Final Report

FINAL REPORT

REDUCING UNNECESSARY REGULATORY BURDENS ON BUSINESS (RURB): TRANSPORT SERVICES

VOLUME I: CARRIAGE OF PASSENGERS

31 December 2018

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Contents

Chapter 1 About the Review ...... 1

1.1 About the Review ...... 3

1.2 What MPC Has Been Asked To Do ...... 4

1.3 Scope of the Study ...... 7

1.4 Approach and Rationale of this Review ...... 18

1.5 Conduct of the Study ...... 20

1.6 Structure of the Report ...... 25

Chapter 2 Regulatory Burdens: Core Concept ...... 26

2.1 Purpose ...... 28

2.2 Why Regulation ...... 28

2.3 Reducing Unnecessary Regulatory Burdens ...... 31

2.4 Types of Unnecessary Regulatory Burdens ...... 32

2.5 Government Initiatives in Good Regulatory Practices ...... 36

Chapter 3 Industry Performance of Transport Services ...... 39

3.1 Transport Services ...... 55

3.2 Air Transport ...... 49

3.3 Land Transport ...... 62

3.4 Maritime Transport ...... 62

3.5 Rail Transport ...... 68

3.6 Value Chain and Regulations for Transport Services ...... 72

Chapter 4 Industry Performance and Issues of the Tourism subsector ...... 77

4.1 Economic Performance of the Tourism subsector ...... 79

4.2 Value Chain and Regulations for the Tourism subsector ...... 87

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4.2.1 Relationship between the Transport Services Sector and the Value Chain for the Tourism subsector ...... 97 4.2.2 Summary ...... 88

4.3 Regulatory Issues in Transport Services for the Tourism subsector 108

4.3.1 Issues under Land Transport ...... 111

4.3.2 Issues under Maritime Transport ...... 209

4.3.3 Issues under Air Transport and Rail Transport ...... 215

4.3.4 Other Issues ...... 217

4.4 Case Study on Transport Services in the Tourism subsector in Langkawi ...... 240

Appendix 1 – Issue Paper for Tourism Subsector ...... 245

Appendix 2 – Detailed Description of the Relevant Groups Relating to Transportation under MSIC 2008 ...... 246

Appendix 3 – Lists of the Associations Interviewed ...... 247

Appendix 4 – Passenger Certificate Survey Checklist ...... 248

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Disclaimer

This Report for Reducing Unnecessary Regulatory Burdens on Transport Services is prepared by Malaysia Productivity Corporation (“MPC”) from sources believed to be reliable. However, no responsibility is accepted by MPC, its employees, consultants, contractors and/or agents in relation to the authenticity, origin, validity, accuracy or completeness of, or for any errors in or omissions from, the information, statements, forecasts, misstatement, of facts, opinions and comments contained herein. No part of this publication may be reproduced, stored in retrieval system, or transmitted in any form or any means, electronics, mechanical, photocopying, recording or otherwise, without the prior written permission from MPC.

To the best of our knowledge, any use of information contained in this Report in which copyright exists was done by way of fair dealing and for permitted purposes. Any excerpt or extract from, or reference to or reproduction of any copyright work has been disclosed expressly and sufficiently and the title of such copyright work and its authorship have been acknowledged in this Report.

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ABBREVIATIONS

AFTA ASEAN Free Trade Agreement

AGPC Australian Government Productivity Commission

AP Approved Permit

BPRH Best Practice Regulation Handbook

CAAM Civil Aviation Authority of Malaysia

CBU Completely Built-Up

CKD Completely Knocked Down

C&C Products Chemicals and Chemical Product

DCA Department of Civil Aviation of Malaysia

EPU Prime Minister’s Department Economic Planning Unit

ERL Express Rail Link

E&E Electrical and Electronics

GDP Gross Domestic Product

ICAO International Civil Aviation Organization

JKJR Road Safety Department of Malaysia

JPJ Road Transport Department

KLIA Kuala Lumpur International Airport

KTMB Keretapi Tanah Melayu Berhad

LRT Light Rail Transit

LSANK Kedah Water Resources Board

LST Luxury-goods Sales Tax

LTA Land Transport Authority

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MATRADE Malaysia External Trade Development Corporation

MAVCOM Malaysian Aviation Commission

Mid-Term Review Mid-Term Review of the 11th Malaysia Plan

MIDA Malaysia Investment Development

MIMA Maritime Institute of Malaysia

MIROS Malaysian Institute of Road Safety Research

MITI Ministry of International Trade and Industry

MMEA Malaysian Maritime Enforcement Agency

MOF Ministry of Finance

MOHA Ministry of Home Affairs

MOT Ministry of Transport

MOTAC Ministry of Tourism, Arts and Culture

MPB Malaysia Productivity Blueprint

MPC Malaysia Productivity Corporation

MRT Mass Rapid Transit

MSIC 2008 Malaysian Standard Industrial Classification 2008

MyCC Malaysia Competition Commission

M&E Machinery and Equipment

NDPC National Development Planning Committee

NKEAs National Key Economic Areas

NLPTMP National Land Public Transport Master Plan

NPDIR National Policy for the Development and Implementation of Regulations

NRSP National Regulatory Strengthening Programme

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NTMs Non-tariff measures

OECD Organisation for Economic Co-operation and Development

PIAs Permit Issuing Agencies

PUSPAKOM Pusat Pemeriksaan Kenderaan Berkomputer

RAC Railway Assets Corporation

RIA Regulatory Impact Analysis

RIS Regulatory Impact Statement

SMEs Small and medium enterprises

SPAD Land Public Transport Commission

SSM Companies Commission of Malaysia

STK Surat Tawaran Kelulusan

TEUs Twenty-Foot Equivalent Units

VAT Value Added Tax

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CHAPTER 1 ABOUT THE REVIEW

Contents: About the review, what MPC has been asked to do, scope of the study, approach and rationale of the review, conduct of the study and structure of the report.

Key Points

1. Malaysia Productivity Corporation (“MPC”) has been mandated under the 10th Malaysia Plan to carry out comprehensive reviews on business regulations with the aim of modernizing such regulations and facilitating the ease of doing business in Malaysia. It has also been tasked to undertake programme on sectoral governance reform, which is a key policy lever in ensuring the development of the services sector under the 11th Malaysia Plan. The main goal of the sectoral governance reform is to create efficient and enabling policy environment, machinery that nurtures thriving and competitive sectors.

2. Reducing Unnecessary Regulatory Burdens on Business (“RURB”) study is one of the initiatives that could enhance the quality of existing regulations. It aims to provide recommendations to ministries and regulators on implementing Good Regulatory Practices (“GRP”) in developing, administrating and enforcing regulations to regulated entity. 3. This report is prepared to conduct RURB study for the Transport Services sector. The scope of this study includes (i) the medium of transport and (ii) the transportation activity. For the medium of transport, the study is limited to the four (4) main modes of road, rail, maritime, and air. As for the transportation activity, Malaysian Standard Industrial Classification 2008 (“MSIC 2008”) is used as a point of reference to understand the technical nature of transportation activities

4. For this study, MPC had decided to focus on the regulatory aspects of Transport Services in five (5) priority subsectors under the Malaysia Productivity Blueprint, as follows:

• Tourism; • Chemicals and Chemical Products; • Machinery and Equipment;

• Electrical and Electronics; and • Agrofood. 5. For the Tourism subsector, the study will consider transport services relevant to the carriage of passengers only, whereas for the other four (4) subsectors listed above, the study will consider transport services relevant to the transportation of goods. As a result, this report will solely focus on the carriage of passengers. As for the study on transportation of goods, it will be made in a separate report titled ‘Reducing Unnecessary Regulatory Burdens on Business (RURB): Transport Services - Volume II: Transportation of Goods’.

6. The report is structured into four (4) chapters as follows:

• Chapter 1 – About the review • Chapter 2 – Core Concept • Chapter 3 – Industry performance of transport service • Chapter 4 – Tourism subsector

1.1 About the Review

Y.A.B Tun Dr Mahathir Mohamad, at the inaugural meeting of the Malaysian Business Council held in Kuala Lumpur on 28 February 1991, stated that there can be no doubt that regulations are an essential part of the governance of society, of which the economy is a part. A state without laws and regulations is a state flirting with anarchy. What is not required is over-regulation although it may not be easy to decide when the Government is over regulating. Wisdom lies of course in the ability to distinguish between those laws and regulations which are productive of our societal objectives and those that are not.1

In order to attain the aspiration of an advanced nation that is inclusive and sustainable by 2020 as announced by Tun Dr Mahathir Mohamad during the 6th Malaysia Plan, Vision 2020 recognises the need for reform of regulations in attaining the goals of a developed nation. Since the implementation of the 6th Malaysia Plan till the current 11th Malaysia Plan, regulatory reform has been highlighted as one of the key components to achieve Vision 2020. Currently, under the 11th Malaysia Plan, the strategies include enhancing public sector productivity and accelerating regulatory reforms. At the national level, productivity-linked incentives will be introduced and regulatory reforms will be accelerated. As such, it is proven that Malaysia has been steadfast moving towards achieving Vision 2020 which is thus why this review is undertaken.

To this end, this study aims to review the stock of regulation and identify areas where regulation imposes unnecessary burdens on businesses and to identify regulatory and non-regulatory options that will reduce regulatory burdens in the transport services sector without compromising underlying policy objectives. It will also examine regulation and enforcement practices that might impede competition and productivity in the industry. Regulatory burdens arise from the costs imposed by regulation and enforcement that would otherwise not arise for businesses. Where requirements from regulation create a change in business behavior and practices, a regulatory burden can be said to exist. While it is usually necessary that some burden is placed on business for regulation to achieve its objectives, where it is poorly designed or its enforcement and administration is not properly executed, it may impose greater burdens than necessary.

1 ISIS, (Malaysia: The Way Forward (Vision 2020)), http://www.isis.org.my/attachments/Vision%202020%20complete.pdf 3

1.2 What MPC Has Been Asked To Do

Malaysia Productivity Corporation (“MPC”) has been mandated under the 10th Malaysia Plan to carry out comprehensive reviews on business regulations with the aim of modernizing such regulations and facilitating the ease of doing business in Malaysia. Regulations that contribute to improve national outcomes will be retained, while redundant and outdated regulations will be eliminated.

Under the 10th Malaysia Plan, MPC had been mandated to do the following:2

• Review existing regulations with a view to removing unnecessary rules and compliance costs. Regulations affecting National Key Economic Areas (“NKEAs”) will be prioritised;

• Undertake a cost-benefit analysis of new policies and regulations to assess the impact on the economy;

• Provide detailed productivity statistics, at sector level, and benchmark against other relevant countries;

• Undertake relevant productivity research (e.g. the impact of regulations on growth of small and medium enterprises (“SMEs”));

• Make recommendations to the Cabinet on policy and regulatory changes that will enhance productivity; and

• Oversee the implementation of recommendations.

This was followed by the 11th Malaysia Plan, where the focus is to accelerate economic growth and promote an economy that will be driven by high-value and knowledge-intensive activities, sectoral governance reforms, and enhancing internationalisation of products and services.3

2The Economic Planning Unit, Tenth Malaysia Plan, http://www.pmo.gov.my/dokumenattached/RMK/RMK10_E.pdf 3 Economic Planning Unit, Eleventh Malaysia Plan: Strategy Paper 18 – Transforming Services Sector http://epu.gov.my/sites/default/files/Strategy%20Paper%2018.pdf 4

Specifically, the Services Sector Blueprint (2015-2020)4 launched in 2015 mandated MPC to undertake initiatives on sectoral governance reform to remove structural barriers and outdated regulations through the following:

• Accelerating and increasing the efficiency of sectoral governance reform; and

• Ensuring that the best regulatory development practices are in place for new regulations by expanding and accelerating the adoption of the National Policy for the Development and Implementation of Regulations (“NPDIR”).

In 2017, the Malaysia Productivity Blueprint (“MPB”) was launched by the Prime Minister’s Department’s Economic Planning Unit (“EPU”) with the aim at raising the country's productivity to new heights. As Malaysia approaches its vision to become an advanced economy and inclusive nation by 2020, productivity improvement is critical for sustaining this positive trajectory. MPC spearheads the country’s effort to boost the productivity and competitiveness by undertaking the main role of facilitating the Government’s productivity agenda. MPB is a holistic approach on productivity improvements across the economy with emphasis on strong coordination and governance for implementation certainty and instilling productivity as a daily work culture to raise productivity of the nation.5

As a result of MPC’s focus primarily being service-centric, it has been decided that the theme for this study is to be on the services industry, specifically on Transport Services where this review process will draw on the expertise and perspectives of the public sector and private sector, which will help identify key issues and the appropriate solutions for such issues.

4 Kementerian Hal Ehwal Ekonomi, Rancangan Malaysia Kesebelas, http://www.epu.gov.my/documents/10124/284bf88c-1aa1-4e3a-b43e-3b4b91fa2d1b 5 MPC, Productivity Report 2016/2017, http://www.mpc.gov.my/wp-content/uploads/2017/05/Productivity-Report- 2017.pdf

After the 14th General Election on 9th May 2018, the Government published the Mid-Term Review of the 11th Malaysia Plan (“Mid-Term Review”), with new priorities and emphases, aims to reform existing policies and outline the revised socioeconomic targets for 2018-2020.6 The Mid-Term Review has taken into consideration the aspirations of the new Government, current economic challenges and global trends.

Pursuant to Strategy A4: Facilitating Ease of Doing Business, under the Mid- Term Review, good regulatory practices will be intensified to improve processes and procedures in increasing productivity and competitiveness. In addition, trade practices including non-tariff measures (“NTMs”) will be streamlined to facilitate trade.7 Improving regulatory and trade practices efforts to implement good regulatory practices will be intensified to address the complex regulatory framework, modernise business regulations and create a more favourable business climate.

On top of that, the application of the NPDIR, which serves as a guideline on parameters and principles of good regulatory practice, will be extended to state government and local authorities. Existing efforts such as modernising business licensing, eliminating unnecessary regulatory burdens on business and reducing bureaucratic processes will be continued to lower compliance costs.

6Mid term review of the Eleventh Malaysia Plan 2016-2020, new priorities and emphases, https://www.talentcorp.com.my/clients/TalentCorp_2016_7A6571AE-D9D0-4175-B35D- 99EC514F2D24/contentms/img/publication/Mid-Term%20Review%20of%2011th%20Malaysia%20Plan.pdf 7 ibid

1.3 Scope of the Study

1.3.1 Transport Services

In order to undertake the study on Transport Services, it must firstly be determined what Transport Services entails. As the study aims to uncover regulatory burdens, similarly it would be appropriate to consider whether there is any legal definition in Malaysia as to what amounts to Transport Services. From the review of Malaysian law, there is no legal definition of Transport Services under the relevant legislations. In the absence of a legal definition, resort can thus be made to the everyday, ordinary use of the term in order to better understand the scope of Transport Services.

In this respect, the dictionary8 meaning of Transport Services has been defined to include two (2) fundamental aspects being:

• a vehicle or system of vehicles, such as buses, trains, etc. for getting from one place to another; and • the movement of people or goods from one place to another.

Based on the aforementioned definition, it is evident that the scope of Transport Services incorporates the medium of transport (being the vehicle or system of vehicles) and the activity undertaken in respect of transportation (being the act of transporting). Some examples of this concept are illustrated in Figure 1: Examples of the definition of Transport Services, for ease of understanding.

8 Cambridge Dictionary, https://dictionary.cambridge.org/dictionary/english/transportation

Figure 1: Examples of the definition of Transport Services

Medium of transport Transportation Activity

Excursion Bus Tour for tourists

Lorry Transfer of goods

Crane Lifting of goods

In addition to the above definition, the study has also assessed several other salient features of Transport Services as further detailed in the two (2) fundamental aspects of the definition adopted.

1.3.2 Medium of transport

As the medium of transport focuses on the vehicles or system of vehicles used to transport passengers/goods from one place to another, it must also be determined which modes of transport is relevant for the purposes of this study. As such, although one of the more common modes to naturally include in any transport service study would be road transport i.e. buses, lorries, taxis, etc., would this study also extend to include as an example, space transport? With guidance from MOT,9 the mode of transport focused on in this study can be limited to the four (4) main modes of transport comprising of air, maritime, road, and rail transport.

The four (4) main modes of transport identified for the purposes of this study can be seen illustrated in Figure 2: Four (4) Modes of transport, for ease of reference.

9 Ministry of Transport, http://www.mot.gov.my/en/about-mot/the-introduction-of-new. Note that based on MOT’s website, there would typically only be three (3) main modes of transport as rail transport would be a sub-set of road transport. However, for the purposes of this study, we have considered rail transport independently.

Figure 2: Four (4) Modes of transport

Air Rail

Road Maritime

1.3.3 Transportation activity

As mentioned above, a second aspect of Transport Services is to focus on the transportation activity. This means for example, when the activity of passenger air transport is of concern, what would the nature of such activity include? As a point of reference, it had been determined that the Malaysian Standard Industrial Classification 2008 (“MSIC 2008”)10, in particular Section H: Transportation as outlined below in Figure 3: MSIC 2008 would be of relevance for this study in order to among others better understand the technical facets of transportation activities.

10 MSIC (2008), https://www.dosm.gov.my/v1/uploads/files/4_Portal%20Content/3_Methods%20%26%20Classifications/2_List%20of% 20References/MSIC_2008.pdf

Figure 3: MSIC 2008 on Transportation11

Section H: Transportation

Group Type of Transport

Group 491 Transport via railways

Group 492 Other land transport

Group 493 Transport via pipeline

Group 501 Sea and coastal water transport

Group 502 Inland water transport

Group 511 Passenger air transport

Group 512 Freight air transport

Group 522 Support activities for transportation

(Source: DOSM, MSIC 2008, https://www.dosm.gov.my/v1/uploads/files/4_Portal%20Content/3_Methods%20%26%20Classifications/2_List%20of% 20References/MSIC_2008.pdf )

Based on MSIC 2008 and using the example of passenger air transport, the standard provides guidance on the nature of such activity where passenger air transport includes, “transport of passengers by air over regular routes and on regular schedules, charter flights for passengers, scenic and sightseeing flights, renting of air-transport equipment with operator for the purpose of passenger transportation and general aviation activities such as transport of passengers by aero clubs for instruction or pleasure”.12

This illustration is reproduced in Figure 4: Group 511 Passenger air transport below, for ease of reference.

11 DOSM, MSIC 2008, https://www.dosm.gov.my/v1/uploads/files/4_Portal%20Content/3_Methods%20%26%20Classifications/2_List%20of% 20References/MSIC_2008.pdf 12 ibid

Figure 4: Group 511 Passenger air transport

Class Item Description MSIC 2000

5110 51101 Transport of passengers by 62101 air over regular routes and Passenger on regular schedules air transport

51102 Non-schedule transport of 62209p passenger by air

51103 Renting of air-transport 62201p equipment with operator for the purpose of passenger transportation

(1) Includes: (a) Charter flights for passengers (eg: helicopter, etc.) (b) Scenic and sightseeing flights (c) General aviation activities (eg: transport of passengers by aero clubs for instruction or pleasure)

(DOSM, MSIC 2008, https://www.dosm.gov.my/v1/uploads/files/4_Portal%20Content/3_Methods%20%26%20Classifications/2_List%20of% 20References/MSIC_2008.pdf )

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1.3.4 Key subsectors under the Malaysia Productivity Blueprint

Given that Transport Services in general is a broad industry, MPC had decided that the focus sector for the study will be aligned with the key subsectors inhibiting productivity growth identified in the MPB. The MPB had identified nine (9) priority subsectors and they collectively contribute to 30% of Malaysia’s GDP and 40% of total employment.13 The nine (9) priority subsectors are as follows:

• Retail and Food & Beverages; • Electrical and Electronics; • Chemicals and Chemical Product; • Agrofood; • Professional Services; • Tourism; • Communication and Technology; • Machinery and Equipment; and • Private Healthcare.

The nine (9) priority subsectors listed above have been selected based on five (5) main criteria being:

• the subsector’s productivity gap;

• impact on gross domestic product (“GDP”);

• percentage of workforce;

• readiness of the subsector to implement productivity improvement; and

• existing Government plans.

13 Productivity Wayup Malaysia, http://wayup.my/wp-content/uploads/MPB_Chapter-4-1.pdf

For this study, MPC had decided to focus on the regulatory aspects of Transport Services under five (5) priority subsectors in the MPB, being:

Chemical and Machinery Electrical Chemical and and Tourism Product Equipment Electronics Agrofood ("C&C ("M&E") ("E&E") Products")

(collectively, “Five (5) Subsectors”)

Why the Five (5) Subsectors?

It must be noted that the decision to focus on the Five (5) Subsectors (out of the total nine (9) subsectors under the MPB) was due to the overriding criteria of the study to be on Transport Services, hence the subsectors chosen extensively involved (i) the medium of transport and (ii) transport activity in the relevant subsector value chain.

As an example, the Tourism subsector was chosen because consistent with the definition of Transport Services adopted, it comprises of (i) various mediums of transport representing the four (4) main modes i.e. cars, planes, yachts, trains, etc. and (ii) includes a range of transport activities i.e. tours, excursions, point- to-point transfers, etc. In contrast, the subsectors omitted such as for example, Professional Services, Communication and Technology, and Private

Healthcare had little to no correlation to the definition and consequently, criteria of Transport Services adopted. Specifically using the Private Healthcare subsector as an example, the focus on Transport Services in the subsector is limited as the medium of transportation would be confined to ambulances (private/public) and helicopters only while the transport activity would be the transfer of patients only.

An illustration of the above explanation can be seen in Figure 5: Example of Tourism subsector vs Professional Healthcare subsector, for ease of understanding.

Figure 5: Example of Tourism subsector vs Professional Healthcare subsector

Subsector Mode of transport Transportation activity

Tourism Road (Cars, etc.) tours, excursions, point-

to-point transfers, etc.

Air (Plane, etc.) tours, excursions, point-

to-point transfers, etc.

Maritime (Yacht, etc.) tours, excursions, point- Included to-point transfers, etc. in the study Rail (Trains, etc.) tours, excursions, point- to-point transfers, etc.

Private Road (Ambulances transfer of patients only Healthcare only)

Air (Helicopters only) transfer of patients only

Maritime (N/A) N/A

Rail (N/A) N/A Excluded from the study

1.3.5 Types of Transport Services

In considering the types of Transport Services, reference can be made to MSIC 2008 which identifies that transportation activity performed under each mode of transport would traditionally involve (i) the carriage of passengers and (ii) the movement of goods, as seen in the extract in Figure 6: Extract of MSIC 2008, Section H: Transportation and Storage.14

Figure 6: Extract of MSIC 2008, Section H: Transportation

Level MSIC 2008 Ver. 1.0

Division 5

Group 11

Class 20

Item 47

This section includes the provision of passenger or freight transport, whether scheduled or not, by rail, pipeline, road, water or air and associated activities such as terminal and parking facilities, cargo handling, storage, etc. included in this section is the renting of transport equipment with driver or operator.

Premised on the foregoing, it was determined that for the Tourism subsector, the study will consider Transport Services relevant to the carriage of passengers only. As for the other four (4) subsectors being C&C Products, E&E, M&E, and Agrofood, the study will consider Transport Services relevant to the transportation of goods only.

For ease of understanding, the types of transportation that will be considered for the Tourism subsector and the other four (4) subsectors are shown in Figure 7: Types of Transport Services.

14 MSIC (2008), https://www.dosm.gov.my/v1/uploads/files/4_Portal%20Content/3_Methods%20%26%20Classifications/2_List%20of% 20References/MSIC_2008.pdf, page H-1

Figure 7: Types of Transport Services

Carriage of Passengers Tourism

C&C Products

M&E Transportation of Goods E&E

Agrofood

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In summation of the above description of Transport Services, the overall scope of this study is shown in Figure 8: Overall Scope of the Study.

Figure 8: Overall Scope of the Study

SCOPE OF TRANSPORT SERVICES STUDY

Key features include:

- includes (i) the medium of transport and (ii) the transportation activity

- for the medium of transport, the study is limited to the four Transport (4) main modes of road, rail, maritime, and air Services - for the transportation activity, MSIC 2008 is used as a point of reference to understand the technical nature of transportation activities

Five (5) C&C Tourism M&E E&E Agrofood Subsectors Products under MPB

Types of Carriage of Transportation of Goods Transport Passengers Services

For ease of reference, this report will solely focus on the carriage of passengers, particularly for the Tourism subsector. The discussion on the transportation of goods, for the other four (4) subsectors will be made in a separate report titled Reducing Unnecessary Regulatory Burdens on Business (RURB): Transport Services - Volume II: Transportation of Goods.

1.4 Approach and rationale of this review

The study will emulate the approach used by the Australian Government Productivity Commission (“AGPC”) as developed by a regulatory expert from the AGPC and established by MPC. After the regulatory issues of concern have been identified, the team will formulate feasible options for further deliberation, based on principles of good regulatory practice, and publish them in this report.

Further consultations with relevant stakeholders will take place in order to develop concrete recommendations that will reduce unnecessary regulatory burdens. These will be published in the final report. Figure 9 shown below summarizes the RURB methodology:15

Figure 9: RURB Methodology

(Source: Reducing Unnecessary Regulatory Burdens on Logistics Sector, http://www.mpc.gov.my/wp- content/uploads/2016/04/RURB-Logistics-Draft-Full-Report.pdf)

15 Reducing Unnecessary Regulatory Burdens on Logistics Sector, http://www.mpc.gov.my/wp- content/uploads/2016/04/RURB-Logistics-Draft-Full-Report.pdf

In conducting the review, MPC had assessed both written regulation and the administration and enforcement of regulations. With regards to written regulation, all types of legislative instruments used by the Malaysian Federal and State Governments as well as rules set by Local Governments, such as by-laws, guidelines, circulars, code or policies are potentially under review. The conditions contained in licenses, permits, consents, registration requirements and leases are also under review where they impose a compliance burden or restrict competition.

While it is usually necessary that some burden is placed on business for regulations to achieve its objectives, where it is poorly designed or its enforcement and administration is not done well, it may impose greater burdens than necessary. This review aims to identify areas where regulations can be improved, consolidated or simplified to reduce unnecessary burdens to the transport services without compromising underlying policy objectives. It will also examine regulations and enforcement practices that might impede competition and productivity in the industry.

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1.5 Conduct of the study

In preparing this report, this study had identified, reviewed, and analysed industry issues in relation to the current Transport Services legal framework from publicly available sources including but not limited to legal sources, reference materials, reports, newspapers, articles, studies, and etc., in which the value chain of each of the Five (5) Subsectors were prepared. Following initial analysis and consultations, MPC had released an Issue Paper for each of the Five (5) Subsectors to interested parties to prepare and participate in the review. The Issue Paper for the Tourism Subsector is appended herewith in Appendix 1.

MPC had provided various opportunities for interested parties to provide input including among others:

• Data and Information gathering: this review commenced with a period of collecting information from interested parties and other sources which began from early August 2018 and ran until the end of October 2018.

• Publishing the issue paper online: MPC had published the issue paper on www.mpc.gov.my in August 2018 to allow the interested parties to give comment and/or provide information on the study.

• Stakeholder engagement: MPC had also organized focus group meetings across the country with the relevant trade associations and industry players during the months of August 2018 to October 2018 to discuss and gather issues relating to unnecessary regulatory burdens on Transport Services.

• Meetings: MPC then held informal consultations with industry groups as well as with a number of companies and individuals to gather data, validate whether the issues identified are valid, identify further issues, and understand such concern, before releasing this report.

Therefore, based on the principles of good regulatory practice, MPC had prepared this report which outlines the issues raised by the key stakeholders, identify regulatory and non-regulatory options, for this short list, which might alleviate the regulatory burdens, including those which will enhance regulatory consistency across jurisdictions or reduce duplication and overlap in regulation or in the role of regulatory bodies, and recommend which options are the most suitable.

As the Government is continuously striving to maintain and enhance efficiency and competitiveness through private-sector driven and people-centred growth. Good regulatory practice is one of the proven instruments to harness national efforts and resources for competitiveness and sustaining economic growth.16 It ensures that all regulations are effective in addressing the desired public policy objectives and in serving the country in a balanced and equitable approach. Further explanation on the principles of good regulatory practice and government initiatives in good regulatory practice will be made in Chapter 2.

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16 Malaysia Productivity Corporation, What is Good Regulatory Practice (GRP)?, http://www.mpc.gov.my/good- regulatory-practice-grp/

Project Milestone

In preparing this report, this study had followed the methodology, and the timeline shown below:

Duration

The period of stakeholder engagement was from 1 August 2018 to 31 October 2018. This was conducted as follows:

• Town hall whereby MPC had a one-day engagement session with Tourism Productivity Nexus and various tourism associations in a hotel in Klang Valley to discuss on regulatory issues, particularly on land transport. There were more than sixty (60) attendees at the town hall and they were broken up into four (4) different groups to discuss on the regulatory issues; • One-to-one interviews whereby MPC had met in person with the stakeholders at various locations in Klang Valley and Langkawi; • Focus group meetings with the relevant associations and industry players to discuss and gather issues relating to unnecessary regulatory burdens on Transport Services in Klang Valley and Langkawi;

• Public surveys whereby MPC had prepared and distributed questionnaires to the public and private sectors, with expertise or experience in the Transport Services for the Tourism Subsector in order for them to give their feedback and assist us in this study; and • Online consultation whereby MPC had released the Issue Paper to assist individuals and organizations to participate in this study on www.mpc.gov.my in August 2018. In the said Issue Paper, MPC had outlined the scope of the review, matters about which MPC are seeking comment and information, and information about how they can get involved in the review. The interested parties were allowed to make a submission (written or electronic) on the regulatory issues from a short letter on a single issue to a more substantial document covering a range of issues. The interested parties were also allowed to contact MPC if they wished to have a one-on-one meeting on this review.

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Governance Structure

The governance structure of the RURB Transport Services consists of (i) Working Group of Government Reform (“WGGR”), (ii) Tourism Productivity Nexus, and (iii) an external assessor.

The members of the WGGR consist of representatives from MPC, Ministry of International Trade and Industry (“MITI”), Ministry of Finance (“MOF”), Malaysia Investment Development (“MIDA”), Malaysia External Trade Development Corporation (“MATRADE”), Malaysia Competition Commission (“MyCC”), and Attorney General’s Chambers. The members of the WGGR meets once per month to endorse and provide high level input on this study. They also ensure timely completion of this study.

As for Tourism Productivity Nexus, it was established in November 2017 and serves as a strategic platform to strengthen the working partnership between the government, private sector and tourism industry players with a common understanding to build the nation’s tourism industry. For this particular study, Tourism Productivity Nexus had provide technical input on the study by assisting in the stakeholder mapping, providing overview of tourism related issues, and giving strategic direction in completing the study.

An external assessor was also appointed for this particular study to provide objective input on this report and to ensure compliance with MPC’s RURB methodology.

For ease of understanding, the governance structure of the RURB Transport Services can be seen below:

Overseeing Body Activity

WGGR • Endorse and provide high level input on the study/project • Ensure timely completion of study/project Tourism • Provide technical input on the study/project i.e. stakeholder Productivity Nexus mapping, tourism related issues, and strategic direction

External Assessor • Provide continuous, objective input on the report • Compliance with MPC’s RURB methodology

1.6 Structure of the Report

This report has been divided into four (4) main chapters being:

• Chapter 1 – About the Review highlights the rationale of the review and approach of this study.

• Chapter 2 – Core Concept presents the core concepts of regulatory burdens and the potential sources of unnecessary regulatory burdens in general.

• Chapter 3 - Industry Performance of Transport Services provides a statistical overview and growth trends of the country trade and on the contributions from Transport Services. Reference is made to the MSIC 2008 in defining the scope of Transport Services. This analysis reflects the importance of Transport Services in the national economy. It also presents the value chain to illustrate the extent of government regulatory requirements placed on businesses in these parts of the economy by looking at the national policy related to transport services sector and the governing Regulations, its regulatory framework, existing legislative and institutional arrangements, and mapping of the value chain to Regulations.

• Chapter 4 – Tourism subsector provides a statistical overview and presents the value chain analysis of the Tourism subsector. This Chapter also explains the relationship between Transport Services and Tourism subsector, as well as the issues raised by the industry, and the options in reducing regulatory burdens for the Tourism subsector.

CHAPTER 2 REGULATORY BURDENS: CORE CONCEPT

Contents: Purpose, why regulation, reducing unnecessary regulatory burdens, types on unnecessary regulatory burdens, Government initiatives in good regulatory practices.

Key Points

1. For the purpose of this study, review will be made on the regulations applicable to Transport Services. Regulations include both written law and the administration and enforcement of regulations. It also includes the conditions contained in licenses, permits, and registration requirements are also under review where they impose a compliance burden or restrict competition.

2. Government uses regulation as the means to address risks to society, the economy or the environment which are not adequately addressed by individuals and markets. However, where regulation is poorly designed or written or it is not administered or enforced well, it may impose greater burdens than necessary. As such poor governance is the principle cause of unnecessary regulatory burdens, resulting from poorly designed or written regulation and/or poor administration or enforcement regulation.

3. There are six (6) core principles for assessing regulations and its administration. The six (6) core principles are as follows:

• Have a proportionate and targeted response to the risk being addressed • Minimise adverse side-effects to only those necessary to achieve regulatory objectives at least cost. • Have a responsive approach to incentivize compliance with regulation. • Ensure all written regulations are consistent and that regulators

interpret and apply them consistently. Avoid duplication and overlap of regulations and regulators. • Adopt transparency criteria, so interested parties are regularly consulted, it is clear to businesses what their legal obligations are, and that all regulations are easily accessed by everyone. • Accountability so that businesses can seek explanations of decisions made by regulators, as well as appeal them and there are probity provisions in order to reduce corruption. 4. The Government has implemented the initiative on good regulatory practice with the launching of the document on National Policy on the Development and Implementation of Regulations on July 2013. This policy document applies to all federal government ministries, departments, statutory bodies and regulatory commissions. The policy document spells out the objective, operating principles, responsibilities, requirements and process for the regulatory process management. Under the said policy, a regulator has to carry out a regulatory impact analysis before introducing or amending any regulation. It is an essential feature of sound regulatory practice. Besides that, the Best Practice Regulation Handbook was launched to provide detail guidance on how to carry out best practice regulation. MPC had also published the Guidelines on Public Consultation Procedure, to provide a reference for Ministries and federal agencies in conducting their public consultation exercises.

2.1 Introduction

This chapter highlights the core concepts of regulatory burdens and their significance, the principles of good regulatory practice and government initiatives in good regulatory practice and generic poor regulatory practices, where all these would provide useful insights to guide the development of options in the subsequent chapter and complexity of regulations in the context of Transport Services.

