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Don 2003 Malaysian Railroad Report V2

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Don 2003 Malaysian Railroad Report V2 Rail System in Malaysia Final Report From: Donavan M. Lowtan To: Professor Joe Sussman Date: 14 Jan 2004 Massachusetts Institute of Technology1 1 This report is an internal memorandum to the Malaysian Group at MIT. It does not meet the bibliographic requirements (in terms of precisely referencing sources) for a journal publication. 1 1. Introduction This report investigates specifically one component of the Malaysian transportation system: the rail system. It aims to provide data and information to the team that may prove valuable for their future work. The Malaysian railways are indeed a dynamic, diverse corporatized entity that has the potential to play an important role in the development of a sustainable transportation system in the country. The seamless land- bridge connections with neighboring states are a key characteristic that may define the rail aspect of the system. Malaysian railways are facing the challenge to improve their reliability and speed in order to offer competitive services and enhance their importance as a road alternative. Malaysia is a middle-income, multi-sector economic country located in Southeastern Asia including a portion of the island of Borneo with a total area of 329,750 square kilometers (of which 328,550 square km are land and 1200 square km are water). It shares 381 km of border with Brunei, 1782 km with Indonesia, and 506 km with Thailand. The CIA lists Malaysia’s major natural resources as tin, petroleum, timber, copper, iron ore, natural gas and bauxite. Malaysia’s estimated population in July 2003 was 23,092,940 while its 2002 estimated GDP is US$198.4 Billion ($8800 per capita). The major industries are listed as rubber and oil palm processing and manufacturing, light manufacturing industry, electronics, tin mining and smelting, logging and processing timber (on the Peninsula) and logging, petroleum production (in Sabah); and agriculture processing, petroleum production and refining, and logging (in Sarawak). Malaysia’s primary export partners are: the US 21%, Singapore 17.4%, Japan 10.9%, China 6.5%, Hong Kong 5%, Thailand 4% (2002) while its primary import partners are Japan 16.9%, Singapore 15.9%, US 15.5%, China 7.3%, South Korea 5%, Taiwan 4.7% (2002).2 2. General Information on the Railroad System in Malaysia As of December 2003, Malaysia has 2418KM of total track of which 57KM use Standard (1.435 M) gauge and 2361KM use Narrow (1.000M) gauge. Approximately 150 KM of rail in Malaysia is electrified. Keretapi Tanah Melayu Berhad is the largest railroad in the country. (Keretapi is a Malay word that translates to “fire wagon”). KTMB owns 2262 km out of the total 2418 km of tracks in Malaysia and employs 5024 employees. Of the remaining 156 KM, the Sabah State Railway has 134 KM. (The remaining mileage remains unaccounted). KTMB is the major and most important railroad in Malaysia. It is government-owned but managed by a private entity. The remainder of this essay will be dedicated to the affairs of KTMB and any discussion about Sabah State Railway will be limited.3 KTMB utilizes 1.000M track gauge with 40% (903KM) tied with Concrete Sleepers and 60% (1359 KM) using Wooden Sleepers. Throughout the country, there are 943 bridges, 2 All the information from the introduction paragraph were compiled from the CIA World Factbook found at http://www.cia.gov/cia/publications/factbook/ 3 The information for the KTMB has been found on http://www.ktmb.com.my 2 144 grade crossings, 55 Overhead Pedestrian crossings, 11 Motorcycle overhead bridge crossings, and 22 tunnels, 2112 KM of single track and 150 KM of double track. The following figure provides a map of the KTMB railway network . 3 3. KTMB Ownership In December 2003, KTMB was still wholly-owned by the Government of Malaysia through a vehicle called the Ministry of Finance Incorporated. In an attempt to privatize the railroad in 1997, the Government handed over the management of KTMB to a consortium (which created a vehicle named Marak Unggul) that was majority controlled by a conglomerate called Renong Berhad. The original plan had the consortium taking over the management of KTMB and purchasing the equity from the Ministry of Finance incorporated. However, the privatization attempt failed (Renong experienced major financial difficulties as a result of the Asian currency crisis) and the Government ended the arrangement, taking control of KTMB from Marak Unggul in early 2002.4 3.1 Subsidiary Operations KTMB owns a subsidiary company known as Multimodal Freight Sdn. Bhd. Multimodal Freight operates container depots throughout the country and also hauls containers by truck. This is part of KTMB’s goal to provide Door-to-Door/intermodal service for its