border to Johore Bahru in the South. the corresponding range is 80 to 90 kilometres per hour.149 59.622 Road Network In the past decade. from just over 41. KTMB had its shortcomings as compared to road transport. the road network had expanded by 8. The federal and state roads in the country together with the privatized roads thus constitute an extensive and nation-wide road system for Peninsular Malaysia. All the major economic centres are linked to one another and to the ports by a network of good roads.549 208 3. Table 14 summarizes the Road and Rail Network Statistics in Peninsular Malaysia for the year 2000.196 40. Maximum permissible speed for motorcars are between 90 to 120 kilometres per hour. 64 3.358 536.985.189 248. In the meantime.888 4.Total railway network – 1700 km Locomotives Freight Wagons Passenger Cars Source: KTMB 2002. The most important component of the country’s road system is the 864 km 2/3 lane North-South Expressway (NSE).705. The average speeds on the roads are quite high due to the double-carriageway and triple-carriage-way roads.100 km. whilst for buses and trucks. 176 .Asian Journal of Case Research (AJCR) was restricted and from technical perspectives such as train speed. KTMB also had some advantages over the road transport industries in terms of the socio-economic benefits such as the number of road accidents and pollution.000 km in 2000. The rural and outlying areas are also connected to the main inter-urban road grid.
The main segment of the KTMB network is the 785 km west coast line from Butterworth to Tanjung Pagar in Singapore. The growth percentage of the total vehicles travelling along the expressway tolls in 2001 as compared to the year 2000 was 9%. North destinations. 177 . the automobile population in Kuala Lumpur has increased very rapidly over recent years. KTMB network links 4 of the 5 principal ports with their respective hinterlands. Other Passenger Road Transports There are 67 bus companies operating and offering inter-city and urban passenger services to almost all destinations throughout Peninsular Malaysia. All destinations. the market outreach of KTMB in comparison to road transport. The following are examples of bus companies providing passenger services in Peninsular Malaysia: i.886 deaths compared to 1996 with 189. This shows that there was an increase in the growth percentage of vehicles between year 2000 to year 1999 by 17%. As presented by En. The situation is further aggravated by the fact that many of the roads and intersections built in the city during the earlier days were not well planned and too narrow to accommodate the increasing volume of traffic. Park May Berhad Plusliner & NiCE Ekspres Nasional Berhad Foh Hup Omnibus – – – – North / South destinations.641 with 5. is very small.700 km in length. being only 3% the size of the road system. The overall total vehicles using highways under Malaysian Highway Authority’s (MHA) supervision until December 2001 increased from 640 million vehicles to 700 million vehicles. KTMB’s track infrastructure is a narrow-gauge system.109 road accidents. The significant increase in vehicle ownership coupled with declining public transport usage has resulted in an inefficient and ineffective utilization of road space in the city. Luxury express bus service.Keretapi Tanah Melayu Bhd With growing affluence and booming local automobile industry. As in 2002. Salleh in the last meeting. iii. Rail Network The rail network in Peninsular Malaysia is about 1. ii. resulting in severe traffic congestion during peak hours. total road accidents occurred were 279. especially during festive seasons. etc. the only exception being Kuantan Port. iv. Mohd. The increasing number of vehicle usage in Malaysia also contributed to the increasing number of road accidents.
. Mohd. Salleh paused and looked straight into En.” En.00 pm. “Azman. The following are some examples of taxi companies. the Board of Directors and the Senior Management Team of KTMB were almost at the end of the Yearly Planning and Management Meeting for the new Financial Year 2003. Persatuan Pemandu Teksi Pantai Timur As requested by En.” En. ii. seminars and workshops have been conducted throughout the year in ensuring our officers and staff are kept abreast of the latest information. Zakaria.. knowledge and developments in rail operations. when En. Azman’s face. East Coast of Peninsular Malaysia and Genting Highlands as their destinations for passenger services. Mohd. Persatuan Pemandu Teksi Bahagian Utara Persatuan pemandu Teksi Selatan – – – Serves North destinations Serves South destinations Serves East Coast destinations. We have to provide quality service. “I think we should focus our strategy to the targeted customers and tailor our strategy to match with their needs and expectations. iii. “We are now at the crossroads where we have to 178 ACTIONS TO BE TAKEN . Azman replied “We have done our best in equipping our officers and staff. With regards to total number of employees …. En.” En. business management and customer service. “Several in-house training programmes. Mohd Salleh said in closing of the meeting. Salleh in their last meeting. which are in operation: i. otherwise we are going to lose the battle. at 4. The number of employees in the Group was only 5073 at the end of financial year 2002 and 5053 for the Company. Salleh recalled. Mohd. etc. but …. which are in operation serving the North. Salleh paused and continued. En.” En. South. unfortunately.Asian Journal of Case Research (AJCR) There were 6 taxi companies. the Head of Malaysian Centre for Transport Studies (Mactrans) commented. we do not have enough employees. do you have any idea how to attract more people to use our service?” “Definitely we have to offer better service for their money. Azman Shaharbi presented some ticketing prices for express bus compared to ticketing prices for intercity passenger services to the Board of Directors (Appendix B).” “We have to do something. Mohd. “How are we going to hire more employees with the current financial situation?” EXAMPLES OF TICKETING PRICES FOR INTERCITY PASSENGER SERVICES AND EXPRESS BUS TICKETS On Monday 6 January 2003..