2.2 Why Regulation?

Regulations include both written law and the administration and enforcement of regulations. With regards to written law, it includes (i) the Federal Constitution and the Constitutions of the States and subsidiary legislation made thereunder, (ii) Acts of Parliament and subsidiary legislation made thereunder, (iii) Ordinances and Enactments (including any federal or State law styling itself an Ordinance or Enactment) and subsidiary legislation made thereunder, and (iv) any other legislative enactments or legislative instruments which are in force in Malaysia or any part thereof.17 Thus, it includes both primary legislation and subsidiary legislation. Subsidiary legislation means any order in council, proclamation, rule, regulation, order, notification, by-law or other instrument made under any act of parliament, ordinance, enactment, or other lawful authority and having legislative effect.18 It also include all types of legislative instruments used by the Malaysian Federal and State Governments as well as rules set by Local Governments, such as quasi instruments, guidelines, circulars, code or policies are potentially under review. The conditions contained in licenses, permits, and registration requirements are also under review where they impose a compliance burden or restrict competition. (collectively, “Regulations”)

In general, the Government uses regulation as the means to address risks to society, the economy or the environment which are not adequately addressed

17 Section 3 of the Interpretation Acts 1948 and 1967 [Act 388] 18 Section 66 of the Interpretation Acts 1948 and 1967 [Act 388]

by individuals and markets. Regulations are essential to enhance governance and promote stability, productivity, progress and prosperity while at the same time protecting public health, safety and the environment. Many regulatory policies have already proved their worth, supporting structural reforms, entrepreneurship and market openness. While it is usually necessary that some burden is placed on business for regulation to achieve its objectives, greater burdens may as well be created when the regulation is poorly designed or written, poorly implemented or administrated, and where there is unnecessary regulatory duplication and inconsistency.

However, impacts should be assessed and regulations should be reviewed systematically to ensure that they meet their intended objectives efficiently and effectively in a changing and complex economic and social environment. Regulations should be periodically reviewed to ensure that the benefits of the regulation outweigh the costs, and that alternative arrangements cannot equally meet the objectives of the regulation with less effect on competition.

There are four (4) broad stages to writing and implementing regulation in Malaysia. The stages involved are as follows:

• ex ante analysis before new regulation is written;

• writing and ratifying/approving/issuing regulation;

• implementing, administering and enforcing regulation; and

• monitoring, reviewing and rewriting existing regulations.

As MPC has been mandated to carry out regulatory reviews to facilitate the ease of doing business in Malaysia, MPC will be looking at all the stages. For ease of reference, the four stages of making and implementing regulations are shown in Figure 10 below19:

Figure 10: Four Stages of Making and Implementing Regulations

(Source: MPC, A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, http://www.mpc.gov.my/wp- content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf )

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19 MPC, A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, http://www.mpc.gov.my/wp- content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf

2.3 Reducing Unnecessary Regulatory Burdens

Regulatory burdens arise from the costs imposed by regulation and enforcement that would otherwise not arise for businesses. Where requirements from regulation create a change in business behaviour and practices, a regulatory burden can be said to exist. While it is usually necessary that some burden is placed on business for regulation to achieve objectives, where regulation is poorly designed or written, or it is not administered or enforced well, it may impose greater burdens than necessary.

When a business has to interact with more than one regulator, either within or across jurisdictions, it may create additional burdens when the regulators use different approach to enforcement.

Regulations can adversely impact on businesses in various ways. Most fall under the following four (4) categories of cost impacts:20

• administrative and operational requirements, such as:

➢ reporting, record keeping

➢ getting legal advice, training

• requirements on the way goods are produced or services supplied, such as:

➢ prescriptions on production methods

➢ occupational registration requirements, requiring professionals to use particular techniques

• requirements on the characteristics of what is produced or supplied, such as:

➢ being required to provide air bags in all motor vehicles

➢ requiring teachers or trainers to cover particular topics

• lost production and marketing opportunities due to prohibitions, such as:

20 MPC, A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, http://www.mpc.gov.my/wp- content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf

➢ when certain products or services are banned.

2.4 Types of Unnecessary Regulatory Burdens

It is usually necessary that some burden is placed on business in order for the objectives of regulation to be achieved. However, regulations may create unnecessary burdens on business where they are poorly designed and written; or they are poorly administered and enforced.21 The types of unnecessary regulatory burdens are as follows:22

• excessive coverage by a regulation - that is, the regulation affects more economic activity than was intended or required to achieve its objective (includes ‘regulatory creep’)

• subject-specific regulation that covers much the same issues as other generic regulation

• prescriptive regulation that unduly limits flexibility such as preventing businesses from:

➢ using the best technology

➢ making product changes to better meet consumer demand

➢ meeting the underlying objectives of regulation in different ways

• overly complex regulation

• unwieldy licence application and approval processes, excessive time delays in obtaining responses and decisions from regulators

• requests to provide more information than needed

• requests to provide the same information more than once

• rules or enforcement approaches that inadvertently result in businesses operating in less efficient ways

21 MPC, A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, http://www.mpc.gov.my/wp- content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf 22 MPC 2014, page 14, Reducing Unnecessary Regulatory Burdens – A Guide to Reducing Unnecessary Regulatory Burdens: A Core Concept

• unnecessarily invasive regulator behaviour, such as overly frequent inspections or irrelevant or duplicative information requests

• an overlap or conflict in the activities of different regulators

• inconsistent application or interpretation of regulation by regulators.

Poor governance and lack of transparency and accountability are among the principal causes of unnecessary regulatory burden, resulting not only from poor designed or written regulation and/or poor administration or enforcement of the regulations. This frequently provides opportunities for corrupt practices. Corruption is the greatest obstacle to economic and social development around the world. To get rid of corruption, regulators must be highly transparent in their decision-making, administrative processes and delivery. As such, understanding how corruption creates uncertainty for businesses and undermines the achievement of government objectives will hopefully increase government and society’s resolve to eliminate the unnecessary burdens from arising from corruption.

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In order to improve the quality of regulations, the regulations must be made according to good practice principles. Some important characteristics of well written regulations are shown in Box 1 below:23

Box 1: Characteristics of Well-Written Regulations

1. the requirements placed on business are proportionate to the risk being regulated, in particular low risks are not addressed by imposing onerous requirements

2. the regulations make appropriate use of prescriptive, performance, in- principle and process-based requirements

3. the regulatory requirements are the minimum necessary to effectively achieve the objective(s) of the regulation

4. the regulations provide an adequate range of enforcement instruments to allow regulators some flexibility in addressing noncompliance

5. the regulations are consistent with other regulations and do not create conflict or duplication

6. the regulations are transparent, communicated effectively and readily accessible by everyone

7. the regulations place accountability requirements on the regulator such as reporting, appeal and review provisions including some that address probity

(Source: MPC (2014), A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, http://www.mpc.gov.my/wp-content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf )

23 MPC (2014), A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, , http://www.mpc.gov.my/wp- content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf

Furthermore, it is crucial for Regulations and its administration to be assessed. The six (6) core principles for assessing Regulations and its administration are shown in Box 2 below:24

Box 2: Six Core Principles for Assessing Regulation and its Administration

Principle 1: Have a proportionate and targeted response to the risk being addressed

Principle 2: Minimise adverse side-effects to only those necessary to achieve regulatory objectives at least cost.

Principle 3: Have a responsive approach to incentivize compliance with regulation.

Principle 4: Ensure all written regulations are consistent and that regulators interpret and apply them consistently. Avoid duplication and overlap of regulations and regulators.

Principle 5: Adopt transparency criteria, so interested parties are regularly consulted, it is clear to businesses what their legal obligations are, and that all regulations are easily accessed by everyone.

Principle 6: Accountability so that businesses can seek explanations of decisions made by regulators, as well as appeal them and there are probity provisions in order to reduce corruption.

(Source: MPC (2014), A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, http://www.mpc.gov.my/wp-content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf)

24 MPC (2014), A Guide to Reducing Unnecessary Regulatory Concepts: Core Concepts, http://www.mpc.gov.my/wp- content/uploads/2016/04/CORE-CONCEPT-BI-30_9-ver01.pdf

2.5 Government Initiatives in Good Regulatory Practices

The Government has implemented the initiative on the good regulatory practice with the launching of the document on National Policy on the Development and Implementation of Regulations (“NPDIR”) on July 2013.25 The NPDIR sets out the objective, operating principles, responsibilities, requirements and process for the regulatory process management. The NPDIR also specifically mandates MPC, through its responsibility to the National Development Planning Committee (“NDPC”), to implement the functions and assist in the coordination of the national policy.

Besides that, the Best Practice Regulation Handbook (“BPRH”)26 which was launched together with the NPDIR provides detail guidance on how to carry out best practice regulation – the systematic process to the development of regulations. Basically, a regulator has to carry out a Regulatory Impact Analysis (“RIA”) before introducing or amending any regulation that may impact upon businesses, investment, or trade. RIA is an essential feature of sound regulatory practice. It consists of a process of examining the likely impact of a proposed regulation and a range of alternative options which could meet the Government’s policy objectives. Regulatory Impact Statement (“RIS”) is a key requirement of the Government’s RIA process. RIS is a document prepared by the regulator in support of proposals for new regulations, following consultation with affected parties. It formalises and provides evidence of the key steps taken during the development of the proposal, and includes an assessment of the costs and benefits of each option considered. The RIS must be submitted to MPC, and later be presented to NDPC. The NDPC oversees the implementation of the NPDIR. It monitors RIS process, examines and endorses the adequacy of all RIS prior to submission for decision by the government. MPC is responsible for assessing the need for RIS and for performing a review of RIS for adequacy prior to submission to the NDPC. It also provides guidance

25 MPC, National Policy on the Development and Implementation of Regulations, http://www.mpc.gov.my/wp- content/uploads/2016/04/National-Policy-Book.pdf 26 MPC, Best Practice Regulation Handbook, http://www.mpc.gov.my/wp-content/uploads/2017/04/Best-Practice- Handbook-2013.pdf

to regulators in facilitating RIA and developing RIS. This RIA involves seven (7) core elements as shown in Figure 11 below.27

Figure 11: Seven Elements of Regulatory Impact Analysis (RIA)28

(Source: MPC, http://www.mpc.gov.my/smart-regulation/#1463342946125-ebd326f2-9f62)

27MPC, Good Regulatory Practice, http://grp.miti.gov.my/mitigrp/resources/Images/pages/Seven_elements_of_RIA.png 28 MPC, http://www.mpc.gov.my/smart-regulation/#1463342946125-ebd326f2-9f62

Once the RIS has been examined by NDPC, it will later be forwarded to the Cabinet, Minister or other authority responsible. RIA and public consultations were introduced in order to standardize the way that polices, laws and regulations are developed and improve overall regulatory quality. Under NDPIR, all Federal Government regulators must undertake RIA and present the RIS in the creation of all new regulations or review of regulations that relate to, or impact business, investments and trade, upon assessment by oversight body. The process is also applicable for voluntary adoption by state governments and local authorities. RIA will be applied in all ministries and agencies. The tool is to enable governments to make sound analysis, evidence-based decision making and ensure transparency in all new and amended regulations.

MPC has published the Guidelines on Public Consultation Procedures29 as public consultation is a central element of RIA. This guideline is part of MPC’s efforts to facilitate the implementation of the NPDIR and also supplements the BPRH. Much of the information is based on the practices and publications from various countries such as the OECD, the United Kingdom, and the Australian Government. The intention of this guideline is to provide a reference for Ministries and federal agencies in conducting their public consultation exercises. It will also clarify the role of the stakeholders involved in public consultation. For the general public, the information will provide them with better understanding on the transparency and democratic process of the Government when developing regulations that will affect them.

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29 MPC, Guideline on Public Consultation Procedures, http://www.mpc.gov.my/wp- content/uploads/2016/04/guidelinepublicconsultation.pdf

CHAPTER 3

INDUSTRY PERFORMANCE OF TRANSPORT SERVICES

Contents: Industry performance of the Transport Services, Transport Services, air transport, land transport, maritime transport, rail transport, and value chain and regulations for Transport Services

Key Points

1. The service sector in Malaysia has been recognised as a target in the 11th Malaysia Plan, 2016-2020 in conjunction with Malaysia’s move towards becoming a developed nation. In 2017 alone, a total of RM124,538.80 million domestic and foreign investment has been input in order to develop this sector. One of the key contributors to the sector’s labour productivity growth is attributed to the transportation and storage subsector. Under the 11th Malaysia Plan, the transportation and logistics sector remain as one of the priority investment area. Improving the roads, railways, and air services are expected to boost regional development and connectivity 2. Transportation and storage has contributed an added value of RM 41,998 million in 2017, which is 6.6% of the total contribution of the services sector in 2017. It has also recorded a steady GDP growth of 6.2% in 2017.30 The growth was driven by land transport, with more passengers on KTM’s electric train service and also intercity services, together with a sharp increase in traffic volume on tolled highways.31 This also increased the labour productivity growth of the services sector as its transportation and storage sub-sector recorded a 7.9% growth in 2017.32 Besides that, recorded an employment of 696,000

30 Treasury, Economic Performance and Prospects, http://www.treasury.gov.my/pdf/economy/er/1718/chapter3.pdf 31 Treasury, Economic Performance and Prospects, http://www.treasury.gov.my/pdf/economy/er/1718/chapter3.pdf 32 MPC, Productivity Report 2017/2018, http://www.mpc.gov.my/wp-content/uploads/2018/07/apr-2018.pdf

workers and a labour productivity of RM60,331.33 3. In the Global Enabling Trade Report 2016, Malaysia achieved good rankings in the availability and quality of transport infrastructure, and availability and quality of transport services by placing 17th and 29th respectively out of 136 countries.34 With the forecasted economy growth, the need for better regulation of the Transport Service is ever more pressing in order to support its increasing demand. 4. The relevant Ministries generally involved with respect to Transport Services in relation to the Tourism subsector include, among others, as follows:

• Ministry of Transport; • Ministry of Tourism, Arts, and Culture; • Ministry of International Trade and Industry; • Ministry of Finance; and • Ministry of Home Affairs.

5. Air Transport - As of 2017, Malaysia’s air transport segment expanded 3.4% in GDP, supported by the higher international passenger movement. This is supported by the passenger traffic statistics in 2017 which notes that the industry grew by 8.1% year-on-year to 99.1 million passengers. 6. Road Transport – Malaysia’s transport and storage subsector’s growth was mainly supported by the land transport segment which GDP rose 6.8% in 2017. The overall market condition for trade transport is expected to increase in recent years. The Malaysia Automotive Association noted that there are a total number of about 28 million vehicles on our roads as of June 2017. 7. Maritime Transport - As at 2017, Malaysian ports recorded 471 international cruise calls, bringing in 924,885 passengers at primary

33 MPC, Productivity Report 2017/2018, https://drive.google.com/file/d/10jE_MFSYmZnkeVNGqG4_GOpYp1ZgL4r1/view 34 WEF, GETR, The Global Enabling Trade 2016, http://www3.weforum.org/docs/WEF_GETR_2016_report.pdf

ports in Malaysia, an increase of 78% from 523,272 in 2013. This brought the total calls made to Malaysian ports in 2017, including local cruise ships, to 599, a 68% growth from 359 cruise calls in 2013. 8. Rail Transport - Passenger rail transport in Malaysia is experiencing a decline is usage. This is estimated to be the result of timing and reliability of the trains.

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3.1 Transport Services

The service sector in Malaysia has been recognised as a target in the 11th Malaysia Plan, 2016-2020 in conjunction with Malaysia’s move towards becoming a developed nation.35 In 2017 alone, a total of RM124,538.80 million domestic and foreign investment has been input in order to develop this sector.36 With a projected economic growth between 5.5% and 6.3% annually up to 2020, a steady growth in all economic sectors, and expected trade growth of 4.7% annually up to 2020 backed by strong trade growth prospects in Asia,37 the service industry has to grow in tandem to support the influx of demand in order to support the growth of all other services.

The services sector accounted for the largest contribution to total GDP at 54.5% in 2017.38 Not only that, it also registered a high productivity growth of 5%, and recorded a significant growth in added value at 6.2%. As for employment, the services sector has recorded growth at 1.1%.

One of the key contributors to the sector’s labour productivity growth is attributed to the transportation and storage subsector. Under the 11th Malaysia Plan, the transportation and logistics sector remain as one of the priority investment area. Improving the roads, railways, and air services are expected to boost regional development and connectivity.39 Hence, after careful analysis of the regulatory burdens in the service sector, this report will focus on the Transport Services in relations to the Tourism subsector. For purposes of this study, this chapter will discuss solely on Transport Services with regards to transportation of passengers.

Transport Services in Malaysia can be classified according to mode of transport namely air, land, maritime, and rail, and what is carried or the services

35 MIDA, Services Sector, http://www.mida.gov.my/home/services-sector/posts/ 36 MIDA, Investment Data (Services Sector), http://www.mida.gov.my/home/investment-data-(services-sector)/posts/ 37 MOT, Logistics and Trade Facilitation Masterplan (2015-2020) http://www.mot.gov.my/en/Penerbitan%20Rasmi/Executive%20Summary%20Logistics%20and%20Trade%20Facilitatio n%20Masterplan.pdf 38 Treasury, Economic Performance and Prospects, http://www.treasury.gov.my/pdf/economy/er/1718/chapter3.pdf 39 World Bank, Productivity Unplugged: The Challenges of Malaysia’s Transition into a High-Income Country, http://documents.worldbank.org/curated/en/185861527855417221/pdf/126781-WP-PUBLIC-P160562-World-Bank- Report-08-Productivity-Unplugged-FA-Full-Web.pdf

performed under each sector either the carriage of passengers or the movement of goods (freight), and also included postal and courier services.

Transportation and storage has contributed an added value of RM 41,998 million in 2017, which is 6.6% of the total contribution of the services sector in 2017. It has also recorded a steady GDP growth of 6.2% in 2017.40 The growth was driven by land transport, with more passengers on KTM’s electric train service and also intercity services, together with a sharp increase in traffic volume on tolled highways.41 This also increased the labour productivity growth of the services sector as its transportation and storage sub-sector recorded a 7.9% growth in 2017.42 Besides that, recorded an employment of 696,000 workers and a labour productivity of RM60,331.43

In the Global Enabling Trade Report 2016, Malaysia achieved good rankings in the availability and quality of transport infrastructure, and availability and quality of transport services by placing 17th and 29th respectively out of 136 countries.44 With the forecasted economy growth, the need for better regulation of the Transport Service is ever more pressing in order to support its increasing demand.

For the purposes of this study, Transport Services includes the activities as defined in the Malaysia Standard Industrial Classification 2008 (MSIC 2008).45 A detailed description of the relevant groups relating to transportation under MSIC 2008 is provided herewith on Appendix 2.

It should be noted that the statistics presented for each transport industry may vary in detail and scope. The most recent statistics on transportation and

40 Treasury, Economic Performance and Prospects, http://www.treasury.gov.my/pdf/economy/er/1718/chapter3.pdf 41 Treasury, Economic Performance and Prospects, http://www.treasury.gov.my/pdf/economy/er/1718/chapter3.pdf 42 MPC, Productivity Report 2017/2018, http://www.mpc.gov.my/wp-content/uploads/2018/07/apr-2018.pdf 43 MPC, Productivity Report 2017/2018, https://drive.google.com/file/d/10jE_MFSYmZnkeVNGqG4_GOpYp1ZgL4r1/view 44 WEF, GETR, The Global Enabling Trade 2016, http://www3.weforum.org/docs/WEF_GETR_2016_report.pdf 45 MSIC (2008), https://www.dosm.gov.my/v1/uploads/files/4_Portal%20Content/3_Methods%20%26%20Classifications/2_List%20of% 20References/MSIC_2008.pdf

storage on the DOSM’s official website were based on the report released in 2015.46

The relevant Ministries generally involved with respect to Transport Services in relation to the Tourism subsector include, among others, the Ministry of Transport (“MOT”), Ministry of Tourism, Arts, and Culture (“MOTAC”), Ministry of International Trade and Industry (“MITI”), Ministry of Finance (“MOF”), and Ministry of Home Affairs (“MOHA”).

Ministry of Transport

MOT is the main ministry in charge of Transport Services as it formulates and implement policies with regards to the Transport Services. There are various division under MOT, being (i) the Land and Logistics Division, (ii) Maritime Division, and (iii) Aviation Division.

The Land and Logistics Division plays an important role as a generator and driving the development and implementation or National Transport Policy. The main functions of the division are as follows47:

• To formulate policies on driving license, driving schools, vehicle registration, road safety and technical standards of vehicle conforming to international standards. • To formulate transport policies in order to increase the quality of land transport services; • Plan, coordinate and implement communication plans/promotions/publicity and engagement as well as achievements of the Ministry and its Agencies; • To ensure policies/process aligned with National Key Result Area (NKRA) initiatives;

46 DOSM, Services Statistics on Transportation and Storage 2015, https://www.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=325&bul_id=SXZTSnRmRitEcW9jaTNjdkhUWTE 4dz09&menu_id=b0pIV1E3RW40VWRTUkZocEhyZ1pLUT09 47 MOT, Logistics and Land Transport Division, http://www.mot.gov.my/en/about-mot/divisions-units/land-division

• To develop an integrated rail transportation infrastructure network and multi-modalism; • To implement Malaysia obligation under the ASEAN agreement and cross border related to road and rail transportation; • To ensure all rules under Railways Act 1991 [Act 463] and Road Transport Act 1987 [Act 333] are in line with current needs; • To monitor and coordinate infrastructure development projects in the rail-based transport sector; and • To formulate policies on fare rates for railway services.

Apart from that, the Maritime Division under the MOT is responsible for establishing maritime transport access within waters of Malaysia and routes that crosses national borders as well as coordinating the development of cruise tourism. The Maritime Division consists of six (6) units, namely Ports, Maritime Safety, Maritime Economic, Domestic Shipping Licensing, International Convention and Maritime Attaché Office in London.48 The Maritime Attaché Office is responsible to ensure the safeguard of the interest of Malaysia maritime sector in dealing in the International Maritime Organization. Malaysia Shipowners’ Association is the association that represents shipowners of Malaysian registered vessels.49

As for the Aviation Division, it is responsible for all civil aviation affairs in Malaysia. The functions of the division are as follows50;

• To plan and review related air services policies from time to time; • To expand international air services network through air negotiations; • To ensure the planning, building and maintenance of airport infrastructure is in accordance with the specified standards; and

48 MOT, Maritime Division, http://www.mot.gov.my/en/about-mot/divisions-units/maritime-division 49 ibid 50 MOT, Aviation Division, http://www.mot.gov.my/en/about-mot/divisions-units/aviatioan-division

• To ensure that all existing air transport / aviation rules and regulation are in accordance with the guidelines as stipulated by the International Civil Aviation Organisation (ICAO).

Further discussion on the agencies under the purview of MOT, as well as the regulations under its purview will be made below, under the respective mode of transport.

Ministry of Tourism, Arts, and Culture

MOTAC is listed herein because it is one of the Ministries regulating Transport Services, particularly in the Tourism subsector by being the primary regulator for tourism operating companies under the Tourism Industry Act 1992 [Act 482]. In order for one to operate a tourism vehicle, it is a pre-requisite for him/her to apply for the Tour Operating Business and Travel Agency Business (“TOBTAB”) license from MOTAC.

Ministry of International Trade and Industry

MITI is listed as one of the Ministries regulating the Transport Services because it is one of the permit issuing agencies under the Customs Act 1967 [Act 235]. In order to import and/or export certain goods, one needs to apply for Approved Permit (“AP”).51 There are several Ministries that issue AP but for the purpose of this study, focus will be made on MITI because it is the Ministry in charge of issuing AP particularly for vehicles.

51 MITI, FAQ – Approved Permit (AP), http://www.miti.gov.my/index.php/pages/view/2096

Ministry of Finance

MOF is listed herein because its agency, the Royal Malaysian Customs is the government agency in charge of collecting custom duties in Malaysia. Custom duty is a tax levied on imports by Customs to raise state revenue and/or protect domestic industries from overseas competitors.52 All goods dutiable on import are put through custom duty pursuant to Custom Duties Order 2017.

Ministry of Home Affairs

MOHA is listed herein because its agency, the Malaysian Maritime Enforcement Agency (“MMEA”) formally established with the enactment of the Malaysian Maritime Enforcement Agency Act 2004 [Act 633]53 is the enforcement agency in charge of maritime offences. Its functions include performing maritime search and rescue, preventing any offences in the Malaysian Maritime Zone, controlling and preventing ocean pollution, prepare a platform for service and support for relevant agencies, and carrying out coastal and air surveillance.54 Its customer service mission is “Quick, Firm, Fair”55 whereby it aims to perform all tasks quickly to ensure proper implementation of laws, to not compromise on situations which violates the rules and laws, and to treat each customer on an equal basis accordance with the principle of "one law for all", to avoid collision regulations and state law regardless of status, rank, and influence of any party.

Besides that, the Immigration Department of Malaysia under MOHA will also be highlighted as it provides services to Malaysian citizens, permanent residents and foreign visitors. The function of the department includes managing the movement of people at authorised entry and exit points. On top of that, its function includes issuing passports and travel documents to Malaysian citizens

52 MPC, Chapter Five: Logistics Stakeholder, http://www.mpc.gov.my/wp-content/uploads/2016/04/CHAPTER-5.pdf alaysian Maritime Enforcement Agency Act 2004 54 MMEA, Functions, https://www.mmea.gov.my/eng/index.php/en/mengenai-kami/fungsi 55 MMEA, Customer Service Mission, https://www.mmea.gov.my/eng/index.php/en/mengenai-kami/misi-perkhidmatan- pelanggan

and permanent residents, as well as issuing visas, passes and permits to foreign nationals entering Malaysia.

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3.2 Air Transport

Air transport provided in Malaysia covers both passenger and freight air transport. Based on the MSIC 2008, passenger air transport includes non- scheduled transport of passengers by air, renting of air-transport equipment with operator for the purpose of passenger transportation, and transportation of passengers by air over regular routes and on regular schedules.56

Non-scheduled transport of passengers by air means air transport services performed by airlines to carry passengers (including scenic and sightseeing flights using helicopters) on an unscheduled or charter basis. A crucial component of the air transport services is the airport that handles both departure and arrival and carriage. In order to accommodate the needs of both local and foreign passengers and airline operations, Malaysian Airports have been equipped with world-class services, facilities and capacity.

As of 2017, Malaysia’s air transport segment expanded 3.4% in GDP, supported by the higher international passenger movement.57 This is supported by the passenger traffic statistics in 2017 which notes that the industry grew by 8.1% year-on-year to 99.1 million passengers.58 MAVCOM forecasted that Malaysia’s passenger traffic will grow by 6.5% to 7.0% year-on-year, translating into passenger traffic of 105.6 million to 106.1 million.59 International tourists contributed RM82.2 billion in tourist receipts to the country’s revenue in 2017.60 Thus, Malaysia aims for a receipt of RM100 Billion in 2020.

56 MSIC 2008 ver 1.0. http://msic.stats.gov.my/bi/carianInteraktif.php?validation_code=2§ion=H&division=51&group1=SilaPilih Treasury, Economic Performance and Prospects, http://www.treasury.gov.my/pdf/economy/er/1718/chapter3.pdf 58 MAVCOM, Waypoint, https://www.mavcom.my/wp-content/uploads/2018/05/Waypoint-Malaysian-Aviation-Industry- Outlook-May-2018.pdf 59 MAVCOM, Waypoint, https://www.mavcom.my/wp-content/uploads/2018/05/Waypoint-Malaysian-Aviation-Industry- Outlook-May-2018.pdf 60 The Edge Markets, 2018-2020 tourist arrival, receipt targets lowered, http://www.theedgemarkets.com/article/20182020-tourist-arrival-receipt-targets-lowered

Figure 14: Tourist Receipts (year to year)61

Year RM (Billions) Growth (%)

2007 46.07 - 2008 49.56 7.58 2009 53.37 7.69 2010 56.49 5.85 2011 58.32 3.24 2012 60.56 3.84 2013 65.44 8.06 2014 72.00 10.02 2015 69.12 -4.17 2016 82.10 18.78 2017 82.17 0.09

(Source: MY Tourism Data, Tourist Receipts, http://mytourismdata.tourism.gov.my/?page_id=242#!from=2007&to=2017)

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61 MY Tourism Data, Tourist Receipts, http://mytourismdata.tourism.gov.my/?page_id=242#!from=2007&to=2017

The passenger traffic in Malaysia from 2010 to 2017, together with the forecasted passenger traffic in 2019 is shown below in Figure 15:

Figure 15: Passenger Traffic (year to year)62

Year Passenger Traffic Growth (%) (Millions) 2011 65.3 12.2 2012 68.6 4.9 2013 81.5 18.9 2014 85.6 5.1 2015 86.3 0.8 2016 91.7 6.2 2017 99.1 8.1 2018f 100.3-101.1 1.1-2.0 2019f 102.5-103.5 2.2-3.3

As seen above, the total number of domestic and international passenger handled by the airports in Malaysia have increased steadily from 2011 to 2017. The 2017 passenger traffic growth was supported by the growth of international and domestic passenger traffic at 13.4% year on year and 3.3% year on year respectively. However, there is a forecasted decrease in growth due to the slower global and Malaysia’s GDP growth and slower growth of seats capacity by Malaysian carriers.63

The World Bank Group has reported that the infrastructure of our airports have outperformed our peer countries due to its heavy investment in the 9th Malaysia Plan.64 In the World Economic Forum Travel and Tourism Competitiveness Report 2017, it rated the aviation infrastructure in Malaysia with a score of 4.5 out of 6 based on the quality of the aviation infrastructure, the quantity of air

62 MAVCOM, Waypoint, https://www.mavcom.my/wp-content/uploads/2018/11/Waypoint-Report-November-2018.pdf 63 ibid 64 World Bank Group, Productivity Unplugged The Challenges of Malaysia’s Transition into a High-Income Country, http://documents.worldbank.org/curated/en/185861527855417221/pdf/126781-WP-PUBLIC-P160562-World-Bank- Report-08-Productivity-Unplugged-FA-Full-Web.pdf

traffic services (available seat kilometres and flights per capita) and the number of operating airlines and the number of airports per capita.65 In the Global Competitiveness Index 2016-2017, Malaysia has ranked 24th for Infrastructure whereby the quality of airport infrastructure was ranked 20th out of 138 countries.66

A report by InterVISTAS Consulting Inc. on the current and future economic benefits within Asia Pacific’s commercial air transport projected a total of 1,018,300 jobs to be directly/indirectly/induced by the air transport sector by 2035 in Malaysia.67 It also predicts an arrival of 164 million passengers by air and an increased contribution to the nation’s GDP by $26 billion by 2035.

Air Transport Service Regulators/Agencies

Civil Aviation Authority of Malaysia

Air transport service in Malaysia is regulated by the Civil Aviation Authority of Malaysia (“CAAM”) (previously known as the Department of Civil Aviation of Malaysian (“DCA”) which is established to provide safe, efficient and orderly flow of air transportation, and to regulate aviation activities in Malaysia.68 The Civil Aviation Authority of Malaysia Act 2017 [Act 788]69 sets out the functions of CAAM, which covers the current duties and functions of the Director General of CAAM, extends further to include but not limited to safeguarding the civil aviation industry against unlawful interference, co-operating with any local and foreign authority in charge of investigating aircraft accidents and serious incidents, and providing technical and consultancy services relating to civil aviation. The rapid expansion of Malaysia’s aviation and air transport industries is largely due to the pragmatic approach taken by CAAM in ensuring compliance to standards and recommended practices of the International Civil

65 World Economic Forum, Travel and Tourism Competitiveness Report 2017, bit.ly/2LLzb3m 66 WEF, The Global Competitiveness Report 2016–2017, http://www3.weforum.org/docs/GCR2016- 2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf 67 InterVISTAS, Asia Pacific Air Transport: Current & Future Economic Benefits- December 2015, https://www.nqr.gov.in/sites/default/files/InterVISTAS%20report%20for%20IATA%20- %20Asia%20Pacific%20Commercial%20Air%20Transport%20%281%29_3.pdf 68 CAAM, Agency Policy, http://www.dca.gov.my/about-dca/dca-safety-policy/ 69 Civil Aviation Authority of Malaysia Act 2017 [Act 788]

Aviation Organization (“ICAO”).70 It oversees the implementation, monitoring and enforcement of the safety standards including airworthiness, air traffic management and aviation security.71

How does CAAM regulate businesses?

CAAM ensures compliance to the standards of ICAO and, monitors and enforces the safety standards by imposing regulations, directives and guidelines on air transport operators.

Malaysian Aviation Commission

The Malaysian Aviation Commission (“MAVCOM”) was established under Malaysian Aviation Commission Act 2015 [Act 771],72 and it functions as an independent economic regulator to the civil aviation industry in Malaysia with the objectives of promoting a commercially viable, consumer-oriented and resilient civil aviation industry which supports Malaysia's economic growth and prospect.73 It regulates economic matters relating to the civil aviation industry, provides a mechanism for protection of consumers, provides a mechanism for dispute resolution between aviation industry players, administer and manage air traffic rights, and advise the Government, administer and manage routes under public service obligations. 74 In order to achieve its aim, it has the recently approved Malaysian Aviation Consumer Protection Code 2016 to assist it in promoting consumer rights.75

How does MAVCOM regulate businesses?

MAVCOM regulates economic matters pertaining civil aviation which includes protection of consumers. Thus, air transport operators will have to refer to MAVCOM’s licensing and registration procedures, and directives on air traffic rights etc in order to carry out their operations.

70 DCA, Director General of Civil Aviation, http://www.dca.gov.my/about-dca/director-general-of-civil-aviation/ 71 MOT, Safety Standards, http://www.mot.gov.my/en/aviation/safety-standards 72 Malaysian Aviation Commission Act 2015 [Act 771] 73 FlySmart, Malaysian Aviation Commission, https://flysmart.my/en/about-mavcom/ 74 MAVCOM, Who We Are, https://www.mavcom.my/en/who-we-are/ 75 The Edge Markets, Mavcom defends its role, http://www.theedgemarkets.com/article/mavcom-defends-its-role

The role of MAVCOM differs from those of MOT and CAAM. MAVCOM is the economic regulator that oversees commercial and economic matters, and is the independent adviser to the MOT on economic matters pertaining to civil aviation. MOT is responsible for industry policy-making and government-to- government discussions (including to spearhead bilateral or multilateral negotiations on traffic rights), while CAAM regulates technical and safety matters for Malaysia’s civil aviation industry.76

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76 MAVCOM, Waypoint, https://www.mavcom.my/wp-content/uploads/2018/05/Waypoint-Malaysian-Aviation-Industry- Outlook-May-2018.pdf

3.3 Land Transport

The road transport services include urban and suburban passenger land transport, other passenger land transport and freight transport by road. Passenger land transport includes city bus services, express bus services, employee bus services, school bus services, taxi operation and limousine services, and rental of cars with drivers. Other passenger land transport includes charters, excursion and other occasional coach services, hill tramway services, airport shuttles, and cable cars services.77

Malaysia's road networks span across the nation most densely in the Peninsular but at less dense rate in East Coast of the peninsular and at a modest rate at Sabah and Sarawak. This slow rate has been a pressing issue for Sabah and Sarawak which can be seen from the demand for road network development across Sabah and Sarawak, especially with the growing rate of the services sector which includes transportation in these states.78 Comparing Sabah and Sarawak with the west coast of the Peninsular Malaysia, the North South Expressway linking the northern-most point, Bukit Kayu Hitam to the southern-most point, Johor Bahru was completed in 1994.79 This is in contrast to the development of the Pan Borneo Highway, the link for the East Malaysia region which is only scheduled to be completed in June 2021.80

The network mostly includes paved and various expressways (accessible through toll-rates) that links the urban, suburban and interurban cities and towns and in the countryside the roads tend to be trunk road of either single or dual-carriage way. The vast majority of vehicles on the roads include motor- vehicles, motorcycles, multi-stop or direct motor-buses services for passengers.