customers. Multimodal Freight manages KTMB’s container depots at Padang Besar, Butterworth, Port Klang and Pasir Gudang. According to a UNESCAP report5 based on a country profile report of 1996, Property SBU, a KTMB subsidiary, is responsible for land development, which has become a significant aspect of the railway business in Malaysia. This branch accounted for 21% of KTMB operating revenues at that time and it was growing faster than all other sources of income and according to the report was expected to surpass the transportation business. According to later sources these activities were discontinued in 1997 and land development contributes an insignificant amount of revenue to KTMB operations. Also other KTMB activities, such as their road haulage company (for multimodal transportation from rail to customer premises) and their road courier service are insignificant in terms of generating KTMB revenue. Albeit their importance is strategic since KTMB vision is to provide high quality door-to-door service. As a result these services play a crucial role in the development of the company as a competitive transportation provider. 4. KTMB History Historical texts regarding the railroads in Malaysia are limited. One book, called Sejarah Keretapi Di Malaysia(Malay) by M.A. Fawzi Basri that has been referred to as “the best book on railways in Malaysia.”6 However, a search on the popular internet search engines and internet book vendors did not produce any reference to this publication. The Malayan Railway by J.A.Stanistreet, was published by the Oakwood Press in 1973. A search of the Oakwood Press webpage (Oakwood Press is a publishing company dedicated to railway issues) also did not produce anything. Some electronic sources have provided clues to the history of railroading in Malaysia. 4 Information compiled from a source at ASEAN. 5 http://www.unescap.org/tctd/pubs/marketingfiles/marketing-chap6.pdf pg 39 6 http://www.railserve.com/jump/jump.cgi?ID=9525 4 The first railway track in Malaysia was built in 1885. This was a 12.8KM length of road from the tin mining town of Taiping to Port Weld (known today as Kuala Sepetang). 1885 also saw the introduction of steam locomotive service. The early 20th century involved the completion of several connections including Padang Besar (in Perlis) to Singapore (in 1913), Gemas to Tumpat to Hatyai (Thailand) (in 1930) and the North- South link from Singapore to Thailand border (in 1931). (Please see stylized map on the next page). The early 20th century gains were somewhat negated by the events of WWII. Japanese occupation (circa 1940) and the construction of the Burmese Death Railway saw widespread destruction of the Malayan railway system; bridges, tracks and coach-stock were sent abroad after being dismantled. At the end of WWII, England started rebuilding the rail system. Until 1948, each state in Malaysia managed its own rail services. The British implemented the Malayan Railway Ordinance in 1948 which streamlined rail administration. As a result, the Federated Malay State Railways became the Malayan 5 Railway Administration (MRA). Some of the previous State-run railways included the Perak Government Railway, the Selangor Government Railway, the Malacca Government Railway, the Sungei Ujong Raailway, the Johore State Railway and the Singapore Johore Railway. In 1957/1958, diesel engines were introduced. Delivery of 26 Class-20 English Electric diesel locomotives marked the end of British-led World War II restoration program in Malaysia. Now consider the 1990s, when Malaysian railroad history changes. In 1992, MRA became KTM Berhad (Railways Act 1991). KTM Berhad began operations as a private sector organization (revenues and operations) but is still owned by the government. Malaysia’s first electrified commuter system was introduced in 1995. 1997 marks the bid by the government to attempt to privatize KTMB. As outlined in the “ownership” section of this essay, that privatization attempt was not successfully completed. 5. KTMB Regulation Issues Freight railways in Malaysia experience very little in terms of regulation from the government. The freight side of the operation is free to set its own rates for shipping goods. However, the government, through the Ministry of Transport, does mandate what prices are charged for KTMB passenger service. As a result, the government does provide some subsidies for passenger rates (but not for freight rates). No exact formula has been established for determining the subsidies. Government subsidies change from year to year for no apparent reason. The absence of a well-developed formula for passenger subsidies means that government payments are hard to predict from year to year. 6. KTMB Operations 6.1 Intercity Freight KTMB can transport a wide variety of products including hazardous material. There are currently
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