Keretapi Tanah Melayu Bhd make serious decisions as to which path to take in order to bring KTMB back to profitability. I have been analyzing the financial reports as a whole and I am very concerned on the hefty losses. Zakaria said. including faster travel time. We have gone through in detail KTMB’s financial standing and operations matters and the transportation industry today and we all know where KTMB stands financially today. Mohd. Salleh and said. the Chairman. Tan Sri Dato’ Thong Yaw Hong said.” 179 .” En.Bhg. can KTMB improve its performance. particularly rail service. “Rapid and efficient service is an important criterion for any public transportation system. “I want you to resolve this problem by identifying the issues and then sourcing for a comprehensive and integrated solution to lead KTMB back to profitability. If KTMB wants to reduce its losses.” He then looked at En. The problems could be more severe and complex than what Zakaria thinks that only by offering better service. cars and buses tend to travel faster than trains. And KTMB financial future does not look good. it has to offer better and efficient service.” At this point. With a good road system. Y. “It is now early January 2003. including faster travel time.
074 1.967 1.080 3.953.080.023.168 2.670.093 3.225 4.510.232 7.864 112.650.178.121 Source: KTMB 2002.435.284.230.510.607.722 130.344.329 3.127 5.356.246 1.571.241 2nd Class 1.412 4.764.776.703 1.177.326 111.855 6.516.718 Total 7.256.705.552.879 162.197 1.554 4.962 6.277 178.614.425.785.040 5.232.362 1.212 43.805 7.246.Asian Journal of Case Research (AJCR) APPENDIX A KTMB – INTERCITY PASSENGER STATISTICS FOR THE YEAR 1980 – 2002.801.880.976 91.680 1.717 2.633.000 3.722.019.903 2.175 6.425.921 5.795 6. Class 43.980.387 48.989 1.447 4.997.954 5.162 3rd.437.531 73.414 89.249 137.735.410 5.876.033.528 1.067.246.849.135 133.494 6.007 1.717.002 6.599 4.904 1.145.925.563 1.544 86.918 1.000.576.787 2.337.709 1.243 1.375.235 6.205 1.656 8.402 3.882 111.905.289 5.923.371 6.641.355.085 38.138 1.468.899.763 6.802 123.639.183 1.097 7.835 96.894 121.670 8.145.699 38.211.042.553.772.937 88.116.636 6.564. Class 5.962.466.785.762 3. Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Passenger Journeys 1st.151 1.163 7.350 8.805 4.951 5.747 89.865 1.100.546 5.410 1.135 2.107 5. 180 .695 3.061 143.076 1.852.649.
Keretapi Tanah Melayu Bhd APPENDIX B TRANSPORTATION VIA TRAIN Ticketing Prices for Ekspres Langkawi from Kuala Lumpur to Alor Setar.00 30.00 22.00 84.00 - Adult Child Adult Child Adult Child Adult Child 98.00 47.00 35.00 16.00 52.00 22.00 11.00 11.00 62.00 - 20.00 39.00 20. Berth Coach Type ADNFB (Premier Night Standard) ADNS (Superior Night) AEC (Economy) ASC (Superior) Upper (RM) Seat Lower (RM) Windows (RM) Aisle (RM) 20.00 35.00 54.00 28.00 16.00 - 29.00 39.00 44.00 97.00 43.00 - Adult Child Adult Child Adult Child Adult Child 89.00 106.00 48.00 181 .00 44.00 20.00 58.00 35.00 33.00 Origin Destination Train Name : TUMPAT : SENTRAL KUALA LUMPUR : EKSPRES WAU Berth Seat Coach Type ADNFB (Premier Night Standard) ADNS (Superior Night) AEC (Economy) AFC (Premier) ASC (Superior) Upper (RM) Lower (RM) Windows (RM) Aisle (RM) 29.00 84.00 66.
00 17. Bus Company Damai Ekspres Sdn Bhd Destination Johor Bahru Kota Bahru Alor Setar Johor Bahru Kota Bahru Alor Setar Johor Bahru Kota Bahru Alor Setar Adult (RM) 24.00 98.00 38.00 43.00 Lower (RM) Windows (RM) 18.45 15.00 42.00 15.90 30.00 43.00 103.00 22.00 37.00 29.00 15.00 29.00 Seat Aisle (RM) Adult Child Child 11.00 13.00 34.00 15.00 29.00 20.10 Child (RM) 24.00 28.00 21.00 11.00 81.00 - 28.00 34.00 25.00 22.00 64.00 15. Train Name Coach Type ADNFD (Premier Night Deluxe) ADNS (Superior Night) AEC (Economy) ASC (Superior) EPLUS (Economy PLUS) AFC (Premier) ASC (Superior) EPLUS (Economy PLUS) EKSPRES SENANDUNG MALAM Berth Upper (RM) 106 Adult Child Adult Child Adult 78.00 30.00 12.00 - EKSPRES RAKYAT EKSPRES WAU ADNFB (Premier Night Deluxe) 95.00 30.00 20.00 126.00 24.00 34.00 51.00 38.00 64.00 30.00 13.Asian Journal of Case Research (AJCR) Ticketing Prices for Some Intercity Trains from Central Kuala Lumpur to Johor Bahru.00 81.00 33.05 Selat Keris Sdn Bhd Transnasional 182 .00 33.00 36.00 30.00 65.00 17.00 21.00 15.00 30.00 21.00 57.00 36.00 24.00 34.00 34.00 ADNS (Superior Night) AEC (Economy) AFC (Superior) ASC (Superior) 46.00 24.00 APPENDIX C TRANSPORTATION VIA BUS The Fare for One – Way Trip from Kuala Lumpur to Some Major Cities by Some Express Buses.00 18.00 30.00 21.