77 MSIC 2008, http://msic.stats.gov.my/bi/carianInteraktif.php?validation_code=2§ion=H&division=49&group1=492&class1=SilaPil ih 78 DOSM, The Performance of State's Economy, 2017, https://www.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=449&bul_id=L25EUXQxbWdBaEVoWXU5aTFQ WUpNdz09&menu_id=TE5CRUZCblh4ZTZMODZIbmk2aWRRQT09 79 Hari Ini Dalam Sejarah, Perasmian Penyempurnaan Lebuhraya Utara-Selatan, https://web.archive.org/web/20160119122333/http://hids.arkib.gov.my/readarticle.php?article_id=8503 80 NST, Pan Borneo project will continue, says Baru Bian, https://www.nst.com.my/news/nation/2018/09/407139/pan- borneo-project-will-continue-says-baru-bian

Malaysia’s transport and storage subsector’s growth was mainly supported by the land transport segment which GDP rose 6.8% in 2017.81 The overall market condition for trade transport is expected to increase in recent years. The Malaysia Automotive Association noted that there are a total number of about 28 million vehicles on our roads as of June 2017.82 With growing disposable income among the population, vehicle ownership for both passenger and commercial is on the rise. The figure below shows the summary of new passenger and commercial vehicle registered in Malaysia for the year 2013 to 2017.

Figure 16: Summary of New Passenger & Commercial Vehicle Registered in Malaysia for the Year 2013 to December 201783

Year Passenger Cars Commercial Vehicles

2013 576,657 79,136

2014 588,341 78,124

2015 591,298 75,376

2016 514,545 65,579

2017 514,679 61,956

* Note:

i. Passenger Vehicle industry reclassified in January 2007 and includes all passenger carrying vehicles. i.e. Passenger Cars, 4WD/SUV, Window Van and MPV models. ii. Commercial Vehicles also reclassified on 1 January 2007 and include Trucks, Prime Movers, Pick-up, Panel Vans, Bus & Others.

(Source: MAA, Info Summary, http://www.maa.org.my/info_summary.htm)

81 Treasury, Economic Performance and Prospects, http://www.treasury.gov.my/pdf/economy/er/1718/chapter3.pdf 82 Paul Tan, Vehicle registrations in Malaysia hit 28.2 million units, https://paultan.org/2017/10/03/vehicle-registrations- in-malaysia-hit-28-2-million-units/ 83 MAA, Info Summary, http://www.maa.org.my/info_summary.htm

Land Transport Service Regulators/Agencies

The agencies under MOT involved in land transport include among others the Road Transport Department (“JPJ”),84 Malaysian Institute of Road Safety Research (“MIROS”),85 and Road Safety Department of Malaysia (“JKJR”).86 Other related authorities involved in land transport include, among others, the Land Public Transport Commission (“SPAD”)87.

Road Transport Department

JPJ objectives include regulating the registration and licensing of motor vehicles in a systematic, reliable and innovative manner, as well as to enforce and administer the road transport law with integrity and commitment to create a society that has a culture of adherence to the rules of the road. It also establishes and administer the road transport law with the commitment to produce competent, law abiding and prudent drivers of motor vehicles, together with monitor and administer motor vehicle safety standards with efficiency and integrity to meet the needs of the environment and the country's automotive industry.88 According to the Road Transport Act 1987 (Act 333),89 the enforcement and regulatory duties are under the roles and responsibilities of JPJ including issues relating to driving license, vehicle registration, vehicle technical specifications and road traffic enforcement.

How does JPJ regulate businesses?

JPJ is involved with the regulation of motor vehicles and road safety. It regulates among others, the conduct of drivers, registration and licensing of motor vehicles, and monitors the vehicle safety standards.

84 JPJ, http://www.jpj.gov.my/ 85 MIROS, https://www.miros.gov.my/1/ 86 JKJR, http://www.jkjr.gov.my/ms/ 87 Suruhanjaya Pengangkutan Awam Darat, http://www.spad.gov.my/ 88 JPJ, Misi, Visi dan Objektif, http://www.jpj.gov.my/en/web/main-site/visi-misi-dan-objektif 89 Road Transport Act 1987 [Act 333]

Malaysian Institute of Road Safety Research90

As for MIROS, it serves as a central repository of knowledge and information on road safety. The findings derived from research and evidence-based intervention programmes provide the basis for the formulation of new strategies, legislations, policies, and enforcement measures, governing road safety at the national level. It also principally engaged in research, whereby MIROS collaborates closely with local and international government agencies and private bodies to further the cause of road safety. In 2014, the ASEAN Transport Ministers appointed MIROS as the ASEAN Road Safety Centre. The aims of this centre are to promote and provide knowledge on road safety issues among ASEAN Member States which includes road traffic laws and regulations, data management, standards development, and road safety awareness and education.91

How does MIROS regulate businesses?

MIROS conducts research on the road transport in Malaysia. Thus, its findings are used to implement enforcement measures etc. It indirectly affects the regulatory burdens of businesses as it provides the basis for the regulations.

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90 MIROS, https://www.miros.gov.my/1/ 91 MIROS, About Us, https://www.miros.gov.my/1/page.php?id=10

Road Safety Department of Malaysia92

As for JKJR, it was established on 15 September 2004 as a leader in road safety advocacy to increase the awareness of road users on the importance of road safety and ultimately reduce deaths and injuries caused by road traffic crashes. It is an agency responsible for advocacy programs and road safety education.93 JKJR is also the Secretariat to the Road Safety Council of Malaysia.94 It plan, formulate, implement and coordinate road safety policies/plan/regulations. Besides that, it coordinates road safety programmes involving other agencies and coordinate and implement road safety campaigns at national level to educate road users.95

How does JKJR regulate businesses?

JKJR handles road safety and its projects. It is not directly involved in the economical/business regulatory segment.

Land Public Transport Commission96

SPAD acts as the central authority for managing all aspects of public transport. SPAD which is directly under the purview of the Prime Minister is responsible for drawing up public transport policies, plans and regulations covering all aspects of land public transport. Since its establishment, SPAD has injected a new impetus into public transport planning by introducing public transport master plans for both the country as well as for localised regions.97 The master plans comprehensively detail SPAD and Government’s goals and vision for public transport, while at the same time specifying accompanying initiatives designed to raise the overall level of service and safety standards of public transport. This includes enforcement initiatives, which not only cover public

92 JKJR, http://www.jkjr.gov.my/ms/ 93 Road Safety Department of Malaysia, Vision, Mission and Objective, http://www.jkjr.gov.my/en/about-us/vission- mission-and-objective.html 94 Road Safety Department of Malaysia, Background, http://www.jkjr.gov.my/en/about-us/background.html 95 Road Safety Department of Malaysia, Role and Function, http://www.jkjr.gov.my/en/about-us/function-and-roles.html 96 Suruhanjaya Pengangkutan Awam Darat, http://www.spad.gov.my/ SPAD, Overview, http://www.spad.gov.my/about-spad/overview

transport operators, but also commercial vehicles on the road. Following the enactment of Land Public Transport Act 2010 (Act 715),98 SPAD took over the functions of the Commercial Vehicle Licensing Board, Department of Railways and the tourism vehicles licensing function of the Ministry of Tourism in Peninsular Malaysia. At present, the Commercial Vehicle Licensing Board, Department of Railways and the Ministry of Tourism continue to exercise their role of authority in Sabah and Sarawak.99

SPAD plans, regulates, and enforces all matters relating to land public transport and has jurisdiction over Peninsular Malaysia. The three (3) main functions of SPAD are planning power, regulatory power, and enforcement power.100

• Planning power - Establishing a master plan to ensure a comprehensive, integrated and sustainable infrastructure development. • Regulatory power - Monitoring and regulating standard of performance of the industry’s operators through licensing. • Enforcement power - Encompassing powers to audit, investigate, compound/suspend/revoke operators' licenses. Additionally, to seize and auction vehicles for offenses relating to the illegal use of vehicles. SPAD has been mandated to introduce a 20-year National Land Public Transport Master Plan (“NLPTMP”) which provides strategic direction and guiding principles that all parties can adopt as they prepare local implementation plans to improve the delivery of public transport services. Among its plans is the National Regulatory Strengthening Programme (“NRSP”) which aims to revise procedures with regards to licensing. It has also recognised the need to better the coordination of multiple agencies and authorities involved in regulation. Among its sector plans under its institutional frameworks includes the excursion and tourist bus sector plan which will examine the day excursion, tours and private hire markets that have significant overlaps with tourism which has not been implemented.

98 Land Public Transport Act 2010 (Act 715) 99 SPAD, Overview, http://www.spad.gov.my/about-spad/overview 100 SPAD, What We Do, http://www.spad.gov.my/about-spad/what-we-do

It should be noted that commencing from January 2019, SPAD will be disbanded and replaced with a new agency called the Land Public Transport Agency (“APAD”) under the Ministry of Transport, taking over most of the functions of SPAD. 101 APAD is created to better manage the functions and development policies of the country’s land transport sector, which was previously under SPAD. Moving forward and to avoid overlapping in power, JPJ will be authorised to conduct enforcement under the Land Public Transport Act 2010. JPJ would also issue licences and permits for land public transport operators, tour and cargo vehicles at its existing counters.102 The Minister of Transport, YB Anthony Loke Siew Fook stated that with the reorganisation, several laws would need to be amended or repealed altogether. He further stated that the Suruhanjaya Pengangkutan Awam Darat Act 2010 [Act 714] would be repealed, and that the Land Public Transport Act 2010 [Act 715] would need to be amended to decentralized SPAD’s power to the MOT, APAD and JPJ.103

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101 The Star, School bus operators in the dark over permit applications, https://www.thestar.com.my/news/nation/2018/12/20/fzbus201218/#IOKmBZaDzlw3wfYD.99 102 The Star, Loke: SPAD to be swapped for APAD, https://www.thestar.com.my/news/nation/2018/06/07/loke-spad-to- be-swapped-for-apad-new-agency-to-better-manage-and-develop-land-transport-sector-says/#keR9fSXzc4XMC05x.99 103 ibid

3.4 Maritime Transport

Maritime transport in Malaysia can be divided into either sea and coastal passenger/freight transport or inland passenger/freight water transport.104

Sea and coastal water transport for passenger includes the operation of excursion, cruise or sightseeing boats, operation of ferries, water taxis, and rental of pleasure boats with crew for sea and coastal water transport. As for sea and coastal freight transport, it involves the transport of freight overseas and coastal waters, whether scheduled or not, and transport by towing or pushing of barges, oil rigs. Inland water transport includes transportation of passenger/freight via rivers, canals, lakes and other inland waterways transport of passenger/freight inside harbours and ports, commerce oriented.105

For passenger services in Malaysia, it includes boats, ferry and cruise ships services for transport and tourism. There are a few dedicated cruise terminals and they are located in among others, Penang, Pulau Indah and Langkawi.106 The cruise tourism sector is experiencing a growing demand and it is estimated that the demand would increase in the future with increased inflow of both domestic and foreign tourists. In 2011, the Cruise and Ferry Integrated Seaport Infrastructure Blueprint for Malaysia was commissioned by the Economic Planning Unit in collaboration with the MOT, and MOTAC, detailing the vision and policy for cruise industry development in Malaysia until 2020. This blueprint considered the infrastructure development and improvement plans for each key cruise terminal and port, making recommendations to reinforce theme-based cruise circuits as well as community-based infrastructure, perimeter attractions and connectivity.107

104 MSIC 2008, http://msic.stats.gov.my/bi/carianInteraktif.php?validation_code=2§ion=H&division=50&group1=SilaPilih 105ibid 106 Ministry of Transport, Ferry Services: Cruise Tourism, http://www.mot.gov.my/en/maritime/shipping/cruise- shipping 107 PEMANDU Associates, Charting the Course for Cruise Tourism in Malaysia, https://www.pemandu.org/2018/10/31/charting-the-course-for-cruise-tourism-in-malaysia/

The blueprint identified six (6) ports as having potential to contribute significantly to the Malaysian cruise industry, being Penang, Port Klang, Kota Kinabalu, Langkawi, Malacca and Kuching. These ports had existing cruise infrastructure, a network of cruise arrivals and/or access to immediate tourism products. In 2013, Kuantan port joined the line-up of primary ports due to its growing strategic importance for international cruise lines developing their East Asia sectors.108

The growth of international cruise tourism in Malaysia serves as a testament to the efforts put into developing the sector since 2009. As at 2017, Malaysian ports recorded 471 international cruise calls, bringing in 924,885 passengers at primary ports in Malaysia, an increase of 78% from 523,272 in 2013. This brought the total calls made to Malaysian ports in 2017, including local cruise ships, to 599, a 68% growth from 359 cruise calls in 2013.109

In the ASEAN Transport Strategic Plan 2016-2025, among the goals and actions for maritime transport to be undertaken by the ASEAN countries is to establish cruise corridors which includes improving cruise infrastructure, developing cruise tourist attractions and having better coordination with the tourism agencies.110

Malaysia has a total of seven (7) major Federal ports namely Port Klang, Johor Port, Port of Tanjung Pelepas, Kuantan Port, Penang Port, Bintulu Port and Kemaman Port. Meanwhile, the ports in Sabah and Sarawak are under the jurisdiction of the State Government of Sabah and Sarawak respectively.111

108 PEMANDU Associates, Charting the Course for Cruise Tourism in Malaysia, https://www.pemandu.org/2018/10/31/charting-the-course-for-cruise-tourism-in-malaysia/ 109 ibid 110 Kuala Lumpur Transport Strategic Plan, Asean Transport Strategic Plan 2016-2025, https://www.asean.org/storage/2016/01/11/publication/KUALA_LUMPUR_TRANSPORT_STRATEGIC_PLAN.pdf 111 MOT, Ports in Malaysia, http://www.mot.gov.my/en/maritime/ports-in-malaysia

Maritime Transport Service Regulators/Agencies

The agencies in charge of maritime include the Marine Department of Malaysia, Maritime Institute of Malaysia (“MIMA”), Malaysian Maritime Enforcement Agency (“MMEA”) and respective port operators. This list of regulators is not exhaustive as respective states have its respective state authorities/regulators as well.

Marine Department Malaysia

Maritime Department Malaysia objectives are to establish a safe, secure and systematic sea communication system, and marine conservation towards quality development of national maritime policy.112 Their other function includes to ensure safe navigation of merchant vessels, provide services to merchant vessels such as ship inspection, certification, registration and licensing; provide services to ships navigating in Malaysian waters and ports, together with supervise examinations of seafarers.113

How does the Marine Department regulate businesses?

The Marine Department is in charge of providing the regulations and guidelines with regards to registration and licensing of sea vessels. In Chapter 4, this report will elaborate on the regulatory burdens impacted on tour operators due to its inadequate and obsolete regulations on yachts and boats.

Maritime Institute of Malaysia

MIMA114 is a policy research institute set up by the Malaysian Government to look into matters relating to Malaysia's interest at sea, and to serve as a national focal point for research in the maritime sector. MIMA takes a comprehensive approach in dealing with maritime issues. Its role is to deal with

112 Jabatan Laut Malaysia, Profile, http://www.marine.gov.my/jlmeng/Contentdetail.asp?article_id=221&category_id=2&subcategory_id=2 113 Jabatan Laut Malaysia, Profile, http://www.marine.gov.my/jlmeng/Contentdetail.asp?article_id=221&category_id=2&subcategory_id=2 114 MIMA, http://www.mima.gov.my/

national, regional and global maritime matters affecting Malaysia. MIMA is therefore expected to contribute towards a meaningful, comprehensive and cogent national maritime policy for Malaysia. One key task of MIMA is to complement the efforts of the various government agencies involved in the maritime sector by mobilising expertise to assist and support them in national maritime policy planning and implementation. MIMA’s role will be both advisory and consultative. MIMA will provide advice and second opinions to Government agencies and other relevant organisations. MIMA also has the task of promoting the free exchange of ideas on all maritime matters.115

How does MIMA regulate businesses?

MIMA is a research institute akin to MIROS, on matters of maritime. Thus, its findings are used to implement enforcement measures etc. It indirectly affects the regulatory burdens of businesses as it provides the basis for the regulations.

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115 Marine Department Malaysia, Profile http://www.marine.gov.my/jlmeng/Contentdetail.asp?article_id=221&category_id=2&subcategory_id=2&subcategory2_i d=0#.W6rltRMzZsN

Port Authorities

The agencies in charge under the MOT in charge of ports in Malaysia include the Port Klang Authority, Johor Port Authority, Kuantan Port Authority, Bintulu Port Authority, Penang Port Commission, and Kemaman Port Authority.116 The administrations of ports in Malaysia are regulated under the various legislations enacted for those purposes and each Act in return establishes a port authority to observe and regulate the port’s day-to-day management. Each major port in Malaysia is governed by the following Port Authority:

Figure 17: Local Port Authorities in Malaysia

Major Ports Local Authorities Related Acts

Penang Port Penang Port Commission Penang Port Commission Act 1955

Port Klang Port Klang Authority

Johor Port Johor Port Authority

Port of Tanjung Johor Port Authority (Tanjung

Pelepas Pelepas) Port Authorities Act 1963

Kuantan Port Kuantan Port Authority Kemaman Port Kemaman Port Authority

Malacca Port Malacca Port Authority

Teluk Ewa Port Teluk Ewa Port Authority

Bintulu Port Bintulu Port Authority Bintulu Port Authority Act 1981

(Source: MOT, Ports in Malaysia, http://www.mot.gov.my/en/maritime/port-of-malaysia )

116 MOT, Ports in Malaysia, http://www.mot.gov.my/en/maritime/port-of-malaysia

The major port operations have been privatized to the following operators:

Figure 18: Major Port Operators

Major Ports Ports Operator

Port Klang - North Port Northports Sdn Bhd - West Port Westports Sdn Bhd Johor Port Johor Port Sdn Bhd

Kuantan Port Kuantan Port Consortium Sdn Bhd

Bintulu Port Bintulu Port Sdn Bhd

Tanjung Pelepas Port Port of Tanjung Pelepas Sdn Bhd

Pulau Pinang Port Penang Port Sdn Bhd

(Source: MOT, Ports in Malaysia, http://www.mot.gov.my/en/maritime/port-of-malaysia)

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3.5 Rail Transport

Rail transport services include urban and suburban railway passenger transport service and freight transport by inter-urban, suburban and urban railways. In Malaysia, the rail transport includes heavy rail (including high-speed rail), light rail transit (“LRT”), express rail link (“ERL”), mass rapid transit (“MRT”), funicular rail and monorail.117 Heavy rail is mostly used for intercity (urban, suburban and interurban) passenger and freight transport as well as some urban public transport, while the LRT, ERL, MRT, and monorail are used for intra-city urban public transport in Klang Valley. Currently, the only high-speed rail linking Kuala Lumpur with the Kuala Lumpur International Airport is the ERL. In Malaysia, the sole funicular railway line is located in Penang.118

The railway network in Malaysia covers most of the 11 states in Peninsular Malaysia. As for the East Malaysia, only the state of Sabah has railways.119 Major operators of the railway network in Malaysia include the Prasarana Malaysia Berhad that operates the RapidKL network and Keretapi Tanah Melayu Berhad (“KTMB”).120

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117 UTHM, Appraisal on Malaysian Rural Rail Transit Operation & Management System: Issues & Solution In Integration , http://eprints.uthm.edu.my/6527/1/348.pdf 118 UTHM, Appraisal on Malaysian Rural Rail Transit Operation & Management System: Issues & Solution In Integration , http://eprints.uthm.edu.my/6527/1/348.pdf 119 Asia Trade Hub, Malaysia-Railways, https://malaysia.asiatradehub.com/Infrastructure/1475/Railways 120 Rapid KL, Corporate Information, https://www.myrapid.com.my/corporate-information

Passenger rail transport in Malaysia is experiencing a decline is usage. 121 This is estimated to be the result of timing and reliability of the trains. As an example, it will take an individual approximately thirty (30) minutes to drive from Puchong to Sunway, but it would take about an hour for the same trip using the LRT. Issues of reliability continue to plague the KTM Komuter, with frequent delays which discourages potential passengers from abandoning their cars in favour of rail transportation.122 This data can be compared with the rise in the ownership of motor-vehicles. The figure below showed the daily rideship of rail services in Klang Valley.123

Figure 19: Daily ridership of Rail Services in the Klang Valley, Q2 2015 to Q2 2017

Type of Q2 2015 Q2 2017 Change % Change

Service

Kelana Jaya 228,763 217,383 (11,380) -5.0%

Ampang 175,713 156,248 (19,465) -11.1%

KL Monorail 67,479 48,202 (19,277) -28.6%

KLIA 9,472 6,071 (3,401) -35.9% Ekspress

KLIA Transit 18,518 17,419 (1,099) -5.9%

MRT SBK - 12,622 12,622 NA

KTM Komuter 135,956 104,978 (30,978) -22.8%

Total 635,901 562,923 (72,978) -11.5%

Source: Ong Kian Ming, Public transport ridership falling, despite the billions spent, https://www.malaysiakini.com/news/397308 )

121 Ong Kian Ming, Public transport ridership falling, despite the billions spent, https://www.malaysiakini.com/news/397308 122 ibid 123 ibid

The number of KTMB and commuter passengers for KTM commuter from the year 2008 to 2017 can be seen below124:

Figure 20: Number of KTMB and Commuter Passengers for Malayan Railways Limited, 2008-2017

Year KTM Passenger Commuter Passenger (‘000) (‘000) 2008 3,974 36,557 2009 4,267 34,683 2010 4,216 34,995 2011 3,686 35,510 2012 3,056 34,847 2013 2,703 43,942 2014 2,223 46,957 2015 2,014 49,690 2016 2,791 41,469 2017 3,092 37,274

(Source: SPAD, http://www.spad.gov.my/land-public-transport/rail/freight-services-ktm)

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124 Ministry of Transport: Transport Statistics Malaysia 2017, http://www.mot.gov.my/en/Statistik%20Tahunan%20Pengangkutan/Transport%20Statistic%20Malaysia%202017.pdf

Railway Transport Service Regulators/Agencies

Railway Assets Corporation

The railway networks are coordinated and regulated by the Railway Assets Corporation (“RAC”).125 RAC is a federal statutory body under the Ministry of Transport of Malaysia which was established under the Railways Act 1991 (Act 463).126 Duties and responsibilities of RAC are to execute the entrusted responsibilities to develop and redevelop railway infrastructures so that the substitute company (KTMB) can give full attention to the railway operations and services in the country; and to finance railway infrastructure development using sources gathered from various activities such as rental, lease and Government allocations.127

How does RAC regulate businesses?

RAC is established as a Government agency to help develop the railway industry in Malaysia to be at par with the railway industry in fully developed countries. RAC also functions as the caretaker and business planner to govern and interpret railway assets into valuable property capable of generating continuous income for the Government.

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125 Railway Assets Corporation, http://www.rac.gov.my/ 126 Railways Act 1991 (Act 463) 127 Railway Assets Corporation, Corporate Info, http://www.rac.gov.my/index.php/pages/view/1

3.6 Value Chain and Regulations for Transport Services

Air Road Maritime Rail

• Scheduled Airline • Bus • Boat • Heavy rail

• Non-scheduled Airline • Car • Cruise • Light rapid transit • Helicopter • Lorry • Ferry • Mass rapid • Air cargo • Van • Jet ski transit • Truck • Yacht monorail • Mobile cranes • Container vessel • Cable car • Refrigerated truck • General cargo vessel • Refrigerated lorry

• Reefer ship

• Refrigerated container

Ministry • Ministry of Transport • Ministry of Tourism, Arts, and Culture • Ministry of International Trade and Industry • Ministry of Finance • Ministry of Home Affairs

Mode (Air) Regulators/Agencies Regulations • Civil Aviation Authority of Malaysia (CAAM) Air

• The Malaysian Aviation Commission • Airport and Aviation Services (Operating Company) (MAVCOM) Act 1991 [Act 467]

• Aviation Offences Act 1984 [Act 307] • Carriage by Air Act 1974 [Act 148]

• Civil Aviation Act 1969

• Civil Aviation Authority of Malaysia Act 2017 [Act 771]

• International Interests in Mobile Equipment (Aircraft) Act 2006 [Act 659]

• Malaysian Aviation Commission Act 2015 [Act 771]

Mode (Road) Regulators/Agencies Regulations

• Land Public Transport Commission (SPAD) • Road Transport Act 1987 [Act 333] Malaysian Institute of Road Safety Research Act 2012 • Road Transport Department Malaysia (JPJ) • [Act 748] • Malaysian Institute of Road Safety Research (MIROS) • Suruhanjaya Pengangkutan Awam Darat Act 2010

• Royal Malaysian Customs [Act 714]

• Land Public Transport Act 2010 (SPAD) [Act 715]

• Commercial Vehicle Licensing Board Act 1987

[Act 334]

• Motor Vehicles (Construction and Use) (Vehicles Carrying Dangerous Goods) Rules 2015 • Tourism Industry Act 1992 0Act 482] • Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000 • Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat

• Customs Act 1967 (Revised 1980) [Act 235] • Customs Duties Order 2017 • Customs (Prohibition of Imports) Order 2017 • Factories and Machinery Act 1967 [Act 139] • Factories and Machinery (Notification, Certificate of Fitness and Inspection) Regulations 1970

Mode (Maritime) Regulators/Agencies Regulations

• Maritime Institute of Malaysia • Carriage of Goods by Sea Act 1950 (Revised 1994)

• Maritime Department of Malaysia [Act 527] • Malaysian Maritime Enforcement Agency • Port Authorities Act 1963 (Revised 1992) [Act 488] • Respective Ports Operators • Ports (Privatization) Act 1990 (Revised 1992) [Act 422]

• Merchant Shipping Ordinance 1952 [Ord 70/1952]

• Boat Rules 1953 [L.N. 312/1953]

• Malaysian Maritime Enforcement Agency Act [Act 633]

• Federation Light Dues Act 1953 (Revised 1981)

[Act 250]

• Free Zones Act 1990 [Act 438]

• Merchant Shipping (Liability and Compensation for Oil and Bunker Oil Pollution) Act 1994 [Act 515]

• Petroleum (Safety Measures) Act 1984 [Act 302]

• Langkawi International Yacht Registry Act 2013 [Act 630]

• Penang Port Commission Act 1955 (Revised 1974)

[Act 140]

• Bintulu Port Authority Act 1981 [Act 243]

Mode (Rail) Regulators/Agencies Regulations

• Railway Assets Corporation (RAC) • Railways Act 1991 [Act 463]

• Railways (Successor Company) Act 1991 [Act 464]

CHAPTER 4

INDUSTRY PERFORMANCE AND ISSUES IN THE

TOURISM SUBSECTOR

Contents: Economic performance of the Tourism Subsector, value chain and regulations for the Tourism Subsector, regulatory issues in Transport Services for the Tourism Subsector, and case study on Transport Services in the Tourism Subsector in Langkawi Island.

Key Points

1. The first section of this chapter discusses on the economic performance of the Tourism subsector including among others, its contribution to GDP and its direct contribution of employment in Malaysia. 2. The second section focuses on the value chain and regulations for the Tourism subsector. The Tourism subsector consists of five (5) key stages being (i) travel planning; (ii) international transport; (iii) accommodation; (iv) domestic transport; and (v) excursions. It also discusses on the relevant industry, regulator/agencies, regulations and stakeholders related to the Tourism subsector. 3. The third section focuses on and analyses the issues raised by the industry. The industry has raised many concerns but the twenty-two (22) main regulatory issues, under the land and maritime subsector that are in line with the RURB concept are as follows: • Restriction in options of tourism vehicles (Approved Permit) • Lengthy processing time to approve new tourism vehicles license • Lengthy processing time to renew tourism vehicles licenses • Submission of the same hard copy documents for license approvals • Tedious requirement for interview process • Summon not issued immediately on the spot • Original certificates need to be displayed in the tourism vehicles

• Burdensome requirement for PUSPAKOM inspection every six (6) months • Excessive regulatory coverage requiring tour guides on excursion buses • Unappealing colour prescribed for excursion buses • Prescriptive marking requirement for excursion buses • Unreasonable age limit imposed on excursion buses • Burdensome requirement to get approval from SPAD to register excursion buses that are above the age of three (3) years • Confusion with the term ‘Bas Persiaran’ when referring to vans • Unreasonable age limit imposed on hire and drive cars • Limitations on tour companies obtaining limousine permit • Limousine permit is restricted for 7-seater vehicles only • Unregulated caravan activity • Burdensome to acquire vehicle licenses/permits (for hotels) • Discrepancy on SPAD equity requirement from MOTAC for commercial vehicle license application • Regulations that are not updated (Boat Rules 1953) • Uncertainty in the application of passenger certificate 4. Apart from the issues listed above, this section also highlighted other issues raised by the industry, including issues that do not comply with the RURB concept and non-Transport Services related issues. 5. The fourth and final section is the summary of the case study on Transport Services in the Tourism subsector in Langkawi Island. It includes the modes of tourist transportation, issues raised by the stakeholders, as well as the RURB recommendations relating to Transport Services in the Tourism subsector in Langkawi Island.

4.1 Economic Performance of the Tourism Subsector

Malaysia’s Tourism subsector has been identified as one of the major contributors to the nation’s economic success and is listed as one of the twelve (12) National Key Economic Areas. For the Tourism subsector, the commodities include accommodation, transportation, entertainment and attractions whereas the industries consist of accommodation services, food and beverage services, retail trade, transportation services and cultural, sports and recreational services.

The contribution of Tourism subsector in 2017 recorded an added value growth of 5.3% to RM12.6 billion from RM12 billion from the previous year. This is due to the result of various government strategies such as the decision to enable eVisa applications (including visa-free option) to China tourists in 2016. Subsequently, Malaysia extended the eVisa facility to India, Bangladesh, Nepal and Myanmar.128

As for productivity, the Tourism subsector has registered growth of 1.1% to RM50,194 due to the industry’s improved ability to offer better service standards, its continued adoption of ICT in day-to-day operations, as well as employers providing more on-the-job training and hiring more skilled workers.129

In the figure below, it is clear that the tourism sector in Malaysia has been delivering an almost-constant increase to Malaysia’s GDP since 2008.130

128 MPC, Productivity Performance, http://www.mpc.gov.my/productivity-performance/ 129 ibid 130 WTTC, Travel and Tourism Economic Impact: 2018 Malaysia, https://www.wttc.org/-/media/files/reports/economic- impact-research/countries-2018/malaysia2018.pdf

Figure 21: Total Contribution of Travel and Tourism to GDP

(Source: WTTC, Travel and Tourism Economic Impact: 2018 Malaysia, https://www.wttc.org/- /media/files/reports/economic-impact-research/countries-2018/malaysia2018.pdf)

Based on the figure shown above, the total economic contribution of the Tourism subsector can be divided into three (3) impacts which include direct impact, indirect impact, as well as induced impacts.

The figure (Figure 22) below differentiates between what is included in each type of impact131:

131 WTTC, Travel and Tourism Economic Impact: 2018 Malaysia, https://www.wttc.org/-/media/files/reports/economic- impact-research/countries-2018/malaysia2018.pdf

Figure 22: Defining the Economic Contribution of Travel & Tourism

Direct Travel and Indirect Travel Induced Total Travel Tourism and Tourism Contribution and Tourism Contribution Contribution (spending of direct Contribution and indirect employees)

Commodities • T&T • Food and • To GDP • Accommodation Investment beverages • To • Transportation • Entertainment spending • Recreation employment • Attractions • Government • Clothing

Industries collective • Housing • Accommodation T&T • Household Services • Food & spending goods beverage • Impact of services • Retail Trade purchases • Transportation from Services • Cultural, sports suppliers & recreational services

Sources of Spending • Residents’ domestic T&T spending • Businesses’ domestic travel spending • Visitor exports • Individual government T&T spending

(Source: WTTC, Travel and Tourism Economic Impact: 2018 Malaysia, https://www.wttc.org/- /media/files/reports/economic-impact-research/countries-2018/malaysia2018.pdf)

The direct contribution of travel & tourism to GDP reflects the ‘internal’ spending on travel & tourism (including the total spending within a particular spending by government on travel & tourism services directly linked to visitors, such as cultural or recreational activities. The ‘indirect’ contribution includes the GDP and jobs supported by the following:132

• travel & tourism investment spending, an important aspect of both current and future activity that includes investment activity such as the purchase of new aircraft and construction of new hotels; • government 'collective' spending, which helps travel & tourism activity in many different ways such as tourism marketing and promotion, aviation, administration; and • domestic purchases of goods and services by the sectors dealing directly with tourists (including, for example, purchases of food and cleaning services by hotels, of fuel and catering services by airlines, and it services by travel agents). Lastly, the ‘induced’ contribution measures the GDP and jobs supported by the spending of those who are directly or indirectly employed by the travel & tourism industry. Hence, the total contribution of travel & tourism includes direct contributions and its ‘wider impacts’ (i.e., the indirect and induced impacts) on the economy.

Not only that, travel & tourism directly supported 670,000 jobs (4.6% of total employment). This is expected to rise by 1.1% in 2018 and rise by 3.1% to 923,000 jobs (5.2% of total employment) in 2028. It includes employment by hotels, travel agents, airlines and other passenger transportation services (excluding commuter service).133 The direct contribution of travel and tourism to employment can be seen in the chart (Figure 27) below:134

132 WTTC, Travel and Tourism Economic Impact: 2018 Malaysia, https://www.wttc.org/-/media/files/reports/economic- impact-research/countries-2018/malaysia2018.pdf 133 WTTC, Travel and Tourism Economic Impact: 2018 Malaysia, https://www.wttc.org/-/media/files/reports/economic- impact-research/countries-2018/malaysia2018.pdf 134 ibid

Figure 23: Malaysia Direct Contribution of Travel & Tourism to Employment

(Source: WTTC, Travel and Tourism Economic Impact: 2018 Malaysia, https://www.wttc.org/- /media/files/reports/economic-impact-research/countries-2018/malaysia2018.pdf)

As seen in the chart below, the numbers of tourist arrivals have been almost constant from 2007 to 2017, which is a good indication of the strength of the tourism sector in Malaysia to be able to attract foreign visitors. This led to Malaysia being ranked 9th in the world for tourist arrival with a total of 25.9 million tourist arrivals in 2017.135 Such tourist traffic is also evidenced by the OAG International Megahubs Index 2018 as it ranked Kuala Lumpur International Airport (KLIA) 12th in its Top 20 most connected airports worldwide, and 3rd in Asia-Pacific.

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135 Tourism Malaysia, Malaysia Tourism Statistics in Brief, https://www.tourism.gov.my/statistics

Figure 24: Tourist Arrivals in Malaysia from 2007 to 2018136

Year RM (Million) Year on year change (%)

2007 20.97 19.52

2008 22.05 5.15

2009 23.65 7.23

2010 24.58 3.94

2011 24.71 0.56

2012 25.03 1.29

2013 25.72 2.73

2014 27.44 6.7

2015 25.72 -6.25

2016 26.76 4.03

2017 25.95 -3.02

2018 19.39 -25.29

(Source: MY Tourism Data, Tourist Arrivals, http://mytourismdata.tourism.gov.my/?page_id=14#!from=2007&to=2018)

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136 MY Tourism Data, Tourist Arrivals, http://mytourismdata.tourism.gov.my/?page_id=14#!from=2007&to=2018

With a rich mix of cultural attractions and rapidly expanding cities filled with skyscrapers, rugged mountains reaching dramatically for the sky, rainforest- clad slopes sweeping down to floodplains teeming with forest life, cool highland hideaways rolling down to warm, sandy beaches and rich, humid mangroves, the Travel and Tourism Competitiveness Report 2017 ranked Malaysia 25th out of 141 countries overall, which placed us as the fifth best in Asia.137

There are various types of tourisms in Malaysia but the main ones that have been receiving interest includes, among others, culture and heritage tourism, medical tourism and education tourism. Cultural and heritage tourism is defined by World Tourism Organization as the movements of persons for essentially cultural motivations such as performing arts, study and cultural tours, festivals and other events. Cultural resources in Malaysia are quite varied, ranging from performing arts, historical sites and handicrafts to having distinctive multicultural heritage with strong Islamic, Chinese, Indian and Western influences. This cultural diversity is clearly manifested in the successful “Malaysia Truly Asia”.138

Medical Tourism - Malaysia was crowned “Medical Travel Destination of the Year” for the third consecutive year at the International Medical Travel Journal’s Medical Travel Awards 2017. With world-class healthcare facilities, well- governed by strict regulations, stringent quality and safety standards set by the Ministry of Health, having national and international accreditations and expertly trained professionals from reputable institutions around the world, Malaysia has certainly become the preferred destination for medical tourists seeking quality healthcare treatments abroad at competitive prices, particularly in South-East Asia.

137 The Star, Airbnb must be safe for both homeowners, tourists, https://www.thestar.com.my/opinion/letters/2018/03/20/airbnb-must-be-safe-for-both-homeowners-tourists/ 138 Mosbah, A., A Review of Tourism Development in Malaysia, https://www.researchgate.net/profile/Aissa_Mosbah/publication/262105663_A_Review_of_Tourism_Development_in_ Malaysia/links/00b49536a94d820f5d000000/A-Review-of-Tourism-Development-in- Malaysia.pdf?origin=publication_detail

The Malaysian healthcare travel industry is growing at an average rate of 16% to 17% every year, according to Malaysia Healthcare Travel Council. In 2017, Malaysia received 1,050,000 medical tourists, a 7.2% increase from 2016’s numbers (921,000). Top medical fields in demand here are cardiology, fertility, orthopaedics, oncology, neurology, gastroenterology, dental and aesthetics (cosmetic surgery). In 2016, the country’s healthcare travel industry recorded a 23% growth from 2015, generating RM1.12bil in hospital revenues and contributing between RM3bil and RM4bil to the country’s gross domestic product.139

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139 Malaysia Healthcare Travel Council, Getting hotels to cater to healthcare travellers in Malaysia, https://www.mhtc.org.my/getting-hotels-to-cater-to-healthcare-travellers-in-malaysia/

4.2 Value Chain and Regulations for the Tourism Subsector

The typical Value Chain for the Tourism subsector is represented in the diagram below:

International Domestic Travel Planning Accommodation Excursions Transport Transport

Compliance with regulatory requirements affects all of these stages and is often treated as one of the processes involved in the Tourism subsector (in relation to the transportation activities). More often than not, the parties involved in the Tourism subsector encounter problems/issues over complying with the regulatory requirements.

The Value Chain of the Tourism subsector consisting of the relevant key stages, industry regulator/agencies, regulations and related stakeholders as follows:

Key Stages Travel Planning International Accommodation Domestic Excursions Transport Transport

Industry • Travel agent • International air • Hotels • Domestic air • Excursion

• Tour operator carrier carrier operators • Individual • Cruise liners • Ground • Local guides

online booking • Car rental transportation services service Regulator/ • Ministry of • Ministry of • Ministry of • Ministry of • Ministry of

Agencies Tourism and Tourism and Tourism and Tourism and Tourism and Culture Culture Culture Culture Culture Malaysia Malaysia Malaysia Malaysia Malaysia • Immigration • Land Public • Ministry of • Ministry of Department of Transport Transport Transport Malaysia Commission • Civil Aviation • Civil Aviation • Ministry of (SPAD) Authority of Authority of Transport • Road Transport Malaysia Malaysia • Civil Aviation Department (CAAM) (CAAM)

Authority of Malaysia (JPJ) • The Malaysian • The Malaysian Malaysia • Ministry of Aviation Aviation (CAAM) International Commission Commission • The Malaysian Trade and (MAVCOM) (MAVCOM) Aviation Industry • Malaysian • Malaysian Commission Institute of Institute of (MAVCOM) Road Safety Road Safety • Land Public Research Research Transport (MIROS) (MIROS) Commission • Land Public • Land Public (SPAD) Transport Transport • Road Transport Commission Commission Department (SPAD) (SPAD) Malaysia (JPJ) • Road Transport • Road Transport • Maritime Department Department Institute of Malaysia (JPJ) Malaysia (JPJ) Malaysia • Maritime • Maritime • Respective Institute of Institute of Ports Operators Malaysia Malaysia • Respective • Respective

• Maritime Ports Operators Ports Operators Department of • Maritime • Maritime Malaysia Department of Department of • Malaysian Malaysia Malaysia Maritime • Malaysian • Malaysian Enforcement Maritime Maritime Agency Enforcement Enforcement • Maritime Agency Agency Division under • Maritime • Maritime the MOT Division under Division under • Ministry of the MOT the MOT International • Ministry of • Ministry of Trade and International International Industry Trade and Trade and Industry Industry

Regulations • Malaysia • Malaysia • Malaysia • Malaysia • Malaysia Related to Tourism Tourism Tourism Tourism Tourism the Tourism Promotion Promotion Promotion Promotion Promotion subsector Board Act 1992 Board Act 1992 Board Act 1992 Board Act 1992 Board Act 1992 [Act 481] [Act 481] [Act 481] [Act 481] [Act 481] • Tourism • Tourism • Tourism • Tourism • Tourism Industry Act Industry Act Industry Act Industry Act Industry Act 1992 1992 [Act 482] 1992 [Act 482] 1992 [Act 482] 1992 [Act 482] [Act 482] • Tourism • Panduan Dasar • Tourism • Tourism Vehicles Pelesenan Vehicles Vehicles Licensing Act Suruhanjaya Licensing Act Licensing Act 1999 Pengangkutan 1999 1999 • Tourism Awam Darat • Tourism • Tourism Vehicles Vehicles Vehicles • Suruhanjaya (Licensing and Pengangkutan (Licensing and (Licensing and Control of Control of Control of Awam Darat Act Tourism Tourism Tourism 2010 [Act 714] Vehicles) Vehicles) Vehicles) Regulations • Land Public Regulations Regulations 2000 Transport Act 2000 2000

• Panduan Dasar 2010 [Act 715] • Panduan Dasar • Panduan Dasar Pelesenan Pelesenan Pelesenan • Commercial Suruhanjaya Suruhanjaya Suruhanjaya Vehicle Pengangkutan Pengangkutan Pengangkutan Licensing Board Awam Darat Awam Darat Awam Darat Act 1987

• Suruhanjaya [Act 334] • Suruhanjaya • Suruhanjaya Pengangkutan Pengangkutan Pengangkutan • Customs Awam Darat Act Awam Darat Act (Prohibition of Awam Darat Act 2010 2010 [Act 714] Imports) Order 2010 [Act 714] [Act 714] • Land Public 2017 • Land Public • Land Public

Transport Act Transport Act Transport Act 2010 [Act 715] 2010 [Act 715] 2010 [Act 715]

• Commercial • Commercial • Land Public Vehicle Vehicle Transport Act Licensing Board Licensing Board 2010 (SPAD) Act 1987 Act 1987 [Act 715]

[Act 334] [Act 334] • Commercial Vehicle • Merchant • Merchant

Shipping Shipping Licensing Board Ordinance 1954 Ordinance 1954 Act 1987

[Ord 70/1951] [Ord 70/1951] [Act 334]

• Boat Rules • Boat Rules • Merchant 1953 [L.N. 1953 [L.N. Shipping 312/1953] 312/1953] Ordinance 1954

• Malaysian • Malaysian [Ord 70/1951] Maritime Maritime • Boat Rules Enforcement Enforcement 1953 [L.N. Agency Act Agency Act 312/1953] [Act 633] [Act 633] • Malaysian • Langkawi • Langkawi Maritime International International Enforcement Yacht Registry Yacht Registry Agency Act Act 2013 [Act Act 2013 [Act [Act 633] 630] 630] • Langkawi • Immigration Act International • Customs [Act 155] (Prohibition of Yacht Registry

• Customs Imports) Order Act 2013 [Act (Prohibition of 2017 630] Imports) Order • Customs 2017 (Prohibition of Imports) Order 2017

Relevant • Malaysian • Malaysian • Malaysian • Malaysian • Malaysian Stakeholder Association of Association of Association of Association of Association of Related to Tour and Travel Tour and Travel Tour and Travel Tour and Travel Tour and Travel the Tourism Agents Agents Agents Agents Agents subsector • Malaysia • Malaysia • Malaysia • Association of • Malaysia Inbound Inbound Inbound Malaysian Air Inbound Tourism Tourism Tourism Carriers Tourism Association Association Association (AMAC) Association

• BUMITRA • BUMITRA • BUMITRA • Malaysia • BUMITRA Malaysia Malaysia Malaysia Inbound Malaysia Tourism • Malaysian • Malaysian • Malaysian • Malaysian

Indian Travel Indian Travel Indian Travel Association Indian Travel and Tours and Tours and Tours and Tours • BUMITRA Association Association Association Association Malaysia • Langkawi • Langkawi • Langkawi • Langkawi • Malaysian Tourism Tourism Tourism Tourism Indian Travel Association Association Association Association and Tours • Association of Association • Association of Malaysian Air Malaysian Air • Langkawi Carriers Carriers Tourism (AMAC) (AMAC) Association • Car Rental • Car Rental • Car Rental Association of Association of Association of Malaysia Malaysia Malaysia • ‘Persatuan • Caravan • ‘Persatuan Pengusaha Bas Camping Pengusaha Bas Persiaran Association Persiaran Semenanjung Semenanjung • ‘Persatuan Malaysia’ Malaysia’ Pengusaha Bas

• Malaysian Taxi • Malaysian Taxi Persiaran Drivers' Drivers' Semenanjung Transformation Transformation Malaysia’ Association Association • Malaysia Cruise (PERS1M) (PERS1M) Industry • Malaysia Cruise • High Speed Rail Association Industry Association of • Rail Tourism Association Malaysia Association Rail Tourism • Malaysian Taxi, • Malaysia Limousine and Association • Malaysian Taxi, Malaysia Car Rental Limousine and Operators and • Malaysian Taxi, Car Rental Drivers Limousine and Operators and Association Car Rental Drivers Operators and Association Drivers

Association

4.2.1 Relationship between the Transport Services Sector and the Supply Chain for the Tourism Subsector

The Supply Chain for the Tourism subsector consists of five (5) key stages being:

• stage (1) travel planning, which can be defined as the preparation of a plan involved in a journey, including, among others, preparing a list of places to visit and things to do, together with booking the transportation (i.e.,: flight tickets and accommodation);

• stage (2) international transport, which can be defined as the transportation involved in transporting passenger from one country to another;

• stage (3) accommodation, which can be defined as a place for tourists to stay in while they are on vacation;

• stage (4) domestic transport, which can be defined as transportation involved in transporting passengers between locations within a particular country only; and

• stage (5) excursions, which can be defined as a short journey or trip, especially one taken as a leisure activity.

Stage (1) - Travel Planning

For stage (1) travel planning, the air transport service identified includes travel agents in charge of arranging air transportation for passengers by purchasing the flight tickets and dealing directly with airlines operators, on behalf of passengers. The travel agents include among others, Sri Sutra Travel, Apple Vacations, Holiday Tours & Travel, Pyo Travel Malaysia, Reliance Travel Malaysia, and Summit Holidays.

The maritime transport service identified includes travel agents in charge of arranging maritime transportation for passengers by purchasing the tickets and dealing directly with the maritime transport operators, on behalf of passengers. The mode of maritime transportation includes, among others, boats, ferries and cruises, in which particularly cruise vacations are fast becoming popular and more affordable, with several leading cruise liners offering cruises ranging from one night to several

months, depending on the itinerary. The travel agents include among others, Jebsen Travel and Tours Services, PST Travel Services Sdn. Bhd., Forerank Travel Sdn. Bhd., JKC Travel & Tours Sdn. Bhd., Tong Yan Travel & Tours Sdn. Bhd., and TLC Travel and Tours Sdn. Bhd.

The road transport service identified includes travel agents in charge of arranging road transportation for passengers by purchasing the bus tickets or arranging services such as coach chartering, city tours, and airport transfer. The travel agents include LA Holidays Travel & Tour Sdn. Bhd. and Sri Sutra Travel Sdn. Bhd.

The rail transport service identified includes travel agent in charge of arranging rail transport for passengers by purchasing the railway tickets. The travel agents include among others, Sri Sutra Sdn Bhd, Mayflower Holidays Sdn. Bhd., Asian Overland Services Tours and Travel Sdn. Bhd., Match Express Holiday Sdn. Bhd., Easibook (M) Sdn. Bhd. and Syarikat Pelancungan Yaskin Sdn. Bhd. These travel agents are also the authorised ticket agents for Keretapi Tanah Melayu Berhad (KTMB).140

In summary, the transport service applicable to the first stage of the Value Chain for the Tourism subsector is as follows:

Air Maritime Road Rail

Transport Transport Transport Transport

Stage (1) – Travel ✓ ✓ ✓ ✓ Planning

For this study, various Tourism associations in Malaysia that consist of travel agents in charge for the four (4) subsectors were interviewed. At this particular stage, the main regulator involved is the Ministry of Tourism and Culture Malaysia. This is because the travel agents have to apply for the Travel Operating Business and

Travel Agency Business (“TOBTAB”) License from MOTAC in order to operate a tour operating business; or a travel agency business.

Stage 2 – International Transport

For stage (2) international transport, the air transport service identified includes airlines operators for scheduled flight141 and non-scheduled flight (chartered)142 transporting passengers to countries outside Malaysia. Scheduled flight means a regular flight organized by the company that owns the aircraft whereas a charter flight is an unscheduled flight that is not part of a regular airline routing. With a charter flight, you rent the entire aircraft and can determine departure and arrival locations and times. Scheduled flight operators in Malaysia include Malaysia Airlines Berhad, AirAsia Berhad, Airasia X Berhad and Malindo Airways Sdn. Bhd. As for the unscheduled flight, the operators include Layang-layang Services Sdn. Bhd., Plus Helicopter Services Sdn. Bhd., Aerial Power Lines Sdn. Bhd., Awan Inspirasi Sdn. Bhd., Weststar Aviation Services Sdn. Bhd. and Sabah Air Aviation Sdn. Bhd.

The maritime transport service identified includes the provision of international transport by sea operated by cruise operators, where typically such cruise liners provide international transportation to neighbouring countries such as Singapore and Thailand. The cruise liners operating in Malaysia include Star Cruises, Royal Caribbean Cruises, Princess Cruises, Oceania Cruises, Norwegian Cruise Line and Costa Cruises. Not only that, there are also ferry operators that provide international transport by sea such as the Tropical Charters Sdn. Bhd. and Telaga Terminal that operate a ferry ride from Langkawi, Malaysia to Koh Lipe, Thailand.

The road transport service identified includes bus operators that provide transportation for passengers from Malaysia to another country such as Singapore. The bus operators include Aeroline, Comfort Super Nice Express Sdn. Bhd. (Super Nice Express), Sri Maju Group, Alisan Golden Coach & Travel Sdn. Bhd., and Suasana Edaran Sdn. Bhd.

141 Oxford Learner’s Dictionaries, Scheduled Flight, https://www.oxfordlearnersdictionaries.com/definition/english/scheduled- flight 142 USA Today, Differences Between Scheduled & Chartered Flights, http://traveltips.usatoday.com/differences-between- scheduled-chartered-flights-55014.html

As for rail transport service, no such services are being provided by international transport carriers in Malaysia.

In summary, the transport service applicable to the second stage of the Value Chain for the Tourism subsector is as follows:

Air Maritime Road Rail

Transport Transport Transport Transport

Stage (2) – International ✓ ✓ ✓ x Transport

For this study, various transport operators in Malaysia that provides international transportation have been interviewed. At this particular stage, the regulators involve includes, among others, the Immigration Department of Malaysia. Every visitor that comes to Malaysia has to fill in a Disembarkation Card (IMM. 26). On arrival, the card has to be handed over to the immigration officer together with the national passport or other internationally recognized travel document endorsed for travel into Malaysia. Immigration and customs checkpoints are situated at all air, maritime, and road entry points.143

For air transport, as explained in Chapter 3, the regulators/agencies in charge include CAAM, and MAVCOM. CAAM ensures compliance to the standards of ICAO and, monitors and enforces the safety standards by imposing regulations, directives and guidelines on air transport operators, while the latter regulates economic matters pertaining civil aviation which includes protection of consumers. Thus, air transport operators will have to refer to MAVCOM’s licensing and registration procedures, and directives on air traffic rights etc. in order to carry out their operations.

For maritime transport, the regulators/agencies in charge includes the Marine Department of Malaysia and MMEA. Maritime Department of Malaysia is in charge of providing the regulations and guidelines with regards to registration and licensing of

143 Tourism Malaysia, Passport/Visa, http://www.malaysia.travel/en/my/about-malaysia/practical-info/passport-n-visa

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sea vessels. In Chapter 4, this report will elaborate on the regulatory burdens impacted on transport operators due to its inadequate and obsolete regulations on yachts and boats. As for MMEA, it ensures the regulatory compliance of marine vessels in the sea.

For road transport, the regulators/agencies in charge includes JPJ, SPAD, and MIROS. As JPJ is involved with the regulation of motor vehicles and road safety, it regulates the registration and licensing of motor vehicles, and monitors the vehicle safety standards. This report will elaborate on the issues faced by road transport operators regarding the burdensome and arduous regulations imposed.

As for SPAD, it has the authority to register vehicles, dispense licences, carry out enforcement measures and is in charge of commercial vehicles, including tourism vehicles. This report will elaborate on the issues regarding the bureaucratic and arduous processes in compliance with its guidelines and regulations. As for MIROS, it conducts research on the road transport in Malaysia. Thus, its findings are used to implement enforcement measures etc. It indirectly affects the regulatory burdens of businesses as it provides the basis for the regulations.

Stage 3 - Accommodation

For stage (3) accommodation, the accommodation providers in Malaysia do not provide air, maritime and rail transport service.

However, for road transport service, the road transport service identified includes hotels that provides their own road transport service (i.e.,: cars and vans) to pick up/send the passengers to the airport or for sightseeing. The hotels that provide such service include among others, St Regis Kuala Lumpur, Mandarin Oriental Kuala Lumpur, La Meridien Kuala Lumpur, Hilton Kuala Lumpur and Concorde Kuala Lumpur.

In summary, the transport service applicable to the third stage of the Value Chain for the Tourism subsector is as follows:

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Air Maritime Road Rail

Transport Transport Transport Transport

Stage (3) - Accommodation ✓ x ✓ x

For this study, the stakeholders in Malaysian Association of Hotels have been interviewed. The main regulator involved at this stage is SPAD, whereby the hoteliers have to apply for various license/permit from SPAD in order to provide road transport services for the tourists that are staying at their hotels, and also their employees.

Stage 4 – Domestic Transport

For stage (4) domestic transport, the air transport service identified includes airlines operators for scheduled flight and non-scheduled flight (chartered) to states domestically i.e. within Malaysia only. The scheduled flight operators include among others, Malaysia Airlines Berhad, AirAsia Berhad, Malindo Airways Sdn. Bhd., China Southern Airlines, Emirates Airlines and Turkish Airlines. The non-scheduled flight operators include Layang-layang Services Sdn. Bhd., Plus Helicopter Services Sdn. Bhd., Aerial Power Lines Sdn. Bhd., Awan Inspirasi Sdn. Bhd., Weststar Aviation Services Sdn. Bhd. and Sabah Air Aviation Sdn. Bhd.

The maritime transport service identified also includes boats and ferries operators that provide transportation of passengers within Malaysia. The operators of boats and ferries include Rapid Ferry (Penang) by Prasarana Malaysia, Langkawi Ferry Services Sdn. Bhd., Langkawi Ferry Line Ventures Sdn. Bhd. (LFLV), Mesra Feri Sdn. Bhd., Berjaya Ferry Services, Blue Water Express and Duta Pangkor Express Ferry Sdn. Bhd.

The road transport service identified includes car rental and leasing companies, and bus operators that provide transportation of passengers within Malaysia. The car

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rental and leasing companies include Mayflower Acme Tours Sdn. Bhd. (Mayflower Car Rental), Sistem Sewa Kereta (M) Sdn. Bhd. (Avis), Sime Darby Rent A Car Sdn. Bhd. (Hertz), Hawk Rent A Car (M) Sdn. Bhd. (Hawk) and Suria Car Rental & Tour Sdn. Bhd. (Suria Car Rental). The bus operators include Konsortium Transnasional Berhad, Comfort Super Nice Express Sdn. Bhd. (Super Nice Express), Sri Maju Group, Wawasan Sutera Travel & Tours Sdn. Bhd. (Aerobus), Utama Ekspres Sdn. Bhd. and Sani Express Sdn. Bhd.

The rail transport service identified includes railway operators in Malaysia such as the Keretapi Tanah Melayu Berhad (KTMB) that provide inter-state travel to passengers.

In summary, the transport service applicable to the Value Chain for the fourth stage of the Tourism subsector is as follows:

Air Maritime Road Rail

Transport Transport Transport Transport

Stage (4) – Domestic ✓ ✓ ✓ ✓ Transport

For this particular stage, various Tourism associations in Malaysia, comprising of air, maritime, road, and rail transport operators have been interviewed. The regulators/agencies relevant are the same as the ones highlighted in Stage (2) – International Transport. Besides that, the main agency in charge of the rail transport in Malaysia is the RAC, whereby it is established as a Government agency to help develop the railway industry in Malaysia to be at par with the railway industry in fully developed countries. RAC also functions as the caretaker and business planner to govern and interpret railway assets into valuable property capable of generating continuous income for the Government. However, it should be noted that the rail

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transport industry is regulated by Government or/and managed by companies through concession agreement between the Government.

Stage 5 - Excursions

For stage (5) excursions, the air transport service identified includes private companies that provide helicopter sightseeing tours. The private companies that operate helicopter sightseeing tours include Ascend Sky Tours, Cempaka Helicopter Corporation Sdn. Bhd., and PLUS Helicopter Services Sdn. Bhd.

The maritime transport service identified includes private companies that provide short sightseeing cruise services, for example, the Putrajaya lake cruise, Melaka river cruise and Langkawi sunset cruise. For Langkawi sunset cruise, the companies identified that provide such service includes Crystal Yacht Holidays Sdn. Bhd., Tropical Charters Sdn. Bhd., and Langkawi Sail and Cruise Sdn. Bhd. Other short sightseeing cruise services private companies that provide boat tour around the top attractions in Malaysia and island hopping. The companies that provide such service include Alanona Nature Enterprise, Dev’s Adventure Tours, and Tropical Charters Sdn. Bhd.

The road transport service identified includes car rental and leasing companies, e- hailing services operator, public and also private bus operators that provide short distant transportation to tourist destination. The car rental and leasing companies include Mayflower Acme Tours Sdn. Bhd. (Mayflower Car Rental), Sistem Sewa Kereta (M) Sdn. Bhd. (Avis), Sime Darby Rent A Car Sdn. Bhd. (Hertz) and Hawk Rent A Car (M) Sdn. Bhd. (Hawk). The e-hailing service operator includes Grabcar Sdn. Bhd., Myteksi and MyCar. The public bus operators include Causeway Link, Metrobus (Malaysia), Nadi Putra and Rapid Bus. The companies operating the private bus for excursions includes Syarikat Bumi Pengangkutan Pantai Timur Sdn. Bhd., S.V. Juta (M) Sdn. Bhd., Shamisha Holiday & Travel Sdn. Bhd., K.K.K.L Sdn. Bhd., Meridian Holidays Sdn. Bhd. and Antar Holiday Sdn. Bhd. Not only that, it also includes the operator of Kuala Lumpur Hop-On Hop-Off, which is an informative tour bus service when you get to disembark and spend more time at certain areas within the city of Kuala Lumpur.

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The rail transport service identified includes railway operators that provide transportation of passengers for short trip excursions such as Express Rail Link Sdn. Bhd., Rapid Rail Sdn. Bhd., Mass Rapid Transit Corporation Sdn. Bhd. (MRT Corp), and operator of the Penang Hill Railway. In Sabah, the railway operators identified include Sabah State Railway and North Borneo Railway. The latter is a joint venture project between Sutera Harbour Resort and Sabah State Railway Department which offers passengers an opportunity to experience the bygone era of British North Borneo while transporting passengers along the lifeline of Sabah. Lastly, the rail transport service identified includes theme parks that provide train ride around the park such as Sunway Lagoon, Legoland, and Puteri Harbour Theme Park.

In summary, the transport service applicable to the Value Chain for the fifth stage of the Tourism subsector is as follows:

Air Maritime Road Rail

Transport Transport Transport Transport

Stage (5) – Excursions ✓ ✓ ✓ ✓

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4.2.2 Summary of the Relationship between the Transport Services Sector and the Value Chain for the Tourism Subsector

In a nutshell, the Value Chain of the Tourism subsector consists of five (5) key stages being (1) travel planning, (2) international transport, (3) accommodation, (4) domestic transport, and (5) excursions.

For stage (1) travel planning, the industry identified covers each mode of transport service. This is because the industry is largely dominated by travel agents that arrange air, maritime, road and rail transport for passengers.

For stage (2) international transport, the industry identified covers each mode of transport service except for rail transport. This is because the industry provides for various travel options, in and out of Malaysia, primarily scheduled and non- scheduled international flight operators (air), cruise liners and ferry operators (maritime), and bus operators (road).

For stage (3) accommodation, the industry identified only covers the road transport service. This is because hotels in Malaysia commonly only provide road transport services to its customers in the form of cars and vans, typically to and from the airport.

For stage (4) domestic transport, the industry identified covers each mode of transport service. This is because the industry provides for various travel options, within Malaysia, primarily scheduled and non-scheduled domestic flight operators (air), boats and ferries (maritime), car rental and bus operators (road), and interstate trains (rail).

For stage (5) excursions, the industry covers each mode of transport service. This is because the industry provides for various travel options, primarily helicopter sightseeing tour operators (air), river cruise operators (maritime), car rental and leasing companies, e-hailing services operators, public and also private bus operators (road) and rail transport operators and theme parks (rail) that provide transportation of passengers for excursion.

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In summary, the Transport Services Sector applicable to the Value Chain for the Tourism subsector can be seen below:

Stage (1) Stage (2) - Stage (3) - Stage (4) - Stage (5) - - International Accommodation Regional Excursions Travel Transport Transport Planning

Air ✓ ✓ x ✓ ✓

Maritime ✓ ✓ x ✓ ✓

Road ✓ ✓ ✓ ✓ ✓

Rail ✓ x x ✓ ✓

Legend:

✓ Applicable

x Not applicable

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4.3 Regulatory Issues in Transport Services for the Tourism Subsector

This chapter captures the regulatory issues and areas of concern raised during a series of engagements with Transport Services providers in the Tourism subsector. The objective of the study is to identify the regulatory burdens in relation to Transport Services related to tourism in Malaysia. Responses and industry recommendations were recorded from stakeholders based on the list of questions as outlined in the Issue Paper. This study will validate the regulatory issues and areas of concern raised by the stakeholders, and highlight the various possible options of regulatory or non-regulatory solutions recommended.

Stakeholders

The Transport Services stakeholders engaged were identified from the stakeholders mapped out in the Value Chain. The stakeholders comprise of among others members of several tour associations, tour operators, bus operators, hire and drive car operators, boat and yacht operators, private jet charter operators and cable car operators to name a few. For the purposes of completeness, the stakeholders engaged represent the four (4) modes of transport, being land, maritime, air, and rail transport operators.

Initially, the Transport Services stakeholders were limited to Klang Valley only. However, with guidance from MPC’s Tourism Nexus, this study had also expanded to include the stakeholders in Langkawi Island, Kedah. Langkawi was chosen by the Tourism Nexus as a case study for this report primarily due to its role as a major tourism hub in Malaysia encompassing stakeholders from each mode of transport service. The case study on Langkawi will be discussed in Chapter 4.4.

From all of the engagements, a total of roughly hundred (100) respondents from fifteen (15) organizations were interviewed in both Klang Valley and Langkawi. A lists of the associations interviewed is appended herewith in Appendix 3.

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Approach

Unnecessary regulatory burdens can be categorized to include, among others:

• prescriptive regulations that unduly limit flexibility such as preventing businesses from making changes to meet customer demand; • overly complex regulation, unwieldy license application and approval processes; • excessive time delays in obtaining responses; or • duplicative information requests.

Under each of the issues highlighted are the various possible options/alternatives of regulatory and non-regulatory solutions recommended. Good regulatory practices require consideration of different options for achieving the desired objectives. They include take no action/continue as is; self-regulation, quasi-regulation, co-regulation and explicit government regulation. Issues and concerns raised by the respondents are analysed in order to propose recommendations in order to assist in resolving the regulatory issues raised. The impacts of Acts, regulations, government’s requirements and approaches taken in different countries are also discussed in this chapter to assist in formulating such recommendations.

Comparative Analysis

Due to the limitation in the RURB methodology in conducting a detailed comparative analysis with other countries, ‘high-level’ recommendations (based on publicly available information) were made for the purposes of indicating regulatory practices in other jurisdictions. As such, the comparative analysis is not intended to be exhaustive in nature but only as a point of reference for discussion purposes in the study. Should any comparative analysis discussed intend to be adopted, we would advise that a more comprehensives study be commissioned on such practices to determine global ‘best’ practices before adoption.

As the focus of the study is on the Tourism subsector, our criteria is to, if possible, compare regulatory practices from the top ten tourist destination countries worldwide

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as comparators. Based on statistics published by the United Nations World Tourism Organization (“UNWTO”), the countries are as follows:144

Figure 25: International Tourist Arrivals, 2017 (Million)

Rank (2017) Country Tourist Arrivals (million)

1 France 86.9

2 Spain 81.8

3 USA 76.9

4 China 60.7

5 Italy 58.3

6 Mexico 39.3

7 United Kingdom 37.7

8 Turkey 37.6

9 Germany 37.5

10 Thailand 35.4

(Source: UNWTO, Tourism Highlights 2018 Edition, https://www.eun37.5wto.org/doi/pdf/10.18111/9789284419876 )

Notwithstanding the above, there are also instances in the study that when comparison cannot be made to one of the top ten (10) tourist destination countries, we will, if possible, consider regulatory practices from neighbouring ASEAN countries. As a last resort, we will look at regulatory practices from other jurisdictions should there be no information from neighbouring ASEAN countries.

144 UNWTO, Tourism Highlights 2018 Edition, https://www.e-un37.5wto.org/doi/pdf/10.18111/9789284419876

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The hierarchy of the comparative analysis criteria is as follows:

Top ten tourist destination countries

ASEAN countries

Other countries Note: limited to ‘high level’ recommendations only, based on publicly available information

4.3.1 Issues under Land Transport

In this particular section, we will divide the issues under land transport to a few categories of land transport vehicles, being (i) tourism vehicles, (ii) excursion buses, (iii) hire and drive cars, (iv) limousine taxi cabs, and (v) other vehicles. For (v) other vehicles, it includes issues raised that do not fall within any of the aforementioned vehicle types.

For ease of reference, the definition of (i) tourism vehicles, (ii) excursion bus, (iii) hire and drive cars, and (iv) limousine taxi cabs are illustrated below:

(i) Tourism vehicle Section 2 of Tourism Vehicles Licensing Act 1999 [Act 594] tourism vehicle means an excursion bus or a hire and drive car. Second Schedule, Paragraph 2 of the Land Public Transport Act 2010 [Act 715] For the purpose of this Act, tourism vehicles shall be categorised into the following classes: (a) Excursion buses; and (b) Hire and drive car for tourists.

(ii) Excursion buses Second Schedule, Paragraph 1 of the Land Public Transport Act 2010 [Act 715] “excursion bus” means a bus used exclusively for the conveyance of tourists and in consideration of payment which has no fare stages.

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(iii) Hire and drive car Second Schedule, Paragraph 1 of the Land Public Transport Act 2010 [Act 715] “hire and drive car for tourists” means a motor vehicle let on hire for the purpose of being driven by the hirer or his nominee whether a tourist or not, and used exclusively for the conveyance of a tourist or tourists.

(iv) Limousine Taxi Cabs Section 2 of the Commercial Vehicles Licensing Board Act 1987 [Act 334] and Schedule 1, Paragraph 1 of the Land Public Transport Act 2010 [Act 715] “limousine taxi cab” as a motor vehicle having a seating capacity of not more than seven (7) persons (including the driver) and operating from a fixed base or in an authorized area in consideration of a single payment.

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Tourism Vehicle

Issue No. 1: Restriction in options of tourism vehicles (Approved Permit)

One of the most common issues raised by the tourism industry is that the options of vehicles that can be used as tourism vehicles in Malaysia are limited.

The industry highlighted that vehicles that can be used as tourism vehicles are only limited to the following:

(i) vehicles that are available under the model line-up in Malaysia; or (ii) the brand of vehicles with assembly facilities in Malaysia (known as Completely Knocked Down (“CKD”) vehicles).

In order to import vehicles manufactured overseas or Completely Built-Up (“CBU”) vehicles, tourism vehicle operators would need to obtain an import license or more commonly knowns as Approved Permit (“AP”) from Ministry of International Trade and Industry (“MITI”).

Regulation

Under the law, it is evident that one has to obtain an import license to import vehicles manufactured overseas, particularly CBU vehicles. This is stated under Section 4(1) and Part II, Item 4 of the Second Schedule of the Customs (Prohibition of Imports) Order 2017. The provisions are reproduced below, for ease of reference:

Section 4 - Conditional prohibition except under import license and does not apply to specified free zones Section 4. Conditional prohibition except under import license and does not apply to specified free zones

(1) Subject to subparagraph (2), the importation into Malaysia of goods specified in columns (2) and (3) of Part II of the Second Schedule, originating from the countries specified in column (4) of Part II of the Second Schedule is prohibited, except under as import license- (a) Issued by the Director General, or (b) Issued by the proper officer of customs appointed by the Director General to act on his behalf at the ministry, department or statutory

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body as specified in column (5) of Part II of the Second Schedule, and subject to such conditions specified in the import license.

Part II, Item 4 of the Second Schedule – Goods which is prohibited to be imported into Malaysia except under an import license and shall not apply to the specified free zones

Item Description of Goods Chapter/Heading/ Country Ministry No. Subheading Issuing License

4. Chasis fitted with engines, All MITI for the motor vehicles of countries heading 87.02, 87.03, 87.04 or 87.05:

(1) For motor cars 8706.00.33.00

(including station 8706.00.39.00 wagons, SUVs, and sports cars, but not including vans) CBU, new and old

(2) For motor vehicles for 8706.00.21.00

the transport of ten or 8706.00.22.00 more persons, CBU, 8706.00.23.00 new or old

This is reiterated on MITI’s website where one has to obtain an AP to import CBU vehicles.145 AP is an import and export license issued by the Permit Issuing Agencies (”PIAs”) under the Customs Act 1967.146 AP acts as a control mechanism

145 MITI, Guidelines to Apply for Import Licence for Motor Vehicles, http://www.miti.gov.my/miti/resources/user_1/Approve%20permits/Guidelines/Guidelines_to_Apply_for_Import_Licence_for_Mo tor_Vehicles_2013.pdf 146 MITI, FAQ-Approved Permit, http://www.miti.gov.my/index.php/pages/view/2096

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limiting the number of cars imported into Malaysia and protecting the national automotive industry, being PROTON and PERODUA.147

There are two types of APs, being (i) Franchise AP and (ii) Open AP. Franchise AP are given out for free to franchise holders of car brands registered with MITI, whereas Open AP are sold to parallel importers of cars for resale in the Malaysian market.148 The objectives of an Open AP policy are to provide car buyers with more options at competitive prices, to empower the Bumiputera economic agenda, giving equal opportunities to Bumiputera businesses to be involved in the automotive sector; and to ensure the Open AP policy’s socio-economic contribution is not affected.149 As such, it is difficult to achieve the national aspiration of Vision 2020 if the industry is only allowed to use tourism vehicles of low quality.

Analysis

In this regard, the industry contends that it is difficult to obtain APs as among others APs are limited in number and there are stringent requirements that have to be fulfilled. The requirements include among others, a private limited company with a 100% Bumiputera status. In order to be eligible to apply for open AP, the company shares have to be fully owned by Bumiputeras. The company must also have a minimum of two years’ experience in the field of sales and distribution of automobiles (cars, bikes or commercial vehicles), which is still operational. On top of that, the company must have a suitable showroom and the capability of handling the financial requirements of an automobile import, distribution and sales business, and a minimum capital of RM1 million. As such, it is impossible for a tourism industry (i.e.,: tour operator) to fulfil such requirements. As an AP is required to obtain vehicles manufactured overseas, it is commonplace in the industry to import vans from China and assemble it in Malaysia as CKD vehicles as the van manufacturers from China has assembly facilities in Malaysia. However, the industry contends that theses vans from China are of low quality and as a result, break down easily. As such, the demand from the industry and tourists alike is to be able to use larger vans such as

147 United States Department of Commerce International Trade Administration Office of Transportation and Machinery, Compilation of Foreign Motor Vehicle Import Requirements, https://www.trade.gov/td/otm/assets/auto/TBR2015Final.pdf 148 United States Department of Commerce International Trade Administration Office of Transportation and Machinery, Compilation of Foreign Motor Vehicle Import Requirements, https://www.trade.gov/td/otm/assets/auto/TBR2015Final.pdf 149 Paul Tan, Open AP policy in Malaysia revised for 2017 – new rules and requirements for AP holders announced, https://paultan.org/2016/05/13/open-ap-policy-in-malaysia-revised-for-2017-new-rules-requirements-for-ap-holders-announced/

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Mercedes Sprinters and Toyota Commuters for tourism activities. However, to do so, they would need to apply for an AP from MITI in order for them to import such vehicles as they are not readily available under the ‘model line-up’ in Malaysia. As the cost of operating assembly facilities are high, it is unlikely manufacturers will setup assembly facilities for such models unless there is a strong market demand to justify the business model.

Option No. 1: Continue as is

There is the option of maintaining status quo and continuing with the current practice. However, it will restrict industrial growth and progress as the current vehicles available under the ‘model line-up’ is insufficient to cater to tourists needs. From a tourism perspective, it may not be a desired option as the current vehicles allowed to be used as tourism vehicles are not in line with global industry standards compared to neighbouring countries.

For example in Thailand, individual and/or company do not have to apply for any permit to import new vehicles that are not manufactured in the country.150 Besides that, the industry also has the option to choose between various tourism vehicles that are available under the model line-up in such country such as Toyota Commuters, and Toyota Ventury, which are of high quality vehicles suitable to cater to tourists.151 However, in Malaysia, the industry contends that the tourism vehicles available under the model line-up is limited and insufficient.

AP is a mechanism to control imported cars to historically protect the national automotive industry which was established in year 1983, and initiated by Tun Dr. Mahathir bin Mohamad.152 Previously, under the National Automotive Policy introduced in March 2006, MITI had announced that the government will phase out the AP system at the end of December 2015 (for open AP) to pave the way for a market liberalisation and competitive automotive industry. However, MITI has decided to retain the open AP system as among others the system provides direct middle and high income employment opportunities for 3,800 people, and generated

150 United States Department of Commerce International Trade Administration Office of Transportation and Machinery, Compilation of Foreign Motor Vehicle Import Requirements, https://www.trade.gov/td/auto/international/importreq/TBR2008.pdf 151 Toyota, Commuter, https://www.toyota.co.th/en/model/commuter 152 Eng Keat Motor, Approved Permits – Aps, http://www.engkeatmotor.com/approved-permits.html

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an annual revenue estimated at RM2 billion through collection of taxes and fees.153 Hence and as discussed with officers from MITI, they highlighted that it would be difficult for MITI to remove such restriction as ultimately; it is the policy of the Government of the day to retain such a system.

Option No. 2: Exemption for the tourism industry to import tourism vehicles

To consider granting a specific exemption to the tourism industry by allowing tourism vehicle operators to import tourism vehicles without obtaining APs. This will promote industrial innovation by allowing the industry to import vehicles depending on market demand and subsequently by generating local interest, such vehicles may eventually be produced locally as part of the ‘model line-up’.

However, this needs to be weighed against the Government’s policy of the day in supporting the AP system and potentially being a ‘floodgate’ by allowing an exemption to one industry. In this respect, the industry highlighted that the Government had given an exemption to the medical industry to import vehicles such as ambulances that are not available in Malaysia. [There is no information publicly available on this and as such, we would need to validate this with MITI].

Recommendation

[Pending meeting with MITI], this study recommends Option No. 2: Exemption for the tourism industry to import tourism vehicles. Open AP system should not be removed as it has helped improve the socio-economic conditions of Bumiputera entrepreneurs, while keeping the automotive industry competitive. However, [similar to ambulances in the medical industry], a limited exemption can similarly be considered for the tourism industry to import tourism vehicles of higher quality, especially established automotive brands and vehicles that are suitable for carrying tourists that not available in Malaysia.

153 The Edge Markets, Bumi car traders urge new government to retain AP system, http://www.theedgemarkets.com/article/bumi-car-traders-urge-new-government-retain-ap-system

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Issue No. 2: Lengthy processing time to approve tourism vehicles licenses

One of the issues raised by the industry is the lengthy processing time taken by SPAD to approve new tourism vehicles licenses application. Based on the Garis Panduan Permohonan Baru Lesen Bas Persiaran, SPAD’s customer commitment aims to complete the application within thirty-five (35) days154 on the condition that the information given is complete. However, the industry contends that the processing time from SPAD may typically take between one (1) to three (3) months.

Regulation

For ease of reference, the Garis Panduan Permohonan Baru Lesen Bas Persiaran is provided below.155

Garis Panduan Permohonan Baru Lesen Bas Persiaran

1. Pemohon mesti mempunyai lesen perniagaan pelancongan dalam negeri yang diluluskan oleh Pesuruhanjaya Pelancongan di bawah Akta Industri Pelancongan 1992. 2. Permohonan hendaklah menggunakan Borang 1 (Subperaturan 3(1)). 3. Setiap permohonan hendaklah disertakan dengan dokumen sokongan seperti yang dinyatakan dalam Borang 1 (Subperaturan 3(1)). Boring tersebut mestilah ditandatangani oleh Pengarah dan dilengkapi dengan cop syarikat. 4. Borang yang lengkap hendaklah dikemukakan ke Bahagian Pelesenan, Pejabat SPAD Putrajaya. 5. Menyertakan fi pemerosesan sebanyak RM50.00 bagi setiap permohonan dalam bentuk Bank Draf/Kiriman Wang/Wang Pos atas nama Kumpulan Wang SPAD. 6. Sebarang kompaun mestilah dijelaskan sebelum permohonan dapat diproses (Jika ada). 7. Sekiranya permohonan yang diterima tidak lengkap, Kementerian akan menghantar notis 14 hari kepada syarikat bagi mengemukakan dokumen

154 SPAD, Garis Panduan Permohonan Baru Lesen Bas Persiaran, https://www.spad.gov.my/sites/default/files/garispanduanpermohonanbarubaspersiaran_1.pdf 155 ibid

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sokongan yang diperlukan. 8. Sekiranya diluluskan, SPAD akan mengeluarkan Surat Tawaran Kelulusan bagi tujuan melesenkan kenderaan. 9. Piagam Pelanggan: 35 hari dengan syarat maklumat lengkap.

(Source: SPAD, Garis Panduan Permohonan Baru Lesen Bas Persiaran, https://www.spad.gov.my/sites/default/files/garispanduanpermohonanbarubaspersiaran_1.pdf)

Analysis

Based on feedback from the industry, the primary reason for the delay is because approval of new license applications would need approval from an internal approving committee. The problems with the approving committee, as informed by the industry, are as follows:

• The approving committee infrequently meets, thereby delaying any decision until a meeting is held; • There is no transparency with the decisions of the approving committee, therefore the decisions are arbitrarily made; and • There is no information on the approving committee, therefore its role and function is not clear.

Option No. 1: Continue as is

There is the option of continuing as is and not instituting changes. However, delaying in approving the application of the license may result in economic losses for the tourism vehicle operators that cannot operate unless they obtain the license from SPAD. In the end and if such operators are unable to provide the services to tourists whom have contracted their services, they may be terminated while at the same time damage their reputation.

Option No. 2: Improving internal efficiency of approving license applications

SPAD has to improve the internal efficiency of the approving committee in approving the license applications. As SPAD already has a client charter to complete the

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applications within thirty-five (35) working days, it should be the case that the approving committee should strive to achieve the target set in the client charter.

Recommendation

This report recommends Option No. 2: Improving the internal efficiency of approving license applications.

Feedback from SPAD

On this issue, SPAD agreed that the processing time to approve new tourism vehicles license application is lengthy. However, SPAD highlighted that the lengthy processing time is for the approval of Surat Tawaran Kelulusan (“STK”), and not the approval of the license per se. This will be further explained below.

To summarize the process of applying for new tourism vehicle licenses, the applicant has to go to SPAD’s counter to submit the application form, together with the relevant documents. SPAD’s officers will then process their application, and later submit it to the SPAD’s Licensing Committee, for their approval.

In relation to the Licensing Committee, SPAD highlighted that previously, the Licensing Committee consists of the members of SPAD, being (i) the Chairman of SPAD; (ii) the Chief Executive Officer; (iii) not more than five representatives of the Government; and (iv) not less than three but not more than five other members. The Licensing Committee will sit once every two (2) weeks, subject to the availability of the members. All of the members must attend the meeting, and it must be chaired by the Chairman of APAD only. Therefore, the application process is dependent on committee’s availability and approval.

However, the structure of the Licensing Committee mentioned above has been changed whereby the Licensing Committee meeting can be chaired either by the Chairman or the acting Chairman. The meeting can also be attended by alternate members in order to ensure a full quorum. For ease of understanding, the differences between the old and the new structure of the Licensing Committee is are shown below:

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Structure of the Licensing Structure of the Licensing Committee (Old) Committee (New) Licensing • the Chairman of APAD; • the Chairman of APAD; Committee • the Chief Executive Officer; • the Chief Executive Officer; Members • not more than five • not more than five representatives of the representatives of the Government; and Government; and • not less than three but not • not less than three but not more than five other more than five other members. members. Quorum All of the members must attend Meeting can be attended by the meeting to ensure a full alternate members in order to quorum ensure a full quorum Meeting Once every two (2) weeks, Once every two (2) weeks, subject to the availability of the subject to the availability of the members members (but alternate members can attend to ensure full quorum) Chairman The meeting must be chaired by The meeting can be chaired the Chairman of APAD only either by the Chairman or the alternate Chairman*

*under APAD, the equivalent designation is Director General as there is no Chairman

Once the Licensing Committee give its approval, SPAD will issue the STK which is valid for one (1) year. The operator will then purchase the buses, and send it to JPJ and PUSPAKOM for inspection. SPAD will only issue the licenses once the buses have been inspected. As compared to STK, the licenses will usually be issued within one (1) working day.

SPAD also informed that in their 2018 Annual Report, SPAD has typically process the application within thirty (30) days, which is within the processing time stated in their client charter.

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Issue No. 3: Lengthy processing time to renew tourism vehicle licenses

One of the issues consistently raised by the tourism industry is the lengthy processing time taken by SPAD to renew vehicle licenses. The industry claims that the processing time from SPAD may take up to one (1) to three (3) months. However, based on the Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran, SPAD’s customer commitment aims to complete the application for license/permit renewals within seven (7) to ten (10) days.

Regulation

For ease of reference, the Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran is shown below156:

Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran

1. Pemohon hendaklah menggunakan: a. Boring 4 (Subperaturan 7(1)) – Permohonan bagi Pembaharuan Lesen Bas Persiaran b. Borang B – deklarasi oleh Pemegang Lesen Bagi Tujuan Pembaharuan Lesen Kenderaan 2. Pemohon hendaklah menggunakan satu boring yang berasingan bagi setiap lesen yang hendak diperbaharui. 3. Boring yang telah lengkap hendaklah dikemukakan bersama dengan dokumen sokongan seperti dinyatakan dalam boring. Boring tersebut mestilah ditandatangani oleh Pengarah dan dilengkapi dengan cop syarikat. 4. Borang permohonan hendaklah sampai kepada SPAD tidak kurang 30 hari dan tidak lebih 60 hari sebelum tamat tempoh lesen sekarang. 5. Borang yang lengkap hendaklah dikemukakan ke Operasi Negeri dan Pelesenan Terminal melalui SPAD Wilayah yang berkenaan. 6. Menyertakan fi pemerosesan sebanyak RM20.00 bagi setiap permohonan dalam bentuk Bank Draf/Kiriman Wang/Wang Pos atas nama “Kumpulan Wang SPAD”. 7. Lesen lama hendaklah dikembalikan semasa lesen baru dikeluarkan.

156 SPAD, Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran, http://www.spad.gov.my/sites/default/files/garispanduanmembaharuilesenbaspersiaran_0.pdf

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8. Pemohon hendaklah menyelesaikan kompaun yang dikenakan kerana melanggar AIP 1992, APKP 1999, dan SPAD 2010 (Jika ada). 9. Had usia bas persiaran adalah sehingga 12 tahun dan tambahan 1 tahun sekiranya ada rayuan. 10. Permohonan pembaharuan bas persiaran berusia lebih 10 tahun mestilah disertakan dengan laporan pemeriksaan fizikal bas persiaran oleh pegawai Kementerian. 11. Piagam Pelanggan: 7 – 10 hari.

(SPAD, Garis Panduan Permohonan Baru Lesen Bas Persiaran, https://www.spad.gov.my/sites/default/files/garispanduanpermohonanbarubaspersiaran_1.pdf)

Analysis

Based on feedback from the industry, the primary reason for the delay is because approval of new license applications would need approval from an internal approving committee, which infrequently meets, thereby delaying any decision until a meeting is held. Besides that, the industry contends that it is burdensome for them to physically go to SPAD’s offices every year to renew their license.

The lengthy processing time hinders the tourism vehicle operators from operating their business. If they operate the tourism vehicle without a valid license, the operators may be liable to a fine not exceeding ten thousand ringgit (RM10,000.00) or to imprisonment for a term not exceeding five years or to both, and in the case of a continuing offence shall, in addition, be liable to a daily fine not exceeding five hundred ringgit for each day during which the offence continues to be committed.157

Option No. 1: Continue as is

There is the option of continuing as is and not instituting changes. However, delaying in renewing the relevant license/permit may result in economic losses for the tourism vehicle operators that cannot operate unless the necessary renewal is granted. Hence, it creates economic loss to the industry as they cannot get income. Apart from that, the industry still has to pay the bus drivers, irrespective of whether the buses can be deployed or not.

157 Section 36(4) of the Land Public Transport Act 2010

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In the long run, this will damage the reputation of the industry as a whole, as both the operators and regulator will appear inefficient in not addressing this issue.

Option No. 2: Improving internal efficiency of approving license applications

For practical purposes in Malaysia, unless it is for a new license application, license/permit renewals should be carried out online instead of manually. In the United Kingdom, operators are allowed to apply for a vehicle operator license through its online portal. If the operator applying for the license/permit renewal has never been blacklisted or has not committed an offence under the regulations of SPAD or any other relevant agencies/regulator, the license should be renewed automatically i.e. within twenty-four (24) hours, similar to road tax renewals.

SPAD has to improve the internal efficiency of the approving committee in approving the license/permit applications for renewal. As SPAD already has a client charter to complete the applications within seven (7) to ten (10) working days, it should be the case that the approving committee should strive to achieve the target set in the client charter.

Option No. 3: Increase the duration of license

Under Section 39 of Land Public Transport Act 2010 [Act 715], a tourism vehicle license issued by SPAD shall not exceed three (3) years.

Section 39 of the Land Public Transport Act 2010 [Act 715]

A license issued under this Chapter shall, unless replaced or revoked, continue in force for such period as may be determined by the Commission, provided that such period shall not exceed three years.

As such, SPAD has the power to increase the duration of a tourism vehicle license from being renewed annually to instead up to every three (3) years. Hence, to lessen the burden for both the industry and SPAD in renewing the license every year, the duration of the license could potentially be increased.

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Recommendation

This report recommends Option No. 2: Improving the internal efficiency of approving license applications. Besides that, in order to improve regulatory efficiency and reduce regulatory burdens on businesses, SPAD should allow for online applications and renew the license, so long as the operator has not been blacklisted or committed an offence under the regulations of SPAD and/or any other regulatory body.

Feedback from SPAD

SPAD highlighted that pursuant to Section 43 of the Land Public Transport Act 2010 [Act 715], an application for the renewal of a licence must be made at least ninety (90) days before the date of expiry of the licence. As such, the issue on processing time should not arise, if the applicant submits their application to renew the license within the prescribed time frame

SPAD also informed that it has improved its internal process in renewing tourism vehicle licenses. In the past, every approval in relation to tourism vehicle licenses would need the Licensing Committee’s approval. However at present, the Licensing Committee’s approval is only needed in specific instances such as among others for new license applications or if there is any change of equity in the company’s structure.

The renewal would only need to get the approval of the Mesyuarat Pelesenan Peringkat Operasi which is held weekly. Hence, the renewal processing turnaround time will be faster.

SPAD also agreed with the long term solution to have an online system which allows for the application and renewal to be made online. The Minister of Transport, YB Anthony Loke Siew Fook recently announced that owners of commercial vehicles who wish to apply for or renew their operating licenses will soon be able to do it online.158 He highlighted that the ministry was in the midst of identifying a vendor, and the online system should be operational by the end of 2019. He further stated that one should not wait for long hours at SPAD offices just to apply for a license,

158 The Star Online, Online Applications Soon for Licenses, Permits for Commercial Vehicles, ttps://www.thestar.com.my/news/nation/2019/03/01/online-applications-soon-for-licences-permits-for-commercial-vehicles/

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and the application should be made online so that it will help reduce their expenses and save time.

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Issue No. 4: Submission of the same hard copy documents for license approvals

Another issue raised by the tourism industry pertaining to the license renewal is the fact that tour operators would have to submit the same hard copy documents to SPAD, which they had originally submitted during the initial license application, every time they apply for such renewal.

Regulations

In accordance with the Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, it is evident that there is a requirement for the industry to provide the same documentation (as per the original application) in hard copy form, every year for a license/permit renewal application. The documents include among others:

• Certificate of Incorporation of Private Company (previously known as Form 9); • Return of Allotment of Shares (previously known as form 24); • Return Giving Particulars in Register of Directors; Managers and Secretaries and Changes of Particulars (previously known form 49),

to name a few.

The list of documents to be submitted to SPAD can be seen in the table below (for renewal of bus license/permit).159

B) Permohonan Membaharui Lesen Bas

Borang: SPAD 12 (2005)

Borang Permohonan Membaharui Lesen Kenderaan Perkhidmatan Awam Bas Berhenti-henti / Bas Ekspres / Bas Mini / Bas Sekolah /

Bas Pekerja / Bas Pengantara / Bas Catar

Tempoh masa proses: 15 hari bekerja

Output: Tempoh sah laku lesen – 5 tahun

Dokumen: Salinan lengkap Pendaftaran Perniagaan (SSM/Borang D/ Sijil Pendaftaran Koperasi)

159 SPAD, Panduan Dasar Pelesenan, http://www.spad.gov.my/sites/default/files/dasarpelesenanrev1.pdf

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1. Salinan lesen 2. Salinan lengkap kad pendaftaran kenderaan 3. Laporan PUSPAKOM (VR1) 4. Salinan slip akaun terima ubah syarat (jika ada permohonan ubah syarat) 5. Menyelesaikan saman / kes penguatkuasaan SPAD, PDRM, JPJ dan PBT

Jadual tambang dan jadual perjalanan mengikut nombor pendaftaran kenderaan (kecuali bas sekolah, bas pekerja dan bas catar)

(Source: SPAD, Panduan Dasar Pelesenan, http://www.spad.gov.my/sites/default/files/dasarpelesenanrev1.pdf )

Analysis

The regulations prescribe for the industry to bring the same documents (i.e.: corporate profile/company secretarial forms) every year they apply for a license renewal, which is tedious for operators with little or no change to their corporate profile/company secretarial forms. Duplicative information requests create an unnecessary regulatory burden on businesses. This is because, not only would they incur costs in having to extract such documents to be produced but also costs to print out such documents in order to fulfil the hard copy requirements. Furthermore, we were also informed that previously the industry only had to pay RM20 per year for renewal but with the latest requirement imposed by SPAD, the fees have been increased where renewal fees are RM50, processing fees are RM20, and printing fees are RM20 for every license/permit issued.

Option No. 1: Continue as is

This is a common practice for most agencies and likewise, a common complaint by regulatees. However, by continuing as is, it will only burden the industry as they have to re-submit the same documents every year they want to apply for the renewal It is suggested that agencies only continue the practice if requiring the same documentation for every renewal serves some important objective.

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Option No. 2: Allow for flexibility in submitting the same documents and allow for online submission

The industry should not have to send the same documents every year they want to apply for the renewal (unless new documents needs to be resubmitted as a result of a change in the company’s information, as an example). This will also reduce the number of physical documents to be handled and will possibly reduce document administration for both applicants and SPAD.

The long term solution is to have an online system which allows for the application and renewal to be made online. By doing so, the documents can be uploaded online and saved in their system. SPAD can also collaborate with the Companies Commission of Malaysia (“SSM”) to integrate their internal system with SSM’s in order to be able to access and confirm the operators’ information on their own.

Option No. 3: Increase the duration of license

Under Section 39 of Land Public Transport Act 2010 [Act 715], a tourism vehicle license issued by SPAD shall not exceed three (3) years.

Section 39 of the Land Public Transport Act 2010 [Act 715]

As such, SPAD has the power to increase the duration of license from being an annual application. Hence, to lessen the burden for the industry in renewing the license every year, the duration of the license can be increased to be every three (3) years, as an example.

Recommendation

This study recommends Option No. 2: Allow for flexibility in submitting the same documents, in order to improve regulatory efficiency and reduce regulatory burdens on business by requesting the operator to provide the same information annually.

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SPAD should not ask the operator to submit the same documents which they had originally submitted during the initial license/permit application (unless there is a change to their corporate profile/company secretarial forms which needs updating).

Feedback from SPAD

SPAD confirmed that for license renewals, the operators have to submit the same documents to SPAD, which they had originally submitted during the initial license application. The main reason for this practice as informed by SPAD is due to an old and outdated computer system being used i.e. Windows 1998, which has yet to be upgraded and requires the submission of printed hard copies.

However, SPAD highlighted that previously, the documents that needed to be submitted totalled sixteen (16) in which they have reduced the number to six (6) documents only as at 2018. SPAD also explained the rationale behind the requirement being to ensure that the details of the operators are continuously updated as there have often been times when the operators have not updated changes to the company information i.e. address as an example. In such instances, summons issued by SPAD would consequently be sent to the operators’ old address.

SPAD also highlighted that they had attempted to collaborate with SSM to integrate their internal system with SSM’s in order to be able to access and confirm the operators’ information intra government agencies. However, due to among others privacy and the costs associated with upgrading the system, the collaboration has yet to manifest.

As a long term solution, SPAD also informed the meeting that they are agreeable to have an online system which allows for the application and renewal process to be conducted online. The Minister of Transport, YB Anthony Loke Siew Fook recently announced that owners of commercial vehicles who wish to apply for or renew their operating licenses will soon be able to do it online.160 He highlighted that the ministry was in the midst of identifying a vendor, and the online system should be operational by the end of 2019. He further stated that one should not wait for long hours at

160 The Star Online, Online Applications Soon for Licenses, Permits for Commercial Vehicles, ttps://www.thestar.com.my/news/nation/2019/03/01/online-applications-soon-for-licences-permits-for-commercial-vehicles/

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SPAD offices just to apply for a license, and the application should be made online so that it will help reduce their expenses and save time.

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Issue No. 5: Tedious condition for interview process

The tourism industry contends that one of the most unreasonable conditions for resolving traffic summons is that the tourism vehicle operators have to settle the summons issued by SPAD at the place where the offence was committed.

Regulation

We were informed that such requirement will be imposed by SPAD in a letter to the tourism vehicle operator regarding the offence and the operator will be required to attend to the place where the offence was committed (i.e.: if the offence is committed in Johor, the operator has to be interviewed in Johor).

Furthermore, we were also informed that SPAD makes it a condition that all traffic summonses for any vehicle must be settled before the new permit is approved. This is also stated under paragraph 8 of the Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran. For ease of reference, the Garis Panduan Permohonan Pembaharuan Lesen Bas PersiaranGuideline to Renew Excursion Bus License is shown below161:

Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran

161 SPAD, Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran, http://www.spad.gov.my/sites/default/files/garispanduanmembaharuilesenbaspersiaran_0.pdf

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Pelesenan Terminal melalui SPAD Wilayah yang berkenaan. 6. Menyertakan fi pemerosesan sebanyak RM20.00 bagi setiap permohonan dalam bentuk Bank Draf/Kiriman Wang/Wang Pos atas nama “Kumpulan Wang SPAD”. 7. Lesen lama hendaklah dikembalikan semasa lesen baru dikeluarkan. 8. Pemohon hendaklah menyelesaikan kompaun yang dikenakan kerana melanggar AIP 1992, APKP 1999, dan SPAD 2010 (Jika ada). 9. Had usia bas persiaran adalah sehingga 12 tahun dan tambahan 1 tahun sekiranya ada rayuan. 10. Permohonan pembaharuan bas persiaran berusia lebih 10 tahun mestilah disertakan dengan laporan pemeriksaan fizikal bas persiaran oleh pegawai Kementerian. 11. Piagam Pelanggan: 7 – 10 hari.

(Source: SPAD, Garis Panduan Permohonan Pembaharuan Lesen Bas Persiaran, http://www.spad.gov.my/sites/default/files/garispanduanmembaharuilesenbaspersiaran_0.pdf)

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Analysis

The complaint by the tourism vehicle operators is that not only do they have to travel to the location of the offence (often far) to settle the summons, once they have reached such locations they would have to typically wait for a few hours before the officer from SPAD issues a notice of offer to compound the offence. As explained above, if the offence is committed in Johor, the operator has to go to Johor to be interviewed, regardless on the fact that the registered business address of the operator is in Kuala Lumpur. The process for the interview process is as follows:

Figure 26: Process for the interview process

Thus, not only is it burdensome to travel to the location of the offence, it is also time consuming to wait in order to settle the compound. As it is a condition that all traffic summonses are settled before a new permit is approved, it is difficult for the operators to settle the summons on time if they have to go to the location where the offence was committed.162 This creates a problem for the industry to renew the permit on time as they would have to settle outstanding summons first, which could be far and time consuming.

162 The Star, Renewal of permits should be simple, https://www.thestar.com.my/opinion/letters/2017/10/04/renewal-of-permits- should-be-simple/#14zxoJZtHFPA2Rkz.99

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Option No. 1: Continue as is

To maintain status quo by requiring the tourism vehicle operators to go to the place the offence was committed because it is easier for the officer in charge to conduct the enquiry. However, it will result in unnecessary burdens to the tourism vehicle operators to have to travel to the location of the offence. This could also arguably result in a high non-compliance rate of resolving the summons as tourism vehicle operators would be discouraged by the travelling.

Option No. 2: To review the requirements

To consider reviewing the requirements by allowing the compound to be settled at any SPAD office. This should be possible as SPAD has nationwide presence (in West Malaysia) and its internal systems is centralized to coordinate the summons.

A long term solution would be, to review the requirements by allowing the compound to be settled online. For example in Singapore, operators can pay for the fines imposed by the Land Transport Authority (“LTA”) on the authority’s official website. The LTA e-Payment Services is a service provided by the LTA to enable the operators to make electronic payments in relation to LTA fines and fees, through the Internet, mobile phone or kiosk.163

Recommendation

This study recommends Option No. 2: to review the requirements imposed on operators to ease the burden of operator. It is inefficient to require the tourism vehicle operators to travel all the way to another city or/and state in order to settle the summons. To reduce unnecessary regulatory burdens on the operator, summons should be able to be settled at any SPAD office. Alternatively, the long term solution is to allow the operator to settle the summons online, which is much more convenient compared to a physical visit to SPAD’s office. However, SPAD should look into this matter as it requires among others cost and internal buy-in to upgrade the system accordingly.

163 One Motoring, One Pay, https://onepay.onemotoring.com.sg/onepay/index.do

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Feedback from SPAD

SPAD had confirmed the process as explained above of which in particular that the operator and driver have to go to the place where the offence was committed in order to be interviewed SPAD.

SPAD explained that the reason for this is because SPAD has no power to issue summons on the spot. SPAD’s power is only limited to conducting an investigation in relation to the offence under the Land Public Transport Act 2010 [Act 715]. SPAD can only institute prosecution on an individual/company for any offence under Act 715 with the consent in writing of the Public Prosecutor. Further discussion on this matter will be made under Issue No. 6: Summon are not issued immediately on the spot.

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Issue No. 6: Summon are not issued immediately on the spot

The tourism industry has informed us that a summons issued for a breach under the Land Public Transport Act 2010 [Act 715] is normally issued a few months after the offence has been committed and not immediately on the spot when the offence is committed. As such, the tourism vehicle operators have argued that it is unfair for them because:

• operators would only realize the existence of a summon late, being usually when the operator is in the midst of renewing its permit; and • the drivers who have committed the offence may have left the tour company.

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Regulations

In this respect, tourism vehicle operators contends that they will only receive summons (notice of offer to compound offence) from SPAD around six (6) months after the offence was committed. An example of the notice of offer to compound an offence can be seen below:

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Analysis

In the notice above, we can see that although the offence was committed in early 2014, the operator only received the notice of offer to compound the offence at the end of 2015. As it is a condition that all traffic summonses are settled before renewal of a permit is approved (as explained under paragraph issue 6, paragraph 3, above), it is unfair to the operators because they might not even know of the existence of the compound, until they want to renew the permit. For ease of understanding, the process to issue the summons is as follows:

Figure 27: Process to issue the summons

Option No. 1: Continue as is

To consider maintaining status quo may prejudice the tour company’s permit renewal and result in it being unfair to the operators as the drivers who have committed such offence may have left the company. As such, the operator would not be able to question the drivers to validate the summons or compel the drivers to pay the summon. This is not an issue if the offence is in relation to the tour company (i.e. no tour guide on board of tourism vehicles) as the operator should take full responsibility

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for it. However, it will be unfair for the operator if the offence was committed by the driver (i.e. driving above the speed limit).

Option No. 2: To issue summons as soon as practicable

Subject to verification with SPAD to understand the reasons as to why the summons cannot be issued on the spot, to consider issuing the summons for any offences as soon as practicable instead of a few months later. The summons can be sent by post or electronically, by e-mail as SPAD would already have the registered e-mail address of the operators in their database.

A long term solution would be to have an online system which allows the operator to check if they have any summons issued to them prior to renewing their license, and pay the summons online. For example in Singapore, operators can check if they have any summon issued to them by the regulator, the Land Transport Authority on the authority’s official website. The operators only have to key in the vehicle number, in which the notice of summon will be made available on the website three (3) days from the date of offence.164

Recommendation

This study recommends Option No. 2: To issue summons as soon as practicable in order not to prejudice tourism vehicle operators with undue delay in the renewal of their permits. The long term solution would be to allow the operator to check their summons and make the payment online. However, SPAD should look into this solution as it requires cost and internal buy-in to upgrade the system.

Feedback from SPAD

164 OneMotoring, LTA Fines & ERP Admin Fees, https://onepay.onemotoring.com.sg/onepay/erp/getRecord.do

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715 with the consent in writing of the Public Prosecutor.

In this process, SPAD explained that pursuant to Section 235 of the it will then pass the investigation paper to the Public Prosecutor. If the offence committed is a compoundable offence, SPAD may, with the consent in writing of the Public Prosecutor, make a written offer to the person suspected to have committed the offence to compound the offence upon payment to the SPAD. 165If it is not a compoundable offence, the Public Prosecutor can institute the prosecution in court.

SPAD also reiterated that effective 2019, the enforcement powers under SPAD have now been transferred to JPJ. Thus, SPAD clarified that if the operator commits an offence under the Land Public Transport Act 2010 [Act 715], JPJ similarly cannot issue summons on the spot as JPJ’s power is limited to completing the investigation paper. However, if the operator commits an offence under JPJ’s regulatory framework i.e. the Road Transport Act 1987 [Act 333], JPJ has the power to issue summons on the spot.

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165 Section 235 of the Land Public Transport Act 2010 [Act 715]

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Issue No. 7: The original certificate needs to be displayed in the tourism vehicle

Another regulator burden faced by the industry is the requirement to display the original license (certificate) on board of tourism vehicles at all times.

Regulation

Pursuant to Section 41(1)(b)(iii) of the Land Public Transport Act 2010 [Act 715], SPAD has the power to impose the type of documents to be displayed on each tourism vehicle and which may be liable for inspection.

Section 41. Conditions which may be attached to license

(1) Subject to this Act, the Commission may attach to a license issued under this Chapter such conditions as it may think fit, and in particular- (a) that the licensee shall, in connection with its license, only use, cause or permit the use of the tourism vehicle specified in the license; and (b) that the licensee shall have such duties, rights, obligations or restrictions as may be imposed by the Commission in respect of the use of the tourism vehicle including- (i) the conduct of the drivers of the tourism vehicle; (ii) the measures to safeguard the safety of passengers and other road users, including the maximum number of passengers which can be carried on the tourism vehicle; (iii) the type of documents and information as specified by the Commission to be carried or displayed on each tourism vehicle, and which may be liable for inspection; and (iv) the requirement that the licensee shall keep and produce on demand for inspection and verification specified accounts, documents and records, other than the documents mentioned in subparagraph (1)(b)(iii). (2) The Commission may, at any time in its discretion, add, cancel or vary any of the conditions attached to a license under this section. (3) A licensee who fails to comply with any of the conditions attached to the

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license under this section commits an offence and shall, on conviction, be liable to a fine not exceeding five hundred thousand ringgit or to imprisonment for a term not exceeding two years or to both.

Analysis

As a result of this provision and based on the license condition imposed by SPAD, the original license assigned to each vehicle must be carried on board and presented upon inspection by the relevant authorities. However, considering the lifespan of tourism vehicles which is twelve (12) years166, it is risky to impose such a condition because the driver can easily lose or misplace it. The operators highlighted that the permit would fly out when the drivers open the window. As explained above, renewal of a license takes a very long time and will thus place a burden and economic loss for operators as they are unable to ferry passengers without an original permit on board. If the operators fail to have the original copy of the license, they may be held liable to a fine not exceeding five hundred thousand ringgit or to imprisonment for a term not exceeding two years or to both.

Option No. 1: Continue as is

By maintaining status quo, it will only give rise to unnecessary burdens for the operators to reapply for a new permit, should the driver lose the original permit. Not only does it burden the operator to have to go to SPAD’s office, the operator also has to pay a certain amount of fees to get a new permit issued.

Option No. 2: Remove the requirement to have an original license on board

Allow for flexibility by requiring the operators to display a duplicate copy of the license in the tourism vehicle instead of the original copy. It is clear that the objective of having the license displayed on board at all times is for ease of monitoring but he need to have the original copy displayed must serve a particular purpose. If the purpose is authenticity, SPAD may consider recognizing certified true

166 Paragraph 3 of the Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat

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copies to be displayed instead. If the officer is still unsatisfied with the authenticity of such copy, the officer can always request the operators to furnish the original at a later time to be verified.

This approach can be seen in the United Kingdom, where there are no requirements for licenses to be displayed in the vehicle for local tours. Instead, the original license is to be kept in the operator’s office, whereas a certified true copy is to be kept in each vehicle when undergoing international operations.167

Recommendation

This study proposed Option No. 2: Remove the requirement to have an original license on board by allowing the operators to display the duplicate copy of the license in the tourism vehicles instead of the original copy. The original copy should be kept by the operator at the office for safekeeping.

Feedback from SPAD

SPAD confirmed that as a license condition the operators have to display the original license/permit on board of their tourism vehicles at all times. SPAD also commented that this is no different to individuals who also have to carry original identity cards with them at all times.

SPAD explained that the reason original certificates are required is because unlike other types of buses, each excursion bus has its own permit. In contrast to other buses such as express buses, such buses are regulated using an operator’s license. Under the operator’s license regime, an operator can have more than one (1) bus and the buses they operate will be listed under one (1) license. However, if the operator’s license is suspended, it will affect all the buses listed under such license. Importantly under an operator’s license, it is not mandatory to have the original certificate on board which can be retained at the operators office for safe-keeping.

However, with excursion buses, if the operator has ten (10) buses, each of the buses must have its own individual permit. The difference between the licenses

167 Gov UK, Public Service Vehicle Operator Licensing: Guide for Operators, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/194259/PSV_Operator_Lice nsing_Guide.pdf

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needed for the buses can be seen below:

Figure 28: Difference between the Licenses Needed for Excursion Bus and Express Bus

Type of Bus License Needed Quantity of License

Excursion Bus • Excursion Bus • One (1) license for Permit each excursion bus

Express Bus • Operator’s License • One (1) license for multiple express bus

On this note, SPAD informed the meeting that the operator’s license regime is under the purview of MOTAC. This is because MOTAC is in charge of the licensing of the tour operating business & travel agency business license. SPAD explained that previously, they have tried to engage with MOTAC to introduce the operator’s license for excursion busses, which has yet to materialize. However, SPAD is open to discuss again with MOTAC in order to introduce operator’s license for excursion buses.

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Issue No. 8: Burdensome requirement for vehicle inspection every six (6) months

The excursion buses, and hire and drive car operators contend that the requirement to undergo vehicle inspection for tourism vehicles (i.e.: excursion buses, and hire and drive car) every six (6) months is burdensome because the inspection will take a whole day and such, they are unable to use their vehicle and will lose business for a day. On top of that, the inspection also adds to the cost of doing business as they have to pay for the inspection. Therefore, the industry proposed for the inspection to be made once a year instead.

Regulation

The Road Transport Act 1987 [Act 333] and Section 3, and 4 of the Motor Vehicles (Periodic Inspection, Equipment and Inspection Standard) Rules 1995 requires that all commercial vehicles are to undergo routine inspection at PUSPAKOM every six (6) months.

Based on the First Schedule of the Motor Vehicles (Periodic Inspection, Equipment and Inspection Standard) Rules 1995, vehicles that are required to go for inspection includes public service vehicles such as excursion buses, hire and drive car, and limousine taxi. The relevant provisions are reproduced below, for ease of reference:

Section 66B of the Road Transport Act 1987 [Act 333] – Vehicles required to undergo periodic inspection Section 66B. Vehicles required to undergo periodic inspection (1) The Minister may by rules specify the class or category of vehicles which is required to undergo periodic inspection under this Part for the purpose of determining that the vehicles comply with the requirements as to construction, equipment and use and the frequency of such inspection in respect of a particular class or category of vehicles.

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Section 3 and 4 of the Motor Vehicles (Periodic Inspection, Equipment and Inspection Standard) Rules 1995 Section 3. Categories of vehicles required to undergo periodic inspection (1) The categories of vehicles that are required to undergo periodic inspection at a vehicle inspection centre are as specified in the First Schedule.

Section 4. Frequency of periodic inspection The frequency of periodic inspection referred to in subrule 3(1) shall be as follows: (a) for a newly manufactured vehicle, once in every twelve months for the first two years and thereafter once in every six months, except for the subcategories of vehicles of hire car, taxi cab, limousine taxi cab and e-hailing vehicle; (aa) for a newly manufactured container’s trailer, once in every twelve months for the first ten years; (bb) for the subcategories of vehicles of hire car, taxi cab, limousine taxi cab and e-hailing vehicle which have reached the age of three years from the registration dates of the vehicles under section 7 of the Act, once in every twelve months; and (b) for other vehicles, once in every six months.

Analysis

Based on the regulations stated above, save for hire car, taxi cab, limousine taxi cab, and e-hailing vehicle, all new commercial vehicles are only required to undergo routine inspection once a year (for the first two (2) years), and subsequently, the commercial vehicles have to go routine inspection every six (6) months.

The regulation imposes the need to undergo the inspection every six (6) months for vehicles above the age of two (2) years old. However, the requirement is needed to ensure that all of the commercial vehicles in operation are roadworthy and safe to be used. Currently, Puspakom Sdn Bhd (“PUSPAKOM”) is the only Malaysia's comprehensive national vehicle inspection company appointed by the Malaysian

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Government to undertake all mandatory inspections for both commercial and private vehicles. As such, the operators have to book a date for such inspection online before sending the vehicles for inspection.

PUSPAKOM will check all the important parts on a vehicle to make sure they meet the required legal and standard limits. In 2016, there had been 521,466 road accidents, and 7,152 deaths due to road accidents in Malaysia.168 The periodical inspection will help to reduce road accident and safeguard the lives of drivers, passengers and other road users.169 Vehicle inspection is an important in preventing accidents and enables drivers to detect potential defects in their vehicle. Furthermore, early detection followed by appropriate rectification and maintenance can enhance the roadworthiness of vehicles.170 The fees for such inspection can be seen in the figure below:

Figure 29: Fees for vehicles inspection at PUSPAKOM171

(Source: PUSPAKOM, Routine Inspection, http://www.puspakom.com.my/routine-inspection/)

168 MIROS, General Road Accident Data in Malaysia (1997 – 2016), https://www.miros.gov.my/1/page.php?id=17 169 PUSPAKOM, Routine Inspection, http://www.puspakom.com.my/routine-inspection/ 170 The Star, Vehicles need regular inspection too': Puspakom, https://www.nst.com.my/news/nation/2018/02/331305/vehicles- need-regular-inspection-too-puspakom 171 PUSPAKOM, Routine Inspection, http://www.puspakom.com.my/routine-inspection/

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Option No. 1: Continue as is

One option is to maintain the requirement to inspect the vehicles every six (6) months for vehicles above the age of three (3) years old for safety reasons. It is arguable that it is easy to arrange for a PUSPAKOM inspection since PUSPAKOM has fifty-six branches in Malaysia in which the operator can easily book a date for such inspection online. It can also be argued that the fee imposed for such inspection is reasonable being only between RM50-RM55 per inspection.

A similar requirement is imposed in Australia, particularly New South Wales, whereby public passenger vehicles are required to submit to tests every six (6) months.

Option No. 2: Review the requirement

Another option is to have the inspection once a year instead of every six (6) months. This will ease the burden of the tourism vehicle operators to go to PUSPAKOM to inspect their vehicles. Although it only takes a day for PUSPAKOM to inspect the vehicle, for the operator, it means that they lose business for a day. Considering the fact that some operators have more than one (1) vehicle, they will have to incur more costs to send their vehicles for inspection.

Furthermore, it is also difficult to reconcile because based on the regulations stated above, hire car, taxi cab, limousine taxi cab and e-hailing vehicle which have reached the age of three years from the registration date of such vehicles only have to undergo inspection once a year. Thus, it is not clear as to the rationale behind this disparity since it may be argued that such vehicles would typically be driven equally as frequent (if not more frequent) as compared to commercial vehicles and hence, should be subject to similar inspection standards.

In the United Kingdom, testing frequency varies by type and operating mode; small passengers cars aged over three years and public transport vehicles aged over one year must be inspected yearly. 172 In Singapore, buses have to be inspected yearly.173 In summary, frequency of vehicle inspection varies among countries but

172 Journal of Eastern Asia Society for Transportation Studies, An Evaluation of the Effectiveness of Private Vehicle Inspection Process in Thailand, https://www.jstage.jst.go.jp/article/easts/6/0/6_0_3482/_pdf 173 One Motoring, Informatiomn Guidelines, https://www.onemotoring.com.sg/content/onemotoring/en/lta_information_guidelines/maintain_vehicle/inspection.html

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most require annual inspection (once a year) as opposed to twice a year (every six (6) months).

Option No. 3: Conduct study to evaluate PUSPAKOM’s service performance

JPJ should conduct a study to evaluate PUSPAKOM’s service performance. The industry contends that it will take PUSPAKOM a whole day to conduct the inspection. However, based on PUSPAKOM’s official website, customer needs to make the booking for inspection online. Most of the vehicle inspections will only take an hour after payment is made.174 The customer needs to be present twenty (20) minutes before the appointment time and PUSPAKOM is committed to complete the inspection within an hour.175 However, the data on PUSPAKOM’s performance is not made available publicly online. As such, the data on PUSPAKOM’s performance should be transparent.

Option No. 4: Allow more operators to conduct the vehicle inspection to improve competition

PUSPAKOM’s main concession agreement with MOT to undertake all mandatory inspections for commercial vehicles and private vehicles is still in effect and will only expire in 2024.176 Another alternative is for the Government to consider allowing more operators to conduct the vehicle inspection. By doing so, it will boost the competition to provide better service in conducting vehicle inspection. Currently, the Ministry of Domestic Trade and Consumer Affairs (“KPDNHEP”) is holding an open tender to select service providers for inspection activities of used vehicles (specifically relating to those under hire-purchase) for the new term effective 18 December 2018.177 However, it will be difficult as the inspecting operators have to fork out a huge sum of money to establish inspection system, infrastructure, and acquire skilled resources.

174 PUSPAKOM, http://www.puspakom.com.my/faq/ 175 PUSPAKOM, http://www.puspakom.com.my/wp-content/uploads/2018/10/MyPUSPAKOM-media-release_bi.pdf 176 ibid 177 NST, Companies interested to offer vehicle inspection services welcomed to apply as PUSPAKOM contract ends, https://www.nst.com.my/news/nation/2018/10/422119/companies-interested-offer-vehicle-inspection-services-welcomed-apply

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Recommendation

This study recommends Option No. 1: Continue as is because unlike private vehicles, commercial vehicles are used for public transportation of goods and passengers. It is used daily and is more prone to wear and tear. As such, the vehicles need to be upkept to ensure it is constantly maintained, particularly in the interest of safety for passengers. Furthermore, periodical inspection is only needed for vehicles above the age of two (2) years old. Thus, it is justified to require commercial vehicles to undergo inspection every six (6) months after because as service year and service mileage accumulates, there is a natural tendency for the vehicle to degrade. Periodical inspection will certainly help to reduce road accident and safeguard the lives of drivers, passengers and other road users.

Feedback from JPJ

The representatives from JPJ had agreed with Option No. 1: Continue as is because inspection every six (6) months for commercial vehicles is the standard imposed by most countries. Furthermore, due to the nature of the vehicles being used for commercial purpose and for high usage, inspection should be made every six (6) months for safety reason.

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Excursion Buses

Issue No. 9: Excessive regulatory coverage requiring tour guides on excursion buses

The tourism vehicle operators have raised the issue in relation to the costs associated with the mandatory requirement to have tour guides on board of excursion buses. This is because:

(i) simple ‘point-to-point’ transfers would be caught under this requirement. An example of such simple ‘point-to-point’ transfer is sending tourists from the hotel to the airport; and (ii) destination transfers for local tourists would be caught under this requirement. An example is the typical ‘rombongan Che Kiah’ or organization/company/family trip whom would commission the excursion bus in a large group to bring such group to a particular destination i.e. Genting Highlands, Port Dickson, etc.

Regulation

Based on Section 6(1) of the Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000, there exists a requirement for all excursion bus to have a tour guide present in the vehicle. The provision is reproduced below, for ease of reference:

Section 6 – Conditions of license for authorized vehicle

Section 6. Conditions of license for authorized vehicle

(1) There shall be attached to a license issued under this Act the following conditions: (a) in relation to an excursion bus- (ii) the license shall be issued according to the conditions specified in the Tourism Vehicles Licensing Act 1999 and the Road Transport Act 1987 [Act 333] and their related regulations, including any additional conditions imposed by the Commissioner from time to time;

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(v) the excursion bus shall use the services of a tourist guide licensed by the Ministry of Culture, Arts and Tourism unless an exemption has been given by that Ministry.

This is also mirrored in Paragraph 5 of the Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat whereby it provides that each company is required to have a tourist guide and loudspeaker on board for each journey. The requirement by SPAD is shown below:

5) Syarat Khas

➢ bagi jarak perjalanan melebihi 300km atau 4 jam berterusan hendaklah mempunyai pemandu kedua dan Buku Log; ➢ Syarikat dikehendaki menyediakan pemandu pelancong dan alat pembesar suara dalam setiap perjalanan. ➢ Hendaklah mengambil perlindungan Insurans mengikut Bagian IV 90 dan 91 (1) Akta Pengangkutan Jalan 1987 semasa membawa penumpang; ➢ Mempunyai cukai jalan yang sah; dah ➢ Memasang alat Global Positioning System (GPS) pada kenderaan yang dilesenkan.

Based on the provisions stated above, it is mandatory for all excursion buses to have a tour guide on board. Bus means vehicle ferrying more than eight (8) person, including the driver. For ease of reference, the provision under the Public Transport Act 2010 [Act 715] that defines bus is shown below:

Section 1 of the First Schedule, Paragraph 1. Classes of public service vehicles

Interpretation

bus means “a motor vehicle having a seating capacity of not less than eight (8) persons (including the driver)”

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As such, excursion buses (and tourism vehicles that have the seating capacity of not less than eight (8) persons) must have a tour guide on board.

Analysis

Based on the identified regulations and the issues raised by excursion bus operators, we can reconcile that the requirement results in an excessive regulatory coverage by unintentionally regulating simple ‘point-to-point’ transfers and destination transfers for local tourists. This is because:

(i) for simple ‘point-to-point’ transfers, it would be impractical to have a tour guide for such a short trip i.e. to the airport or to a landmark for sightseeing; and (ii) for destination transfers for local tourists, it would be impractical to have a tour guide as typically in such instances, local tourists would already be knowledgeable about such destinations. As such, the appeal for a tourism vehicle is only because of the size to transport larger groups as opposed to having an informative guide.

It is also unfair because foreign excursion bus carrying seven (7) passengers and below is exempted from the tourist guide service requirement.178

It is important to note that the regulations do allow for local tourists to obtain an exemption from the requirement under Section 6(1)(a)(iv) of the Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000. The exemption is reproduced below, for ease of reference:

Section 6 – Conditions of license for authorized vehicle

Section 6. Conditions of license for authorized vehicle

(2) There shall be attached to a license issued under this Act the following conditions: (b) in relation to an excursion bus- (vi) the excursion bus shall use the services of a tourist guide licensed by the Ministry of Culture, Arts and Tourism unless an exemption has been given by that Ministry.

178 https://www.spad.gov.my/sites/default/files/termcondition-foreignexcursionbus_0.pdf

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However, although local tourists have the option of applying for an exemption, the exemption process is cumbersome as it must be made three (3) working days before the journey by submitting a formal letter together with the relevant information, including two (2) copies of the details of the journey consisting of the schedule, name of passengers and their identity card number, duration of the journey, and the total number of passengers.179 Furthermore, the exemption may only be applied for in very limited circumstances such as for point-to-point transfers that do not involve tourist attractions (i.e. sending tourists to a jetty to go to an island resort, transfer service for conference, crew transfer, or exhibition), religious ceremonies, weddings, sports, and any reasonable purposes as determined by MOTAC such as death, visit, and festival.180 For ease of reference, the categories for exemption can be seen below181:

GARIS PANDUAN PERMOHONAN PENGECUALIAN PEMANDU PELANCONG

1. Permohonan pengecualian pemandu pelancong bas persiaran hanya boleh diluluskan bagi tujuan-tujuan berikut; a. Point to point transfer yang tidak melibatkan tempat pelancongan. Contoh: menghantar peserta persidangan, pameran, crew transfer atau menghantar pelancong ke jeti untuk ke pulau peranginan. b. Upacara keagamaan c. Perkahwinan d. Sukan e. Apa-apa tujuan yang difikirkan layan diluluskan oleh Kementerian seperti kematian.

(Source: MOTAC, Garis Panduan Permohonan Pengecualian Pemandu Pelancong, http://motac.gov.my/muat- turun/category/21-garis-panduan )

Not only that, representatives from MOTAC also highlighted that they would normally approve the application for the exemption to have tour guides on board for local tourist. Hence, it would only be burdensome to the industry to make such application, and for MOTAC to approve such application.

179 MOTAC, Garis Panduan Permohonan Pengecualian Pemandu Pelancong, http://motac.gov.my/muat-turun/category/21- garis-panduan 180 ibid 181 MOTAC, Garis Panduan Permohonan Pengecualian Pemandu Pelancong, http://motac.gov.my/muat-turun/category/21- garis-panduan

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Option No. 1: Continue as is

Overall, the impact of the requirement would add to the dispensable cost of the excursion bus operators as there is a minimum cost of RM200 per day to hire a tour guide, which would be passed through to the passengers to bear resulting in increased fees. We were informed by the tourism vehicle operators that there are numerous requests from tourists, especially domestic packages, to waive the requirement of tourist guides during excursions.182 The effect as informed by such operators is the economic loss of business primarily from local customers as their prices would not be competitive by having to include the tour guides cost in their fees. Instead, local customers would opt for other forms of transport services such as chartered/express buses which are larger and cheaper without the requirement of having a tour guide on board.

Another concern relating to this issue is the limited number of qualified tour guides in rural areas.183 As a result, the level of non-compliance is high in addition to creating a market for ‘illegal’ tour guides to operate which would affect the overall quality/standard of the industry.

Option No. 2: Exemption with quicker approval/rejection time

Excursion bus operators to continue with the current regulatory framework which provides for an exemption in limited circumstances, however, it is recommended that MOTAC review its internal processing of such exemptions by allowing tourism vehicle operators to submit the application with a shorter processing timeframe i.e. twenty-four (24) hours before the journey where an approval/rejection can be instantly given, instead of three (3) days before the journey. A long term solution would be to allow the operators to make the application online and for MOTAC to approve/reject the application within twenty four (24) hours.

182 The Sun Daily, Tour guide exemption call, http://www.thesundaily.my/news/1024183 183 The Star, Driving the tourism industry, https://www.thestar.com.my/news/nation/2013/12/08/driving-the-tourism- industry/#STCe43dri9tdpPIM.99

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Option No. 3: Review and update the relevant regulations

To review the existing regulations and consider removing the mandatory requirement to have tour guides in excursion buses, especially for local tourists and simple ‘point- to-point’ transfers. To reduce the cost of business, the Government should consider providing an opt-in service184 instead whereby local tourists may hire a tourist guide at their own discretion, if necessary. The fundamental objective of having a tour guide must be addressed whereby if the need for a tour guide is to inform/educate tourists on tourist destinations thus, the applicability of the regulations must commensurate with such objective and not over-reach in over-regulating. In particular, local tourists should be given the right to decide whether they require guide services or otherwise.

As an example in Singapore, it is only mandatory to have a tour guide on board if the vehicle is used to convey tourists into Singapore or to a place or point of interest in Singapore.185 Tourist is defined as an individual who visits Singapore for recreation, pleasure, business or any other purpose, but does not include a citizen or permanent resident of Singapore.186 Hence by such definition, locals are not subjected to the requirement. Another model that can be observed is in Europe, where tourist guides are not required to travel with the group throughout the journey. As such, when a tour group leaves Paris for Milan (as an example), they are not required to have a guide with them during the travel. When they arrive in Milan, the operator will engage a local guide to show them around. Once they are done, the tour guide leaves and the group can go to the next destination.187

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184 The Star, Disruption Affects Tourism Sector Too, https://www.thestar.com.my/opinion/letters/2018/05/08/disruption-affects- tourism-sector-too/#c5IlhM2FI156ARqK.99 185 Section 4(a) of the Singapore Tourism (Tourist Guides) Regulations 2014 186 Section 19A of the Singapore Tourism Board Act (Chapter 305B) 187 The Star, Driving the tourism industry, https://www.thestar.com.my/news/nation/2013/12/08/driving-the-tourism- industry/#STCe43dri9tdpPIM.99

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Option No. 4: To increase the number of passengers in excursion buses to impose the requirement of having a tour guide on board

Another option is to increase the requirement in terms of the number of passengers in tourism vehicles before the requirement of having a tour guide on board is imposed. The cost to hire a tour guide and the size of the excursion bus should be considered in determining the applicable number in order to ensure that the excursion bus operators do earn a reasonable margin and the tourists pay a reasonable amount in renting an excursion bus.

Recommendation

This study recommends Option No. 3: Review and update the relevant regulations whereby the requirement for mandatory tour guide present in tour vehicles should be exempted for local tourists and simple ‘point-to-point’ transfers. This is an onerous burden on tour operators and local tourists as they have to sustain the costs for this even in instances when a tour guide is not required. Although the operators may apply for exemption of having tour guides for local tourists, the process to obtain approval from MOTAC is burdensome. They also have to wait for a few days as MOTAC will not issue the approval immediately. On top of that, as there is a requirement to submit the application for exemption three (3) working days before the journey, it is almost impossible for tourism vehicle operators to obtain such approval when last minute requests by customers are made.

Feedback from SPAD

The mandatory requirement to have tour guides on excursion buses is stated under Section 6(1)(a)(iv) of the Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000, which is a subsidiary legislation under the Tourism Vehicles Licensing Act 1999 [Act 594].

Historically, SPAD highlighted that the aforementioned legislations were under the purview of MOTAC. However in 2011 and pursuant to the Land Public Transport Act 2010 [Act 715], SPAD took over all dealings concerning the licensing of tourism vehicles from MOTAC in which SPAD had continued to apply the same regulations

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(without change) to this day.

In this respect, SPAD are similarly agreeable with the recommendation to liberalize the requirement to have tour guides as their primary regulatory focus is on vehicles. SPAD further explained that in principle they are agreeable to review the regulations relating to tour guides subject to streamlining the approach with MOTAC in order to among others manage the historical ‘sensitivity’ between both SPAD and MOTAC in terms of the appropriate regulator to monitor tourism vehicles.

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Issue No. 10: Unappealing colour prescribed for excursion buses

The tourism industry has raised the issue that the colour prescribed for excursion buses are unappealing as it is required by law to be green and white in colour.

Regulation

According to Paragraph 3, Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, the vehicle must be green in colour and such colour must cover one third of the bus. The requirement stated in the said regulation is shown below.

DASAR KHUSUS BAS PERSIARAN

3. Kenderaan dan Tanda Pengenalan

➢ had usia untuk dilesenkan: ≤ 3 tahun dari tarikh pendaftaran kenderaan. ➢ Had usia ganti kenderaan: ≤ 12 tahun dari tarikh pendaftaran kenderaan. ➢ Warna bas persiaran ialah warna hijau (1/3 dari badan bas) ➢ Tulisan ‘Bas Persiaran’ di badan kenderaan

(Source: Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat )

This is reiterated in further detail under Section 15 of the Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000.

Section 15 – Standard colour of excursion bus

Section 15 Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000 is reproduced below, for ease of reference:

Section 15. Standard colour of excursion bus The standard colour for an excursion bus shall be as follows: (a) the colour coniferous green shall be painted on 1/3 of the outer part of the left, right and rear side of the bus measured from the bottom of its body; (b) the colour white shall be painted on the rest of the outer part of the bus; and (c) the white portion of the bus in paragraph (b) may only be decorated with an

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appealing and lively colour, and may incorporate a suitable Malaysian image as approved by the Commissioner.

Not only that, the Excursion Bus (Colour and Markings) Rules 1998 under the Commercial Vehicles Licensing Board Act 1987 [Act 334] is also applicable whereby it states as follows:

Section 2 – Excursion bus to be painted as prescribed

Section 2. Excursion bus to be painted as prescribed

An excursion bus shall be painted as follows:

(a) 1/3 of the outer part of the left, right and rear side of the bus measured from the bottom of its body with the colour coniferous green;

(b) the rest of the outer part of the bus with the colour white; and

(c) the white portion of the bus as stated in paragraph 2(b), may only be decorated with an appealing and lively colour and incorporate a suitable image which projects a Malaysian image as approved by the Board.

Furthermore, in PUSPAKOM’s Bus Inspection Guideline, it states as follows:

Body Marking – Outer (Tour Bus)

• Conifer green should be painted on 1/3 of the outer of the bus on the left, right and back sides (measured from the base of the body bus); and • White color should be painted on the remaining side of the bus. The white part can be decorated with attractive and bright colors, which can include Malaysian images approved by SPAD / LPKP.188

(Source: PUSPAKOM, Bus Inspection Guidelines, http://www.puspakom.com.my/wp-content/uploads/2018/04/Bas-050218- Eng.pdf)

188 PUSPAKOM, Bus Inspection Guidelines, http://www.puspakom.com.my/wp-content/uploads/2018/04/Bas-050218-Eng.pdf

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Analysis

The industry contends that the regulation that prescribes the colour of excursion buses to be green and white is too prescriptive. The colour requirement not only makes it unattractive to the tourists, it also hinders the excursion bus operators to earn extra income from bus advertising space.

Although the intention of the requirement is for excursion buses to be easily identifiable to enable easy monitoring and enforcement by relevant agencies, from discussion with the industry, there is no rationale as to why the colour of the bus needs to be green (as opposed to any other colour) in the first place.

Option No. 1: Continue as is

There is the option of maintaining the existing regulations pertaining to the requirement of the colour and design of excursion buses. However, aesthetically there is a concern that the design and colour of the excursions buses in Malaysia will not be as attractive as the ones in neighbouring countries such as Singapore189 and Thailand. The excursion buses in Singapore and Thailand are not restricted to any colour and/or design. It could also be a potential loss of revenue for advertising. Bus advertising has been proven to be a great way to reach the general public and also increase exposure of an ad campaign. It can have a transformative effect on transport operators, by providing a significant source of additional revenue.190

Currently, in Malaysia, bus advertising can be seen only on public buses (i.e. Rapidkl).191 In 2015, school bus operators were given an opportunity to earn extra income of RM65 per day by displaying advertisements on their buses.192 In Singapore, advertisements on private bus can be made on wholly painted buses or 40% of individual fleet, so long as the operators abide with the terms and conditions for carrying advertisements on buses.193 In the Singapore, bus advertising for a week

189 Part V, Road Traffic (Public Service Vehicles) Rules 1976 190 KPMG, Turning public transit ads into powerful digital tools 9 June 2017, https://home.kpmg.com/xx/en/home/insights/2017/06/turning-public-transit-ads-into-powerful-digital-tools.html 191 Myrapid, Advertising, https://www.myrapid.com.my/corporate-information/business-opportunities/advertising 192 The Star, School Buzz, https://www.thestar.com.my/schoolbuzz/ 193 LTA, Standard Guidelines for Advertisement on Public Service Vehicles, https://www.lta.gov.sg/content/dam/ltaweb/corp/PublicTransport/files/PSVAdvertisementGuidelines.pdf

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ranges from $150 to $1,800.194 The advertisement rates of the buses in Singapore can be seen below:

Figure 30: Advertisement rates of the buses in Singapore

(Source: SMRT Media, Bus, http://smrtmedia.com.sg/Product-Rates/Bus )

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194 SMRT Media, Bus, http://smrtmedia.com.sg/Product-Rates/Bus

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Option No. 2: Review and update the current regulations

To look into the regulations and to be more flexible in allowing the excursion buses to be multi-coloured, and not limited to green/white based. For example in Singapore, the statute is silent on the colour of excursion buses.195

Although the colour of excursion buses in Malaysia is standardized to enable easy monitoring and enforcement, another option is by grouping the license plate according to vehicle type and use (i.e. using different colours/alphabets/numbers).

This can be seen in Singapore, where the use of letters and colours are used to differentiate the types of scheme that a specific vehicle is registered under.196 The vehicle licence plate consists of the index mark and the registration number assigned to the motor vehicle. The index mark and the registration number shall be suffixed with a letter of the alphabet, which serves as the official reference197 All private-hire vehicles in Singapore are issued with ‘PA’ plates.198

Recommendation

This report recommends Option No. 2: Review and update the current regulations in order to make the excursion buses more attractive to tourists and allow the excursion bus operators to earn extra income to offset the rising cost of the industry. Although the current regulation facilitates monitoring and enforcement by the relevant agencies, the term ‘Bas Persiaran’ has been put on the excursion buses to allow the agencies to differentiate it from other buses. If that is not sufficient to enable monitoring, license plates can instead be grouped according to vehicle types and use (i.e. using different colours/alphabets/numbers).

Feedback from SPAD

Although the Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat specifies for excursion buses to be green and white in

195 Road Traffic (Public Service Vehicles) Rules, https://sso.agc.gov.sg/SL/RTA1961-R14?DocDate=20180621 196 The Finder, A Beginner’s Guide To The Types Of Car Plate Numbers In Singapore And What They Mean, http://www.thefinder.com.sg/healthy-living/ask-the-experts/beginners-guide-types-car-plate-numbers-singapore-and-what/ 197 One Motoring, Vehicle Licence Plate, https://www.onemotoring.com.sg/content/onemotoring/en/lta_information_guidelines/buy_a_new_vehicle/vehicle_licence_plate. html 198 SG Car Mart, Types of Car Number Plates in Singapore, https://www.sgcarmart.com/news/writeup.php?AID=284

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colour, SPAD highlighted that the guiding policy on this matter was derived on the regulations under JPJ, being the Motor Vehicles (Construction and Use) Rules 1959 issued under the Road Transport Act 1987 [Act 333].

The requirement for the excursion buses to be green and white in colour is also stated under Section 15 of the Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000, a regulation which was previously under the purview of MOTAC, as discussed above.

In relation to the colour, SPAD commented that the colour requirement was imposed for easy monitoring however, agreed that there was no rationale for the colours chosen. SPAD also shared that internally, it had taken a lenient approach to enforcement whereby no action would be taken if the top part of the excursion bus was colourful, so long as the bottom part was painted green. SPAD also commented that with the advent of technology, it was generally open to suggestions to discuss on different methods of enforcement moving forward.

Similar with the tour guide issue, SPAD agreed with the recommendation to review the regulations subject to streamlining the approach with JPJ as among others the guiding policy on this matter was derived on the regulations under JPJ.

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Issue No. 12: Prescriptive marking requirement for excursion buses

In addition to the prescriptive colour requirement, the tourism industry has also raised the issue that the requirement to mark the term ‘Bas Persiaran’ on the excursion buses is too prescriptive.

Regulation

According to Paragraph 3, Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, the term ‘Bas Persiaran’ must be marked on the vehicle. The requirement stated in the said regulation is shown below.

DASAR KHUSUS BAS PERSIARAN

3. Kenderaan dan Tanda Pengenalan

This is reiterated in further detail under Section 16 of the Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000.

Section 16 – Marking of excursion bus

Section 16 of the Tourism Vehicles (Licensing and Control of Tourism Vehicles) Regulations 2000 is reproduced below, for ease of reference:

Section 16. Marking of excursion bus (1) The markings of an excursion bus shall be as follows: (a) thirty centimetres from the bottom of the window across the outer left and right and thirty centimetres from the rear side of the bus, the words "BAS PERSIARAN" shall be marked in bold and italics black Arial font with each letter of the words being 205 millimetres in height and 40 millimetres in width.

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Not only that, the Excursion Bus (Colour and Markings) Rules 1998 under the Commercial Vehicles Licensing Board Act 1987 [Act 334] is also applicable whereby it states as follows:

Section 3 – Letter of markings

Section 3. Lettering of markings

(1) An excursion bus shall be marked as follows:

(a) thirty centimetres from the bottom of the window across the outer left and right and thirty centimetres from the rear side of the bus, the words "Bas Persiaran" in black Arial font in bold and italics of which each letter of the words is of 205 milimetres in height and 40 milimetres in width;

Furthermore, in PUSPAKOM’s Bus Inspection Guidelines, the requirement is stated below:199

(Source: PUSPAKOM, Bus Inspection Guidelines, http://www.puspakom.com.my/wp-content/uploads/2018/04/Bas-050218- Eng.pdf )

199 PUSPAKOM, Bus Inspection Guidelines, http://www.puspakom.com.my/wp-content/uploads/2018/04/Bas-050218-Eng.pdf

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Analysis

The industry contends that the requirement to mark the term ‘Bas Persiaran’ on the excursion buses are too prescriptive. Although the intention of the requirement is for excursion buses to be easily identifiable to enable easy monitoring and enforcement by relevant agencies, the requirement to mark the term ‘Bas Persiaran’ is too prescriptive as it provides the font and size. The font and size is generally too big and makes it unattractive to the tourists. Besides that, it also hinders the excursion bus operators to earn extra income by providing bus advertising.

Option No. 1: Continue as is

To maintain the existing regulations pertaining to the requirement to mark the term ‘Bas Persiaran’ on the bus in conformity with the prescribed font and size. However, the industry may argue that the wording is too big and it will limit the space for bus advertising. As mentioned earlier in Singapore, there is no requirement to put the word ‘excursion bus’ in which the regulation is also silent on the design of the bus.200

Option No. 2: Review and update the current regulations

The term ‘Bas Persiaran’ should not be removed completely from the bus. However, the font and size of the term ‘Bas Persiaran’ should be varied. As an option, instead of putting it at the rear side of the bus, it could be placed next to the address of the company instead. If that is not sufficient to enable monitoring, as elaborated above, the license plate should be grouped according to vehicle type and use (i.e. using different colours/alphabets/numbers).

Recommendation

This report recommends Option No. 2: Review and update the current regulations in order to mark the term ‘Bas Persiaran’ next to the address of the company and make the excursion buses more appealing to tourists. The term ‘Bas

200 One Motoring, Bus, https://www.onemotoring.com.sg/content/onemotoring/home/buying/vehicle-types-and- registrations/commercial-vehicle/buses.html

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Persiaran’ should not be removed completely to enable easy monitoring by the relevant agencies and allow them to differentiate it from other types of buses.

Feedback from SPAD

On this issue, SPAD commented that the requirement to have the word ‘Bas Persiaran’ on the bus should not be removed as it is needed to enable easy monitoring to differentiate between the different types of buses.

Notwithstanding the foregoing and similar to the unappealing colour issue, SPAD agreed that with the advent of technology, it was generally open to suggestions to discuss on different methods of enforcement moving forward and to streamline the approach with JPJ as the guiding policy on this matter was derived on the regulations under JPJ.

Feedback from MOTAC

On this issue, MOTAC also commented that the word ‘Bas Persiaran’ on the bus should be maintained to enable easy monitoring.

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Issue No. 12: Unreasonable age limit imposed on excursion buses

The bus operators in Malaysia have argued that the age limit imposed on excursion buses is too short as buses are generally built to last more than twelve (12) years.

Regulation

In the transport industry, Paragraph 3 of the Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat imposes an age limit of twelve (12) years for excursion buses in Peninsular Malaysia from the date it is registered. The requirement stated in the regulation is shown below:

DASAR KHUSUS BAS PERSIARAN

3. Kenderaan dan Tanda Pengenalan

Analysis

In accordance to the regulation, the lifespan of excursions buses is only limited to twelve (12) years. The excursions buses that are above the age of twelve (12) years can no longer be used in the business and have to be changed. As the average price of one (1) bus is RM500,000, the return of investment may be affected whereby the modal cost may not be returned if they can no longer use the bus after twelve (12) years. Our preliminary research has shown that the average age limit imposed on buses in other countries typically range from twenty (20) to twenty-five (25) years.

In Sabah and Sarawak, based on the Garis Panduan Permohonan Baru Lesen Bas Persiaran Bagi Negeri Sabah, Sarawak dan Wilayah Persekutuan Labuan by MOTAC, the age of the vehicle to be licensed must not be more than thirteen (13) years from the date it is manufactured overseas/date it is registered in Malaysia. 201

201 MOTAC, http://www.motac.gov.my/perkhidmatan/permohonan-lesen/bas-persiaran-kereta-sewa/category/21-garis-panduan

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Option No. 1: Continue as is

To maintain status quo. Age limit is imposed as old vehicles tend to have a higher risk of component failure as well as structural integrity which would, directly and indirectly, affect road safety. Old vehicles are more likely to break down and consume more fuel and oil. As such, it will increase higher maintenance and operation costs. A New South Wales audit office report released in 2002 suggests that there is a direct correlation between vehicle age and volume of repair works.202 Older vehicles tend to require higher repair volume and this means that the operator will incur bigger maintenance cost. Not only that, breakdowns further pose safety issues as well as cause traffic jams.203

However, they industry may consequently continue to have objections as it is difficult for them for them to get their return of investment within twelve (12) years as the price of a bus in Malaysia is very expensive. As such, the industry tends to use ‘illegal’ buses that are above the prescribed age limit.

Option No. 2: To review the existing regulations

Age limits are imposed on vehicles to ensure vehicles used to provide services have higher standards of comfort and safety, and decrease the levels of pollution emitted by aging vehicles.204 It ensures the safety of the driver and passengers, as well as other road users.

Feedback from the industry suggests that the age limit of excursion buses should be increased from twelve (12) to fifteen (15) years, with the choice to apply for a second term of three (3) years, subject to the approval from JPJ. Furthermore, excursion buses can be refurbished and reconditioned to extend their life and subsequently, meet safety checks and standards by JPJ.

202 MIROS, Heavy Commercial Passenger Vehicle Service Life in Malaysia, https://www.miros.gov.my/1/dl.php?filename=MRev_Heavy%20Comm.%20Passenger%20Vehicle%20Service%20Life%20in% 20Msia_Final27Jan2012.pdf 203 NST, 'Expiry date policy' proposal for vehicles in Malaysia needs careful studying https://www.nst.com.my/news/nation/2017/10/296759/expiry-date-policy-proposal-vehicles-malaysia-needs-careful-studying 204 Queensland Government: Department of Transport and Main Roads, Should a maximum age for public passenger vehicles be removed

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Based on MIROS’ Review Report titled Heavy Commercial Passenger Vehicle Service Life in Malaysia published in 2012, the advancement in technology has increased the corrosion resistance of material and managed to extend the service life limits of heavy commercial passenger vehicles, particularly buses. In some cases, with proper design and manufacturing standards, a vehicles structure lifespan is expected to last fifteen (15) years.205

However, it is clear that the twelve (12) years age limit imposed in Malaysia is low, as opposed to the age limit set in other countries. In Singapore, the age limit for excursion bus is twenty (20) years.206 In Australia, particularly Queensland, the maximum age of a heavy bus is between fifteen (15) to twenty-five (25) years. However, as an alternative to replacement of an aging heavy bus after twenty-five (25) years, operators are given the option for service life extension of their heavy vehicles either through partial or full refurbishment.207

Recommendation

This report recommends Option No. 2: To review the existing regulations. Increasing the minimum age limit will encourage the tourism industry to invest in vehicles of better quality, thus, providing tourists with better comfort and safety. We understand that older vehicles tend to have a higher risk of component failure and structure integrity, which would affect road safety. However, it is clear from the benchmarking data that our current age limit of twelve (12) years is below those set by developed countries, where a preliminary review of several jurisdictions indicate that the age limit of buses are typically in excess of twenty (20) years.208

This report thus concurs with the proposed solution by the industry to raise the minimum age limit subject to an in-depth study including formulating scientific tools, such as statistical equation and vehicle inspection procedure to determine vehicle

205 MIROS, Heavy Commercial Passenger Vehicle Service Life in Malaysia, https://www.miros.gov.my/1/dl.php?filename=MRev_Heavy%20Comm.%20Passenger%20Vehicle%20Service%20Life%20in% 20Msia_Final27Jan2012.pdf 206 Singapore’s Road Traffic (Public Service Vehicles) Rules provide that no license shall be renewed in respect of an excursion bus which has been used for more than 20 years unless permitted by the Registrar. 207 MIROS, Heavy Commercial Passenger Vehicle Service Life in Malaysia, https://www.miros.gov.my/1/dl.php?filename=MRev_Heavy%20Comm.%20Passenger%20Vehicle%20Service%20Life%20in% 20Msia_Final27Jan2012.pdf 208 Singapore’s Road Traffic (Public Service Vehicles) Rules provide that no license shall be renewed in respect of an excursion bus which has been used for more than 20 years unless permitted by the Registrar.

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expiry conditions, to be undertaken by the Ministry of Transport209 to identify the minimum age limit suitable in a Malaysian context.

Feedback from SPAD

Based on Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, the age limit imposed on excursion buses is twelve (12) years from the date it is registered. However, it was also highlighted that MOTAC allows the age limit of excursion buses up to thirteen (13) years. As a result, SPAD informed that it has similarly followed MOTAC and allowed the age limit for excursion buses up to thirteen (13) years of age.

SPAD also commented that although research shows that other countries have distinctly higher age limits for excursion buses, a reason for this could be that such countries only allow for brand new buses to be used as excursion buses. In Malaysia, SPAD informed the meeting that operators are allowed to use reconditioned buses, which at times only meet the minimum standards. In addition, SPAD commented that the benchmark should also consider other factors including among others the brand of buses used overseas in contrast to Malaysia and the Malaysian bus operators lax approach to maintenance.

On this note, SPAD shared that typically the operators in Malaysia would only take their buses to the workshop for repair purpose, when the buses break down or become faulty. As a matter of good practice, operators do not normally send their buses for regular maintenance and/or refurbishment. SPAD highlighted that the cause of the fatal accident involving an express bus which plunged into a deep ravine at KM137.3 of the North-South Expressway (northbound), near Pagoh in 2016 was a testament to this issue as it showed that the reason for the crash is because of poor maintenance. As such, the age limit imposed, although lower compared to other countries, is to encourage the industry in Malaysia to use newer buses for the carriage of passengers.

In relation to increasing the age limit, SPAD commented that they were not opposed to such suggestion, subject to an in-depth study on the minimum age limit suitable in

209 NST, 'Expiry date policy' proposal for vehicles in Malaysia needs careful studying, https://www.nst.com.my/news/nation/2017/10/296759/expiry-date-policy-proposal-vehicles-malaysia-needs-careful-studying

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a Malaysian context to be conducted by the technical agencies including among others MIROS, JKJR, and JPJ.

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Issue No. 13: Burdensome requirement to get approval from SPAD to register excursion buses that are above the age of three (3) years

The industry raised an issue pertaining to the burdensome requirement to get another approval from SPAD to register excursions buses that are above the age of three (3) years old. This is because in the event the buses are above three (3) years old, the industry has to get a prior approval to use such buses from SPAD, in addition to the application for excursion buses permit/license.

Regulation

As explained in the issue above (Issue no. 12), the age limit of an excursion buses is twelve (12) years from the date it is registered for excursion buses in Peninsular Malaysia. Although the age limit of the excursions buses is twelve (12) years, in order to obtain an excursion bus permit/license from SPAD, Paragraph 3 of the Dasar Khusus Bas Persiaran, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, shown below, states that the age of the bus must be less than three (3) years from the date it is registered. The requirement stated in the regulation is shown below:

DASAR KHUSUS BAS PERSIARAN

3. Kenderaan dan Tanda Pengenalan

(Source: Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat)

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Analysis

Hence, based on the regulation above, the industry can only apply for excursion bus license if their buses are less than three (3) years old. The industry claims that the requirement is ridiculous considering the fact that the age limit of excursion buses imposed on the said regulation is twelve (12) years. However, if the age of the bus is above three (3) years, the industry has to make an application to SPAD to ‘melesenkan kenderaan melebihi had usia’ prior to applying for excursion bus license/permit to allow such buses be used as excursion buses. The information on such application is not available online. The industry has to pay roughly around RM500 to obtain such approval, and they will also have to wait around one (1) month for SPAD to give such approval. Once they have received the approval, they will have to bring the buses to PUSPAKOM for inspection and only then they can apply for excursion buses permit/license at SPAD.

Option No. 1: Continue as is

To maintain status quo. However, it will only burden the industry to get SPAD’s permission prior to applying for the excursion bus permit/license as they have to fork extra money to pay for the applicable fees and wait for a long time. The requirement is new as previously they did not have to get approval from any agencies to use buses that are above the age of three (3) years old as excursions buses. As such, there was no requirement to pay any approval fee and wait for a long time before they could use the buses that are above the age of three (3) years as excursion buses.

Option No. 2: To apply for approval from SPAD to use buses above the age of three (3) years old as excursion buses concurrently with the excursion bus license/permit

The application to use buses above the age of three (3) years old as excursion buses should be made concurrently with the application to apply for excursion bus license/permit. By doing so, it will certainly save the operators’ time as they do not have to go to SPAD twice in order to obtain the approval before the apply for the

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excursion bus license/permit. It will also save the operators’ cost of doing business as they do not have to pay for the approval fees.

Option No. 3: To remove the current regulations

Requirement to get SPAD’s approval should be remove as it is burdensome to get the approval as it will require the operator to pay a certain fee and wait for a long time to get the approval from SPAD. Furthermore, the same regulation states that the age limit of excursion buses is twelve (12) years. Hence, the vehicles should be allowed to be registered without having the operator to apply for approval from SPAD, so long as the vehicle has passed PUSPAKOM’s inspection.

Recommendation

This study recommends Option No. 2: To apply for approval from SPAD to use buses above the age of three (3) years old as excursion buses concurrently with the excursion bus license/permit to reduce the burden faced by industry. With the current regulation, the industry has to go to SPAD twice and also fork out a sum of money to get approval and these will add to their cost of doing business.

Feedback from SPAD

SPAD confirmed to the meeting the requirement for the industry to obtain prior approval from SPAD in order to register excursion buses that are above the age of three (3) years, in addition to the subsequent separate approval for an excursion bus license.

Currently, SPAD will allow buses above three (3) years to be registered as excursion buses so long as the buses are below twelve (12) years of age. However, the usage age limit will still subject to the “usia penggunaan” which is thirteen (13) years from the year of make (for CBU vehicles) or year of registration (for CKD vehicles). As an example, if they register and license an eleven (11) year old bus, they can only use that bus for two (2) years. Once the approval is given, the operators would then need to conduct a PUSPAKOM inspection before applying for an excursion bus

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license.

Similar to Issue 12, SPAD commented that they were not opposed to the recommendation of the RURB study in order to make both applications concurrently, subject to an in-depth study on the feasibility of the recommendation to be conducted by the technical agencies including among others the MIROS, JKJR, and JPJ.

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Issue No. 14: Confusion with the term ‘Bas Persiaran’ when referring to vans

The industry raised an issue that it is misleading for tourists when the term ‘Bas Persiaran’ similarly refers to vans.

Regulation

The definition of the term ‘Bas Persiaran’ and ‘bus’ based on the Land Public Transport Act 2010 [Act 715] are reproduced below, for ease of reference.

Second Schedule, Land Public Transport Act 2010 [Act 715] – Classes of Tourism Vehicles

1. Interpretation

In this Schedule-

"excursion bus" means a bus used exclusively for the conveyance of tourists and in consideration of payment which has no fare stages;

First Schedule, Land Public Transport Act 2010 [Act 715] – Classes of Tourism Vehicles

1. Interpretation

In this Schedule-

"bus" means a motor vehicle having a seating capacity of not less than eight persons (including the driver);

Not only that, the definition of bus under the Commercial Vehicles Licensing Board Act 1987 [Act 334] is also reproduced below, for ease of reference.

Section 2, Commercial Vehicles Licensing Board Act 1987 [Act 334] - Interpretation

2. Interpretation

“bus” means a public service vehicle having a seating capacity of not less than eight persons (including the driver);

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It should be noted that the Road Transport Act 1987 [Act 333] also adopts the same definition of bus under the Commercial Vehicles Licensing Board Act 1987 [Act 334].

Analysis

As seen above, the regulation describes a ‘Bas Persiaran’ as a vehicle with a seating capacity of not less than eight (8) persons, clearly unintentionally categorizing larger commercial vehicles i.e. vans in the bus category and not having a separate category for vans on its own.

As a result, when an excursion van is requested by a tourist, it creates confusion when they are subsequently informed that a ‘Bas Persiaran’ will be the mode of transport. In such cases, it also gives the wrong impression that a bus will be transporting such tourists (although the groups are small) and at times, it is difficult to explain the rationale behind the terminology especially to tourists with limited command of English.

Option No. 1: Continue as is

Not doing anything may continue to result in confusion regarding the type of vehicles required by tourists as the perception in mentioning ‘Bas Persiaran’ would naturally suggest that the mode of transport is a bus.

Option No. 2: Differentiate between vans and excursion buses

Another alternative is to revise the definition of ‘Bas Persiaran’ in order to avoid the confusion regarding the type of vehicles required by tourists. For one, ‘Bas Persiaran’ can be limited to buses only where a separate definition for vans in the form of ‘Van Persiaran’ can be introduced.

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Recommendation

This study recommends Option No. 2: Differentiate between vans and excursions buses because a one size fits all definition do not work to define a vehicle that can carry more than eight (8) persons. It will only cause confusion to the tourists that a bus will be transporting such tourists, when such definition includes vans.

Feedback from SPAD

SPAD remarked that the reason for the terminology of ‘Bas Persiaran’ is referring to the class of license as opposed to the type of vehicle being licensed. SPAD shared that at this juncture, there were no plans to amend the regulations to make the distinction between buses and vans. However, SPAD also commented that they were willing to discuss and explore further should there be a need to amend the regulations on this matter.

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Hire and Drive

Issue No. 15: Unreasonable age limit imposed on hire and drive cars

The industry contends that the prescribed maximum age limit on hire and drive cars imposed by SPAD is unreasonable. Currently, SPAD only allows vehicles that are less than three (3) years old to be registered as hire and drive cars. As such, vehicles that are registered in 2015 and below are not allowed to be used as hire and drive cars. Hence, the industry contends that the requirement is unreasonable because they have to purchase newer cars which financially restrict them from undertaking such business.

Regulation

Paragraph 3 of the Dasar Khusus Kereta Sewa/Pandu Pelancongan, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat states that the type of vehicles and age limit is based on the conditions imposed by MOTAC under the Tourism Industry Act 1992 [Act 482], where the age limit of a hire and drive car is subject to terms given by SPAD. As such, the Act in itself is silent on the age limit which is to be determined at SPAD’s discretion. For ease of reference, the applicable provision under Dasar Khusus Kereta Sewa/Pandu Pelancongan, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, is reproduced below:

DASAR KHUSUS KERETA SEWA / PANDU PELANCONGAN

1) Dasar Semasa ➢ Dibuka kepada Syarikat Sdn Bhd sahaja. ➢ Pemohon mesti mempunyai lesen perniagaan pelancongan dalam negeri yang diluluskan oleh Pesuruhjaya Pelancongan di bawah Akta Industri Pelancongan 1992. 2) Kawasan Operasi ➢ Seluruh Semenanjung Malaysia 3) Kenderaan dan Tanda Pengenalan ➢ Jenis kenderaan, had usia kenderaan dan tanda pengenalan adalah tertakluk kepada syarat-syarat yang ditetapkan oleh Pesuruhanjaya Pelancongan di bawah Akta Industri Pelancongan 1992.

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(Source: Dasar Khusus Kereta Sewa/Pandu Pelancongan Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat)

Analysis

As SPAD is empowered to determine the age limit, the industry highlighted that typically SPAD will impose under its licensing requirement that the vehicle must be less than three (3) years old from the date it is registered. An example of the license condition imposed by SPAD is shown below:

The tour operators providing hire and drive services complained that due to the high costs of brand-new cars, tour operators in Malaysia would typically seek to acquire second-hand cars instead for hire and drive. However, this requirement has significantly decreased the ability of tour operators to utilize second-hand cars as we were also informed that most cars sold in the market would be older than three (3) years from the date it is registered/manufactured.

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Option No. 1: Continue as is

To maintain status quo may have the effect of barring owners of ‘older’ cars from registering for a hire and drive license. However, from a customers’ perspective, the requirement may be a preferred option as it ensures newer and potentially safer cars to be used as hire and drive cars. Using newer cars will generally reduce the risk of major breakdowns and also provide more modern and comfortable cars to cater to tourists.

Option No. 2: Increase the age limit of hire and drive cars eligible to be licensed by SPAD

In order to ease the burden faced by the industry, tour operators have suggested that the age limit for hire and drive cars eligible to be licensed by SPAD should be increased to five (5) years, with the condition that the vehicles are subject to inspection by PUSPAKOM. By increasing the age limit, it will assist the operators in purchasing second hand cars as it is easier to find second hand cars that are below the age of five (5) years old in the market.

The preliminary research discussed above has also shown that the average age limit imposed on hire and drive cars in other countries is ten (10) years. In the United Kingdom, particularly London, the maximum age limit for private hire vehicles are ten (10) years old from the date of first registration.210 In Australia, maximum vehicle age for forward-control and off-road passenger vehicles used to provide public passenger services (other than taxi or limousine service) is ten (10) years.

Option No. 3: Remove the age limit of hire and drive cars eligible to be licensed by SPAD

The removal of the requirement will allow tour operators to have flexibility in making business decisions regarding the choice of vehicles to be used as hire and drive cars. Operators will be free to use cars of any age as long as the cars are inspected periodically and deemed roadworthy by PUSPAKOM.

210 TFL, Vehicle License Inspection Manual, http://content.tfl.gov.uk/vehicle-license-inspection-manual.pdf

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However, there is the argument that without the age limitation, it may create a floodgate for operators with ‘older’ cars, who were previously unable to do so with the three (3) year restriction, to provide hire and drive services. Therefore, from the customer’s perspective, it may not be desirable if no age limit is imposed. As explained above, age limit is imposed as old vehicles tend to have a higher risk of component failure as well as structural integrity which would, directly and indirectly, affect road safety.

Recommendation

This report recommends Option No. 2: to increase the age limit of hire and drive cars to obtain license from SPAD, subject to inspection by PUSPAKOM. It should be in line with the requirement imposed on e-hailing or taxi services whereby vehicles which are more than five (5) years old will not be allowed to be registered for e-hailing or taxi services.211 Furthermore, we were informed by the tourism industry that typically the average car warranties covered by manufacturers last up to five (5) years. As such, the age limit should be increased as long as the hire and drive car complies with the standards to ensure the vehicle is safe for use.

Feedback from SPAD

SPAD confirmed to the meeting that if the hire and drive cars are above three (3) years old, the operator needs to obtain prior approval from SPAD to register the vehicle as a hire and drive car. As an example, SPAD explained that the car-sharing platform, SOCAR is licensed under a hire and drive car license, in which as a result of this requirement users get to enjoy newer cars with the latest technology including among others push start capability, built in GPS, etc.

As for now, SPAD remarked that the requirement will be maintained but in the future may replicate the same requirement under the e-hailing service/taxi (to increase the age to license to five (5) years), subject to further discussion with the industry.

211 The Star, No-go for vehicles over five years old, says SPAD, https://www.thestar.com.my/news/nation/2017/08/02/nogo-for- vehicles-over-five-years-old-says-spad/#cAKP7A5Bzm7djv3j.99

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Limousine

Issue No. 16: Limitations on tour companies obtaining limousine permits

In relation to limousines, the tourism industry raised the issue on the limitation to obtain limousine permits from SPAD whereby the limousine operations must be based at and contracted with hotels that are four (4) stars and above.

Regulation

According to Dasar Khusus Teksi Mewah/Limousine, Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, in order for tour operators to apply for a permit to carry out limousine operations, they are only allowed to be based at and contracted with hotels that are four (4) stars and above. The requirement is reproduced below, for easy reference.

DASAR KHUSUS TEKSI MEWAH/LIMOSINE

2) Kawasan Operasi

➢ Berpangkalan di hotel-hotel bertaraf 4 bintang dan ke atas (Perkhidmatan Biasa) ➢ Berpangkalan di pejabat operasi atau depoh (perkhidmatan super luxury)

(Source: Dasar Khusus Teksi Mewah/Limosine)

Analysis

This requirement causes several issues faced by tour operators such as:

• rental of parking space: the operators themselves are required to pay rental of parking space to the hotels as they are only allowed to be ‘based’ there; • preference of tour operators: tourists are only allowed to use the limousines that are based at the hotels they are staying in. As such, if they wish to stay at a different hotel, they would subsequently need to hire limousines which are provided under the service of a different tour operator.212 • limited opportunities to provide limousine services: many of the tour operators are actually keen to provide limousine services but are unable to do

212 The Star, Complexity of Malaysia’s Taxi Service, https://www.thestar.com.my/metro/views/2015/09/18/complexity-of- malaysias-taxi-service-spad-is-working-hard-to-untangle-and-streamline-the-nations-reg/

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so due to the limited number of four (4) star and above hotels. We were also informed that tour operators are also interested to obtain the permit as the limousines would be granted excise duty exemption. Therefore, due to the limited number of hotels that qualify, it creates a barrier to entry for operators keen to undertake this business.

Option No. 1: Continue as is

If we continue with the current regulation, it may result in the decline of the limousine industry as it is common these days for hotel operators to suggest to their customers to use e-hailing service instead of limousines. For one, it would be cheaper as hotels would not have to construct the facilities for limousine operators i.e. four (4) star, slip roads, parking, etc. and likewise, limousine operators would not have to comply with the requirements for limousine permit. There are arguments to be made that limousine services at hotels is a ‘sunset industry’.

Option No. 2: Review the restrictions imposed on the limousine permit

The restriction should be reviewed and leniency should be given to allow limousine operators to pick up and drop off anywhere in Malaysia, without having a base, or alternatively, allow the limousines to be based at and contracted by hotels with four (4) stars and below. Limousines were previously seen as a luxurious commodity for hotel guests, and not to be used for commercial purposes. However, nowadays, limousines are used for tour or event purposes that do not involve hotel services.

In Queensland, limousine license issued allows the operator to provide services in its designated area which may be the whole of Queensland, rest of Queensland or regional Queensland.213 Thus, limousine operators are allowed to pick up and drop off passengers within the designated area, without involving hotel services.

213 Connecting Queensland, Information Bulletin: Limousine Service PT 08/05.13

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Option No. 3: Allow limousines to be based at and contracted by hotels with four (4) stars and below

As there are not limited four (4) stars and above hotels in Malaysia, the restriction should be reviewed by allowing the limousines to be based at and contracted by hotels with four (4) stars and below. As such, it will be give more choice to the operators to choose the hotels that could accommodate their vehicles. However, there might not be high demand for limousines at such hotels because the tourists that normally stay in such hotels would prefer to use affordable vehicles, instead of limousines, which is considered as a luxurious vehicle and would incur most cost to the tourists.

Recommendation

This report recommends Option No. 1: Continue as is because with the Government move in regulating e-hailing services, it is easier to provide regulated limousine services under the e-hailing platform which has the option of luxury vehicles.

Feedback from SPAD

SPAD highlighted that this requirement for the limousine operations to be based at and contracted with hotels that are four (4) stars and above had already been removed and liberalized pursuant to a new policy issued in 2018.

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Issue No. 17: Limousine permit is restricted for 7-seater vehicles only

Another issue highlighted by the industry is the restriction against the issuance of limousine permits whereby such permits are only given for vehicles that can accommodate for up to seven (7) passengers. As such, it prevents operators from providing ‘large’ limousine services to customers.

Regulation

Section 1, Schedule 1 of the Land Public Transport Act 2010 [Act 715], and Section 2 of the Commercial Vehicles Licensing Board Act 1987 [Act 334] state that limousine taxi cab can accommodate not more than seven (7) persons only, including the driver. The provisions are reproduced below, for ease of reference.

Section 1, Schedule 1 of the Land Public Transport Act 2010 [Act 715]

1. Interpretation

“limousine taxi cab” means a motor vehicle having a seating capacity of not more than seven (7) persons (including the driver) and operating from a fixed base or in an authorized area in consideration of a single payment.

Section 2 of the Commercial Vehicles Licensing Board Act 1987 [Act 334]

2. Interpretation

Analysis

Based on the foregoing, it is evident under the regulation that a limousine permit issued by SPAD can only be given to vehicles that can accommodate up to seven (7) passengers (including the driver). This restriction hinders the industry from providing services to customers with big families where there is market demand for large limousines.

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Examples shared from the industry were particularly of tourists from the Middle East i.e. Saudi Arabia with big families typically requesting large limousines to accommodate the families together with their luggage. However, due to the restriction in the size of a limousine, they would usually have to book two (2) or three (3) limousines instead of occupying one (1) limousine for their entire entourage. Although a potential solution is for them to opt instead for excursion buses to fit such big families, they would naturally prefer the luxury of limousines and likewise, do not wish to have a tour guide on board (as required for excursion buses).

Option No. 1: Continue as is

If no action is taken, tourists have other alternatives such as hiring excursion buses to accommodate their large families. However, it is arguable that excursion buses would not solve the luxury aspect of the limousine, which such tourists are already accustomed to in other overseas countries.

As an alternative, tourists also have the option to use luxury vehicles under the e- hailing platforms. Nonetheless, there is no certainty in terms of the luxury vehicle that would be engaged as it is determined by availability of the driver as well as the e-hailing platforms operation in prescribing what amounts to a ‘luxury’ service.

Option No. 2: Increase the capacity of passengers under a limousine license

Another option is to consider increasing the total capacity of passengers allowed in limousines, subject to market demand and type of vehicles used. This approach is quite commonplace in several countries including for example:

• In the United Kingdom, there are two (2) types of limousines being ‘small’ limousines and ‘large’ limousines. Small limousines are those with fewer than nine (9) passenger seats, whereas large limousines, are those with nine (9) or more passenger seats.214 Importantly, there are no restrictions on the total number of passengers allowed in ‘large’ limousines.

214 Vehicle & Operator Services Agency, Guidance for operators of stretch limousines, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/147836/Guidance_for_Oper ators_of_Stretch_Limousines__2_.pdf

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• Similarly in the United States, particularly Minnesota, limousine service means a service that is provided in a luxury passenger automobile that has a seating capacity of not more than fifteen (15) persons, including the driver.215 • In Canada, limousine includes vehicles that can accommodate up to six (6) to eleven (11) persons, including the driver. 216 However, it should be noted that these countries have super stretched limousines such as Cadillac and super stretch Hummer limousines which can accommodate up to eighteen (18) passengers.217

Recommendation

This report recommends Option No. 2: Increase the capacity of passengers under a limousine license subject to an in-depth study undertaken by the Ministry of Transport to identify the appropriate number of passengers for limousine suitable in a Malaysian context.

Feedback from SPAD

SPAD remarked that the definition under law provided that limousines are to seat not more than seven (7) passengers and anything with larger seating capacities would be regulated under the bus license. SPAD also highlighted various types of limousine categories such as luxury (mewah) and super luxury limousines (ultra mewah), which although had different technical specifications, still have limited seating capacity of not more than seven (7) passengers.

For the purpose of the definition of limousines, SPAD commented that there are no plans to change the seating capacity of limousines. If they were to increase the seating capacity of limousine permits, this could potentially create confusion between the categories of limousine and bus permits.

215 Subdivision 1 of the Minnesota Statute 221.184 216 Passenger Transportation Board, Rates and Rules for Limousines for Victoria, Vancouver & Surrounding Areas May 1, 2014, https://www.ptboard.bc.ca/documents/rule-limo-rates-vancouver-victoria-2014-may-1.pdf 217 BBZ Limousine & Livery Service, https://www.bbzlimo.com/

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Other vehicles

Issue No. 18: Unregulated caravan activity

With the trend for caravans on the rise, the industry has proposed to regulate such recreational vehicles by introducing a commercial license and to create more recreational vehicle facilities such as caravan parks.218

Regulation

Currently, caravans are allowed to be owned by individuals in Malaysia under a private vehicle license. However, there is no commercial license for such vehicles. With this emerging industry, there is a loss of business opportunity from the commercialization of such vehicles. In particular, the caravan industry is interested to form partnerships with tourism associations to among others rent out caravans to tourists.219 The former Minister of MITI, Datuk Seri Mustapa Mohamed, had also said that the availability of motorhomes could pave the way for more domestic tourism and promote a new lifestyle that could be a norm in the future.220

However, one of the key challenges raised by the industry is the lack of support from insurance companies since caravans could not be registered as commercial vehicles and thus, there are also no insurance products providing coverage for commercial caravan use.

Analysis

As a result, the industry proposed to introduce a new license for caravans and allow it to be registered as a commercial vehicle. Once the license is available, commercial caravans can be legalized in which the operators would also be able to engage insurance companies in order to provide commercial caravan insurance products. Currently in Malaysia, caravans parks are available in Desaru Park (which is Government owned) and KW Caravan Park (private owned) in Pontian, both located

218 The Sun Daily, Ministry urged to relook tourism regulations, http://www.thesundaily.my/news/2018/08/02/ministry-urged- relook-tourism-regulations 219 VulcanPost, We Test Drove A Luxury Motorhome That Just Launched In Malaysia—It's Worth RM609K, https://vulcanpost.com/609192/malaysia-luxe-motorhome-benimar-mileo-313-review/ 220 NST, Living on the go, https://www.nst.com.my/property/2017/05/236357/living-go

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in the State of Johor. The industry has also been suggesting to various other State governments for the creation of caravan park facilities.221

Option No. 1: Continue as is

As there are only a few caravan parks in Malaysia at this point in time, maintaining status quo may have little or no implication on society. Furthermore, unlike in New Zealand, and Australia, it is arguable that the caravan industry is not suitable in Malaysia, considering the fact that Malaysia has hot tropical weather coupled with safety and security issues in isolated areas.222

However and to be proactive, the MOT should conduct an in-depth study on the viability of the caravan industry, in particular with a case study on the caravan parks available in Johor, in order to gauge the general receptiveness of commercial caravans by the public. The Government should only need to introduce a licensing regime for commercial caravan use when there is a societal demand to regulate it.

Option No. 2: To introduce license on caravan and create more caravan parks

The Government should introduce license on caravans in order to enable the industry to rent such vehicles to tourists, and create more caravan parks. It should be noted that caravans can bring in an overall positive impact to the tourism industry. In Australia, the revenue generated by the caravan and camping trade industries (not including caravan parks’ profits or money spent by visitors) is approximately $4.5 billion each year. The figures demonstrate the extensive supply chain within the caravan trade industry and also the value to the Australian economy as the sector made up more than 21,000 full time jobs across 4,300 trade businesses in Australia. In Thailand, tourists can explore Thailand’s countryside using caravans.223 Currently, there are approximately 20 campgrounds across the country. Most of these are owned and managed by private resorts, and some are operated by the Thailand government national parks.

221 Paul Tan, Benimar Mileo motorhomes in Malaysia, from RM609k – 13 caravan models available, sleeps up to six, https://paultan.org/2017/04/20/benimar-mileo-motorhomes-arrive-in-malaysia-rm609k/ 222 FMT, No caravans in Malaysia, please, https://www.freemalaysiatoday.com/category/opinion/2018/03/26/no-caravans-in- malaysia-please/ 223 Tieland to Thailand, Exploring Thailand’s Countryside with Campervan Thai, https://www.tielandtothailand.com/exploring- thailands-countryside-with-campervan-thai/

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Furthermore, MOTAC can also work together with the caravan industry to provide tour caravan service. In Myanmar, caravan tours were introduced in 2000. Caravan tours are operated by Myanmar Travels and Tours under the Ministry of Hotels and Tourism.224 The tours can normally stay from five (5) to fifteen (15) days in Myanmar depending on their destinations.225

Recommendation

This study recommends Option No. 1: Continue as is because there is limited information available in determining whether this is currently an emerging industry or not. For one, it is evident that there are not many caravan and caravan facilities in Malaysia. However, the Government should conduct a detailed study to determine the feasibility of such business activity (i.e. commercial caravans). If there is a high demand for caravans, the Government should certainly introduce a license for caravans and create more caravan parks to cater for society’s needs.

Feedback from SPAD

SPAD informed the meeting that at this juncture, it had yet to receive any application to regulate such activity in Malaysia. In addition, SPAD agreed with the proposed recommendation to ‘continue as is’ because there is limited information available in determining whether this is currently an emerging industry or not.

SPAD also shared that a possible solution to regulate caravans is to be registered as a commercial vehicle under the hire and drive license. However, SPAD qualified that a more detailed study would need to be conducted to determine among others the feasibility of using the hire and drive license and licensing the commercial use of caravans in general.

224 Myanmar Times, Border crossings opened to caravan tours, https://www.mmtimes.com/lifestyle/travel/20680-border- crossings-opened-to-caravan-tours.html 225 Myanmar Times, Border crossings opened to caravan tours, https://www.mmtimes.com/lifestyle/travel/20680-border- crossings-opened-to-caravan-tours.html

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Issue No. 19: Burdensome to acquire vehicle license/permit (for hotels)

Hoteliers have raised the concern that it is burdensome to obtain the various licenses/permits required to operate a public service vehicle as hotels are providing complimentary transportation services for their employees/customers as opposed to providing such services as a business.

Regulation

Pursuant to the First Schedule, Paragraph 2 of the Land Public Transport Act 2010 [Act 715], ‘public service vehicles’ include the following classes of vehicles:

• stage buses; • charter buses; • express buses; • mini buses; • employees buses; • feeder buses; • school buses; • airport buses; • hire cars; • hire and drive cars; • taxi cabs; • airport taxi cabs; and • e-hailing vehicle.

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Section 16 of the Land Public Transport Act 2010 [Act 715] states that no person shall operate or provide a public service vehicle service using a class of public service vehicles unless he holds an operator's license issued.

Section 16 of the Land Public Transport Act 2010 Act [715] is reproduced below, for ease of reference:

Section 16 – Requirement for operator’s license

16. Requirement for operator’s license

(1) Subject to sections 194 and 195, no person shall operate or provide a public service vehicle service using a class of public service vehicles unless he holds an operator's license issued under this Chapter. (2) For the purposes of this Chapter, a person is deemed to be operating or providing a public service vehicle service if he- (a) uses or drives a public service vehicle of a class of public service vehicles himself; or (b) employs one or more persons to use or drive a public service vehicle of a class of public service vehicles, to operate or provide a public service vehicle service, and-

(a) he owns the said public service vehicle; or (b) he is responsible, under any form of arrangement with the owner or lessor of the said public service vehicle to manage, maintain or operate such public service vehicle. (3) A person intending to operate or provide a public service vehicle service using more than one class of public service vehicles shall apply for a separate operator's license under this section to operate or provide a public service vehicle service in respect of each such class of public service vehicle.

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The types of licenses/permits are listed in Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat. Currently, there are fourteen (14) licenses/permits issued by SPAD. The types of licenses are listed below:

Category of License Class of License Types of Service

Lorry (transport goods 2 Carrier (Pembawa) A • Contenna (KA) types of license) • Other services beside contenna Carrier (Pembawa) B -

Bus (public transport) Bas Berhenti-henti -

Bas Catar -

Bas Ekspres • Budget Service • Executive Service Bas Mini • Bas Mini • Bas Mini Desa Bas Pekerja -

Bas Pengantara -

Bas Sekolah -

Taxi (public transport) Kereta Sewa -

Hire and Drive -

Taxi • Budget service • Executive service Airport Taxi • Budget service • Premier service • Family service Luxury Taxi / Limousine • Normal service • Super luxury service

(Source: Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat)

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Analysis

At present, applying for the various licenses/permits for the tourism industry, particularly for accommodation providers (i.e.: hotels) is an inconvenience for such providers considering it is for non-commercial use. We were told that applying for multiple permits is burdensome to them because they are not making any profit out of the service they provide but still have to fulfil the same requirements as transport service operators before obtaining such approvals.

For hotels, they typically provide free shuttle transport service to the customers that stay in their hotels to nearby tourist attractions, without charging any fee. Besides that, they also provide free transport service to their employees to and from their hostels. As such, they would be required to apply for Bas Pengantara and Bas Pekerja licenses, similar to other operators whom provide such commercial services.

As an example, to apply for a Bas Pekerja license, one has to fulfil various requirements including among others:

• the company must be fully owned by Bumiputeras; • bus painted in light blue colour; and • have a public service vehicle license.

The hoteliers contends that it will impose extra costs to them as they are required to hire a driver with vocational license in order to transport their employees. Drivers with vocational license will generally charge more as compared to drivers with normal license because they have attended classes of theory and practical training, and passed the theoretical and practical test required by JPJ.226

As a result, it can be argued that it is onerous for hoteliers to meet the same requirements as commercial operators since they are not making a profit out of the service provided.

226 JPJ, Application For Vocational License (GDL, PSV Dan Konduktor), http://www.jpj.gov.my/en/web/main-site/pemandu-en/- /knowledge_base/driver/application-for-vocational-license-gdl-psv-dan-konduktor-

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Option No. 1: Continue as is

As it is a burdensome requirement, hotels tend to provide such services illegally, without having the requisite licenses. As such, this presents a safety issue as among others the passengers are not covered by insurance and the vehicles are not regularly inspected.

Option No. 2: Introduce a new class of license for operators that are providing complimentary transport service

To introduce a new class of license that allows operators to provide complimentary transport service for non-commercial use. For the license, leniency should be given in that such license is not for commercial use and thus, compliance to existing requirements should focus on the safety aspect only. The requirements for such license should not be as stringent as a commercial license such as for example the requirement for the company to be a fully owned Bumiputera company for a bas pekerja license, would similarly be difficult to be complied by hoteliers especially with various international chains operating in Malaysia.

Recommendation

This study proposes Option No. 2: Introduce a new class of license for operators that are providing complimentary transport service as the transport service offered are for non-commercial use and thus, the requirements for such license should not be as stringent as a commercial license (i.e.: the company must be fully owned by Bumiputeras).

Feedback from SPAD

SPAD suggested two (2) solutions, firstly, for the hoteliers to engage third party (shuttle operators) to transport their guest/staff. As SPAD explained, there is already an industry providing such services and as such, the hoteliers can readily outsource to service providers that are compliant with the law.

Secondly and as a long term solution, SPAD informed the meeting that they agreed

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with the proposed recommendation to look into introducing a new class of license for operators that are providing complimentary transport services. On this, a similar initiative as can be seen in Singapore is being developed with a new license called the ‘Bas Kegunaan Sendiri’ (personal use) license, which is still in the planning stages. A detailed study to determine the feasibility of such license (i.e. how the introduction of the new license would affect other industries, etc.) as well as further deliberation with MOT is needed before the license materializes.

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Issue No. 20: Discrepancy on SPAD equity requirement from MOTAC for commercial vehicle license application

The tourism industry contends that the restriction imposed for any change in equity from Bumiputera to non-Bumiputera in travel operator companies by SPAD is unnecessary considering the fact that even MOTAC does not impose such a condition. This issue arose when a travel operator company had their application to get a commercial vehicle license from SPAD rejected on the grounds that there was a change in equity status of the company from Bumiputera to non-Bumiputera in their company.

Regulation

As explained above, under the Panduan Dasar Pelesenan Suruhanjaya Pengangkutan Awam Darat, commercial vehicles include lorry, bus, and taxi.

Although commercial vehicles are not defined in Land Public Transport Act 2010 [Act 715], Section 2 of the Commercial Vehicles Licensing Board Act 1987 defines “commercial vehicles” as public service vehicles and goods vehicles. Pursuant to First Schedule, Paragraph 2 of the Land Public Transport Act 2010, public service vehicles include the following classes of vehicles:

• stage buses; • charter buses; • express buses; • mini buses; • employees buses; • feeder buses; • school buses; • airport buses; • hire cars; • hire and drive cars;

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• taxi cabs; • airport taxi cabs; and • e-hailing vehicle.

Based on Section 16 of the Land Public Transport Act 2010 [Act 715], one has to apply for operator’s license from SPAD in order to operate public service vehicles. The provision is reproduced below, for ease of reference:

Section 16 - Requirement for operator’s license

16. Requirement for operator’s license

Section 17 of the Land Public Transport Act 2010 [Act 715] confers powers to SPAD to request for any information from the applicant and reject the application if the application does not comply with any other requirements prescribed by SPAD. The provision is reproduced below, for ease of reference:

Section 17 - Application for operator’s license

17. Application for operator’s license

(1) An application for an operator's license under this Chapter shall be made to the Commission in the form and manner as determined by the Commission and shall be accompanied by the prescribed application fee. (2) The applicant shall give to the Commission the following information in relation to the application: (a) complete information on the details of the routes which are related to the application and the proposed frequency of the services to be provided; (b) a letter of approval from the relevant local authority regarding the usage

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of stops or terminal facilities in the area of administration of the local authority where the route is located; (c) a justification report for the route; (d) the class and maximum number of public service vehicles of that class to be operated by the applicant; (e) the proposed fares or fares structure and surcharges, if any, to be imposed on passengers travelling on the public service vehicle; and (f) any other information as may be determined by the Commission. (3) The Commission may refuse to register, proceed with or hear or determine an application, and may require that the application be appropriately amended or completed and resubmitted or that a fresh application be submitted in its place if- (a) the application form is not duly completed by reason of any omission or misdescription; (b) the application form contains any error or alteration; (c) the applicant fails to provide the documents or information required under subsection (2) within the time-frame stipulated in the requirement or any extension of time granted by the Commission; or (d) the application does not comply with any other prescribed requirements.

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Under Dasar Pengeluaran Lesen Baru SPAD for buses (one of the classes of public services vehicles),227 an equity change from Bumiputera to non-Bumiputera in a company is not allowed. The restriction is reproduced below, for ease of reference:

DASAR UMUM BAS

6) Pindahmilik:

➢ Lesen individu boleh ditukarmilik kepada keluarga terdekat iaitu suami atau isteri dan anak-anak. Bagi lain-lain anggota keluarga akan diputuskan oleh Suruhanjaya berdasarkan merit. ➢ Surat Tawaran Kelulusan tidak boleh dipindahmilik. ➢ Pertukaran pemilikan syarikat (pemilikan ekuiti) daripada bertaraf Bumiputera kepada Bukan Bumiputera adalah tidak dibenarkan.

(Source: Dasar Pengeluaran Lesen Baru SPAD)

Analysis

Based on the above provisions and the copy of the sample rejection letter shown below, the travel operators company’s application to obtain a commercial vehicle license from SPAD was rejected on the ground that there was an equity change from Bumiputera to non-Bumiputera in such company.

227 SPAD, Panduan Dasar Pelesenan, https://www.spad.gov.my/sites/default/files/dasarpelesenanrev1.pdf

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It is arguably ultra vires for SPAD to impose such a restriction because travel operating companies are under the purview of MOTAC. In particular, Section 5(2) of the Tourism Industry Act 1992 [Act 482], provides that:

No person shall carry on or operate, or hold himself out as carrying on or operating (a) a tour operating business; or (b) a travel agency business, unless it is a company and holds a valid license granted under this Part.

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Tour operating business is defined under Section 2 of the Tourism Industry Act 1992 [Act 482] as: any business of (a) arranging for sale or commission any transportation, accommodation, tour services or any other incidental services for tourists within or outside Malaysia; (b) organizing or conducting for sale or commission inbound or outbound tours; (c) providing conveyances for hire to tourists; or (d) any other services incidental to any of the services enumerated above.

Therefore, as MOTAC does not provide for any restriction as to the equity change of travel operating companies, there is no reason for SPAD to impose such restriction. The relationship between MOTAC and SPAD pertaining to tourism vehicles can be seen below:

Figure 31: Relationship between MOTAC and SPAD

Ministry/Agency MOTAC SPAD

Types of Licensing licensing of travel licensing of hire and drive operating business and commercial vehicles, hire travel and drive and tourism vehicles

Regulates tour operating business or hire and drive commercial a travel agency business vehicles, hire and drive and tourism vehicles

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Option No. 1: Continue as is

If we were to continue as is, the industry may challenge the validity of the restriction on the grounds that travel operating companies are under the purview of MOTAC. As such, there is an overlap or conflict in the activities of different regulators, being MOTAC and MOT (SPAD).

Option No. 2: Remove the change in equity restriction

The restriction should be removed, particularly for travel agencies because they are under the purview of MOTAC. We noted that SPAD has taken the regulation of tourism vehicle services over from MOTAC in 2011, and it regulates all dealings concerning the licensing of tourism vehicles. However, for the application process of tourism vehicles, it still requires the Travel Operating Business and Travel (TOBTAB) License from the MOTAC as a pre-requisite requirement. However, we would need to validate with SPAD on the objective of having such restriction.

Recommendation

This study proposes Option No 2: Remove the change in restriction in order to do away with the overlap or conflict in the activities of MOTAC and SPAD. MOTAC and SPAD should work closely in order to streamline the licensing requirements where although under the law SPAD has the power to impose any licensing requirement, it has to give due consideration to firstly, whether there is any other co-regulator in the same industry (in this case, MOTAC being the primary regulator for tourism operating companies) and secondly, the objective of having such a requirement.

Feedback from MOTAC

Based on the engagement with MOTAC, it confirmed that it does not impose any restriction on non-Bumiputeras prior to issuing/renewing TOBTAB license. However, they do have foreign equity restriction. The equity restriction imposed by MOTAC can be seen below:

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Feedback from SPAD

SPAD informed the meeting that historically, the requirement was derived from the policy imposed by the Commercial Vehicle Licensing Board (“CVLB”). When SPAD took over the power of CVLB for Peninsular Malaysia in 2011, SPAD applied the same policy to encourage Bumiputera participation in the tourism industry.

SPAD also explained that in 2017, it had liberalized this policy by removing such equity restrictions for new applications of commercial vehicle licenses. However, for existing commercial vehicle license holders, the restriction would still apply in order to protect Bumiputera shareholders.

Moving forward, SPAD has agreed in principle to remove the equity requirement altogether in which a new policy that has been drafted on this matter is pending Cabinet’s approval since it deals with the sensitive matter of Bumiputera equity.

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4.3.2 Issues under Maritime Transport

Boats/yacht

Issue No. 1: Prescriptive regulation that unduly limits flexibility

The most common issue raised by the maritime industry is the restriction imposed on boats to carry not more than twelve (12) passengers pursuant to Section 9 of the Boat Rules 1953, irrespective of the size of the boat.

Regulation

According to Section 9 of the Boat Rules 1953 issued under the Merchant Shipping Ordinance 1952 [Ord. 70/1952], no licensed boat shall carry a greater number of passengers than the number allowed by its license or under the rules. The provision is reproduced below, for ease of reference:

Section 9 – Limitation of number of passengers

9. Limitation of number of passengers

(1) No licensed boat shall carry a greater number of passengers than the number allowed by its licence or under these Rules.

Currently, the boat/yacht can carry not more than twelve (12) passengers only, which is laid out in Section 10 of Boat Rules 1953. The provision is reproduced below, for ease of reference:

Section 10 – Cargo boats carrying passengers

Section 10. Cargo boats carrying passengers228

(1) Except as provided in paragraphs (2) and (3) of this rule no passenger shall be carried in a licensed cargo boat.

(2) The Port Officer may, if he considers it in the public interest so to do and in

228 Section 2 of the Boat Rules 1953

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every case with the approval of the Director of Marine, license a cargo boat to carry passengers subject to the following conditions:

(a) that not more than twelve passengers may be carried at any one time or not more than three passengers per measurement ton (whichever shall be the less);

(b) that where a cargo boat is licensed under this rule is not fully loaded with cargo, the measurement ton for the purposes of paragraph (a) shall be calculated on the gross tonnage of such boat less the weight of the cargo; and

(c) that every cargo boat licensed under this rule to carry passengers shall carry one efficient life jacket for every person the boat is licensed to carry.

Analysis

From the regulations identified, the rules have not been revised ever since it was gazetted in 1953. As a result, it restricts boat operators from expanding their business as although their boat/yacht has the capacity to carry more than twelve (12) passengers, they are legally restricted from doing so. Passengers include ‘any person carried by a boat, provided that a child of less than one year of age shall not be taken into account’. Thus, a child above the age of one (1) year constitutes a passenger as well, which would also limit the overall capacity count. As such, it is clear that the regulation has not been updated to keep pace with the capacity of yachts and boats, and this emerging industry.

Option 1: Continue as is

To maintain the status quo would only limit innovation and prevent the industry from evolving to better meet consumer demands. One of the most popular tourist attractions in Langkawi Island is the sunset cruise. Langkawi sunset cruise is typically a three (3) hour trip that sails along the Andaman Sea with the aim of catching the sunset. However, the industry contends that they are unable to legally provide such services due to the capacity restriction imposed. It should be noted that depending on the size, some yachts can accommodate up to thirty (30) passengers,

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in accordance with the manufacturers certification. However, due to the restriction imposed, they are unable to accommodate all of the tourists that are interested to subscribe to the sunset cruise package. As an example, the industry has informed us that the Malaysian Maritime Enforcement Agency (MMEA) has detained a sailboat for violating various regulations, including overloading, near Pulau Singa Besar, Langkawi for carrying twenty (22) passengers on a sunset cruise tour.229

Option 2: Review Section 9 of the Boat Rules 1953 and increase the number of passengers allowed on a boat

Passenger boats in this era are much more advance compared to the boats in 1950s. As such, the number of passengers allowed on a boat should be increased. It is clear that the rules have not been reviewed and/or amended since its inception and thus, does not commensurate with the capacity and technological advances of the industry. Therefore, there is a need to review the suitability of the capacity under the existing rules. In determining the number of passengers allowed, a suggestion is for it to depend on the maximum capacity based on the boats’ specification set by the manufacturer.

This practice can be seen in Australia, whereby the regulators look at the information on the Australian builder's plate (ABP) or the manufacturer's compliance plate, to determine the maximum number of adults a boat can legally carry.230

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229 FMT, Cruise boat caught near Langkawi for overloading passengers, https://www.freemalaysiatoday.com/category/nation/2017/09/03/cruise-boat-caught-near-langkawi-for-overloading-passengers/ 230 SA, Boat Capacity, https://www.sa.gov.au/topics/boating-and-marine/boat-and-marine-safety/boating-safely/boat-capacity

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Recommendation

This study recommends Option 2: Review the Section 9 of the Boat Rules 1953 and increase the number of passengers allowed on a boat by reviewing the existing regulatory regime on a periodic basis and making changes to meet market demands and technological advances.

Feedback from the Marine Department of Malaysia

The representatives from the Marine Department of Malaysia recognized that the regulation does not allow for boats to carry more than twelve (12) passengers. However, they are in the midst of introducing a new regulation which allows for boats with more than twelve (12) passengers to be registered. They also highlighted that the boat operators are allowed to carry more than twelve (12) passengers if they apply for a Passenger Certificate.

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Issue No. 2: Uncertainty in the application of Passenger Certificate

Boat and yacht operators have raised the issue that in order to carry more than twelve (12) passengers on a boat/yacht and not contravene the Boat Rules 1953 is by applying for a Passenger Certificate (“PC”) from the Marine Department of Malaysia. However, the issue raised by the industry is that the application process for a PC is not clear and transparent.

Regulation

A PC is a certificate required for any maritime vehicle to carry passengers for commercial purposes. However, there are no proper guidelines on how to obtain a PC. Furthermore, some of the officers at Marine Department of Malaysia are confused with the policies in obtaining PC. This creates uncertainty among the boat and yacht operators as they have difficulty in obtaining PCs to allow them to carry out their commercial operations. The industry contends that PCs have also been inconsistently given to some boat/yacht operators in which they are allowed to carry more than twelve (12) passengers on their boat/yacht.

Option 1: Continue as is

To maintain status quo but the operators have to bear with the idiosyncrasies of licensing officers that interpret the PC differently from one officer to another and also interpret unclear policies. Therefore, there is no clarity in terms of the issuance of PCs as one of stakeholders interviewed highlighted that the Marine Department of Malaysia has freezed the issuance of such license, whereas other stakeholders have informed us that such agency has issued a PC to them to enable them to carry more than twelve (12) passengers on their boats.

Option 2: Publish guidelines on how to obtain a PC

A clear guideline should be made publicly available on how to obtain a PC and likewise, the officers in the Marine Department of Malaysia should be well-versed with the process of issuing PCs to ensure consistency. Guidelines are necessary to ensure efficient and effective administration of regulation. With good administrative

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instruments, many of the idiosyncrasies relating to PCs including misinterpretation, uncertainty, etc. can be avoided.

Recommendation

This study recommends Option 2: Publish guidelines on how to obtain a PC will ensure transparency and make it clear to businesses what are their legal obligation. As the commercial yacht industry is a large contributor to the country’s tourism sector. Issuing the legal licenses to yacht operators will allow the industry to accommodate the tourists that are interested to go for the sunset cruise. It will also boost the tourism image as it can give tourists a peace of mind when travelling. Furthermore, having a license can allow for better enforcement as authorities will be able to better identify operators that are up to standard.

Feedback from the Marine Department of Malaysia

The representatives from the Marine Department of Malaysia stated that upon application for a PC, the officer in charge of such application will inspect the boat/yacht to ensure that the boat/yacht meets the requirement and/or specification listed in the PC checklist, in possession of the Marine Department of Malaysia. A copy of the PC checklist is appended herewith in Appendix 4, for ease of reference.

However, the said checklist is not made available publicly online and thus, applicants would not be privy to the requirements until an application is made with the Marine Department of Malaysia.

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4.3.3 Issues under Air Transport and Rail Transport

As discussed in Chapter 3, the value chain of tourism subsector consists of (i) travel planning, (ii) international transport, (iii) accommodation, (iv) domestic transport, and (iv) excursions.

Air Transport

For stage (i) travel planning, several travel agents in charge of arranging air transportation for passengers by purchasing the flight tickets and dealing directly with airlines operators, on behalf of passengers, have been interviewed. Based on the engagement, such travel agents commented that they do not have any regulatory burdens because the airline operators are the ones who are highly regulated under the relevant air transport regulations.

For stage (ii) international transport, (iv) domestic transport, and (iv) excursions, several private charter air transport operators that provides air transport overseas i.e. to Thailand, and various destinations around Malaysia, have been interviewed. The afore-mentioned operators also commented that there are no regulatory burdens with the current regulations pertaining to air transport, and the licensing requirements imposed by CAAM and MAVCOM.

Stage (iii) accommodation, is not applicable because no air transport services are being provided by accommodation providers in Malaysia.

Rail Transport

For stage (i) travel planning, passengers normally purchase their own tickets and deal directly with the rail operators at the respective ticketing counters.

Stage (ii) international transport is not applicable because there is no direct rail to other countries.

Stage (iii) accommodation, is also not applicable because no rail transport services are being provided by accommodation providers in Malaysia.

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As for stage (iv) domestic transport, and (v) excursions, the tourism industry and specifically, cable car operators commented that there are no regulatory burdens with the current regulations pertaining to rail transport as the industry is regulated by the Government and/or managed by Government linked companies. Keretapi Tanah Melayu Bhd (“KTMB”), is the main railway operator in Peninsular Malaysia and is owned by the Government.231 Apart from that, the Langkawi cable car system currently known as Langkawi SkyCab is operated and managed by LADA Eco- Tourism Sdn Bhd, a subsidiary under the Langkawi Development Authority (agency under Ministry of Finance).232

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231 MIT, Rail System in Malaysia, http://web.mit.edu/mtransgroup/reports/reports%20pdf%203-25- 04/Don%20_2003_%20Malaysian%20Railroad%20report%20v2.pdf 232 Panorama Langkawi, About Us, http://www.panoramalangkawi.com/corporate-info/

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4.3.4 Other Issues

Based on the engagement with the stakeholders, there are several issues which had been brought up which do not comply with the RURB core concept. As such, the issues will be listed herein. The issues highlighted by the stakeholders that do not conform to the RURB concept are as follows:

• Restriction on options of tourism vehicles (Import Duty/Tax); • Restriction on Double decker buses going to Genting Highlands; • No restrictions for foreign excursion buses (from Thailand) to enter Malaysia; • Requirement to change Bas Persiaran drivers every four (4) hours; • Business owner to be liable for offences committed by drivers; • Multiple enforcement agencies/authorities in Langkawi; and • Lack of regulations on the commercial use of jet skis.

Apart from that, for information purposes, this section will also highlight the issues raised by the industry that are not specifically related to the transport services sector and/or do not involve regulatory burdens. The issues are as follows:

• Immigration issue; • Insurance issue; • Parking issue for disabled; • Parking issue for excursion buses; and • Inconvenient for the tourism industry in Langkawi to renew TOBTAB license.

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Non-RURB Issues

Issue No. 1: Restriction on options of tourism vehicles (Import Duty/Tax)

Apart from the fact that one has to apply for an AP to import tourism vehicles, the industry contends that the current import duties/taxes imposed on tourism vehicles are too high.

Regulation

Based on the Malaysian Automotive Association’s website, the import duties/taxes imposed to import vehicles can be seen below:233

Figure 32: Malaysia: Duties & Taxes on Motor Vehicles

Import Duty Local Taxes CBU CKD CBU CKD Engine MFN ATIGA MFN ATIGA Excise Sales Capacity (cc) Duties Tax A) Passenger Cars (including station wagons, sports cars, and racing cars) <1,800 30% 0% 10% 0% 75% 10% 1,800 – 1,999 30% 0% 10% 0% 80% 10% 2,000 – 2,499 30% 0% 10% 0% 90% 10% Above 2,500 30% 0% 10% 0% 105% 10% B) Other Motor Cars <1,500 30% 0% NIL 0% 60% 10% 1,500 - 1799 30% 0% NIL 0% 65% 10% 1,800 – 1,999 30% 0% 10% 0% 75% 10% 2,000 – 2,499 30% 0% 10% 0% 90% 10% Above 2,500 30% 0% 10% 0% 105% 10% C) Commercial Vehicles All 30% 0% NIL 0% NIL 10%

(Source: MAA, Duties & Taxes on Motor Vehicles, http://www.maa.org.my/pdf/duties_taxes_on_motor_vehicles.pdf)

233 MAA, Duties & Taxes on Motor Vehicles, http://www.maa.org.my/pdf/duties_taxes_on_motor_vehicles.pdf

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Note:

(i) Passenger Vehicle industry reclassified in January 2007 and includes all passenger carrying vehicles. i.e. Passenger Cars, 4WD/SUV, Window Van and MPV models.

(ii) Commercial Vehicles also reclassified on 1 January 2007 and includes Trucks, Prime Movers, Pick-up, Panel Vans, Bus & Others.

Analysis

Although it can be argued that the import duties/taxes are high in Malaysia, it should be noted other ASEAN countries have similarly high import duties/taxes as well. For example in Thailand, the importation of cars is subject to an 80% import duty rate234, which is higher than the import tax in Malaysia of 10-30%. On top of that, importation of cars is subject to excise tax as well as interior tax (10% of the excise tax payable). For cars and vans, the ad valorem excise tax rates are between 30% and 50%.235 In Indonesia, in addition to paying Value Added Tax (‘VAT”) of 10%, imports of cars are also subject to Luxury-goods Sales Tax (“LST”), ranging from 10% to 150%, together with import duty ranging from 5% to 50%.236 A comparison of the aforementioned taxes for Malaysia, Thailand, and Indonesia can be seen in the figure below:

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234 PWC, 2015 Global Automotive Tax Guide, https://www.pwc.com/gx/en/automotive/pdf/pwc-global-automotive-tax-guide- 2015.pdf 235 PWC, 2015 Global Automotive Tax Guide, https://www.pwc.com/gx/en/automotive/pdf/pwc-global-automotive-tax-guide- 2015.pdf 236 PWC, Indonesian Pocket Tax Book 2018, https://www.pwc.com/id/en/pocket-tax-book/english/ptb-2018-eng.pdf

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Figure 33: Comparison of taxes for importation of vehicles in

Malaysia, Thailand, and Indonesia

Countries Taxes Malaysia237 Thailand238 Indonesia239

Import Duty 10-30% 80% 5-50%

Excise Tax 60-105% 30-50% -

10-150% (Luxury- Sales Tax 10% - goods Sales Tax)

10% out of Excise Inferior Tax - - Tax Payable

Value Added - 7% 10% Tax

(Source: PWC, 2015 Global Automotive Tax Guide, https://www.pwc.com/gx/en/automotive/pdf/pwc-global-au tomotive-tax-guide-2015.pdf)

Based on the above, the import duties of importing vehicles in Malaysia are considered quite low as compared to other neighbouring countries. If the vehicles that are available in Malaysia are not of high quality, the industry has a choice to purchase cheaper tourism vehicles from ASEAN. In Malaysia, as part of its commitment under the ASEAN Free Trade Agreement (“AFTA”), import duties on cars originating from within the ASEAN membership have been eliminated from 1st of January 2010. However, the high excise duties remain (ranging from 60 to 105%).

237 MAA, Duties & Taxes on Motor Vehicles, http://www.maa.org.my/pdf/duties_taxes_on_motor_vehicles.pdf 238 PWC, 2015 Global Automotive Tax Guide, https://www.pwc.com/gx/en/automotive/pdf/pwc-global-automotive-tax- guide-2015.pdf 239 PWC, 2015 Global Automotive Tax Guide, https://www.pwc.com/gx/en/automotive/pdf/pwc-global-automotive-tax- guide-2015.pdf

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It is not the best option to reduce the duties/taxes imposed on importing tourism vehicles because from Government’s perspective, as reiterated by the former Minister of MITI in which the contribution of excise duties to the economy in Malaysia is huge, and any reduction in excise duties will not be made in the near future due to the implications of such a move to the local auto industry and the welfare of its 300,000 workers.240

The Government may consider in giving tax exemption for the tourism industry to import tourism vehicles that are not available in Malaysia. Pursuant to Section 14 of the Customs Act 1967 [Act 235], the Minister may, by order, exempt, subject to such conditions as he may deem fit to impose, any class of goods or persons from the payment of the whole or any part of any customs duty or any other prescribed fee or charge which may be payable. For example in Pakistan, the Government exempts custom duty on the import of certain categories of motor vehicles by tour operators/travel agents as defined under Customs Rules and Procedures 2002-2003.241 In India, new vehicles purchased by tourism project proponents, for carrying out tourism related activities are exempted from payment of motor vehicle tax (pro rata to the life time tax applicable for the category of vehicle).242 However, by providing specific tax exemption to the tourism industry, it may be perceived as unfair to the other industries and to the general public interested to purchase such imported vehicles without paying any taxes.

For this particular issue, the Government may consider increasing the import duties rate. As consequences, it may encourage the manufacturers to consider setting up assembly facilities for such tourism vehicles in Malaysia. Furthermore, if the manufacturers open such assembly facilities in Malaysia, the industry will no longer have to apply for approved permit from MITI in order to import such vehicles that are not available in Malaysia.

240 The Malaysian Reserve, Government reduces car import taxes, https://themalaysianreserve.com/2017/03/31/government-reduces-car-import-taxes/ 241 United States Department of Commerce International Trade Administration Office of Transportation and Machinery, Compilation of Foreign Motor Vehicle Import Requirements, https://www.trade.gov/td/otm/assets/auto/autos_tradebarriers2011.pdf 242 Karnataka, Procedure for Project Approval & Claiming Subsidy & Incentives under Karnataka Tourism Policy 2015- 20, http://karnatakatourism.org/policy/Tourism_Policy.pdf

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Issue No. 2: Restriction on Double decker buses going to Genting Highlands

One of the issues raised by the bus operators is the restriction on double decker buses going to Genting Highlands. Bus operators claimed that they purchased the double decker buses, especially for the purpose of transporting passengers to Genting Highlands. Currently, the buses are only allowed to stop at Genting Sempah. After that, the passengers have to change to single decker buses to go to Genting Highlands. In the past, the industry had been making considerable profits by providing luxury packages whereby they would provide transportation to Genting Highlands using double decker buses.

Regulation

From 1st of May 2014, SPAD had issued a policy restricting double-decker buses indefinitely from using six (6) routes which have been described as ‘dangerous’ for double-decker buses. The routes are to Genting Highlands, Cameron Highlands, Fraser’s Hill, Bukit Larut, Bukit Tinggi and Gunung Jerai.243 The ban will stay until the authorities have studied the routes and identified the common causes of accidents in those areas.244

Analysis

It is clear that the restriction is imposed for safety reasons considering the number of accidents/fatalities that frequently occurs in that area. Based on accident statistics for the period 2008 to 2011 from Royal Malaysia Police, few locations along the Batang Kali-Gohtong Jaya road were identified as accident-prone areas and need to be addressed.245

The restriction was made based on the recommendations by the independent advisory panel to the ministry set up after the tragic Genting Highlands bus crash which claimed thirty-seven (37) lives in 2014 to disallow double decker buses from

243 The Star, Double-decker buses barred from six, https://www.thestar.com.my/news/nation/2014/04/23/doubledecker-buses- barred-from-six-danger-routes/#PoVcJAo4YPrkGUpd.99 244 The Star, Putting an end to bus tragedy, http://english.astroawani.com/malaysia-news/putting-end-bus-tragedy-34514 245 MIROS, Research Report, https://www.miros.gov.my/1/publications.php?id_event=373&idxs_page=19

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plying hilly roads.246 The accident occurred at KM36 of the Genting-Kuala Lumpur road, as the bus carrying 53 people was coming down from Genting Highlands and heading towards Kuala Lumpur which was considered the country’s worst road tragedy.247

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246 Malay Mail, Stricter guidelines for bus drivers and operators, https://www.malaymail.com/s/657041/stricter-guidelines-for- bus-drivers-and-operators 247 The Star, 37 dead in Genting bus crash (Updated), https://www.thestar.com.my/news/nation/2013/08/21/bus-accident- genting-highlands-ravine/#wTIt142wMsflJiZG.99

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Issue No. 3: No restrictions for foreign excursion buses (from Thailand) to enter Malaysia

The industry contends that there are no restrictions for foreign excursions buses, particularly excursion buses from Thailand, to enter Malaysia. Thus, the local bus operators contend that it is unfair for them as excursion buses from Thailand are not bound by the stringent requirements imposed on local excursion buses (i.e. to apply for local license, obtain insurance, etc). Representatives from the industry suggested that the Government should make it mandatory for foreign excursion buses to have insurance, at the very least. Currently, buses from Thailand do not need insurance to enter and drive around Malaysia. However, buses from Malaysia to Thailand would require having insurance.

Regulation

Based on the terms and conditions imposed on foreign excursion buses on SPAD’s website, foreign excursion buses must have the original copy of the valid Foreign Excursion Bus License issued by SPAD.248 For ease of reference, the terms and conditions imposed on foreign excursion buses is shown below:

TERMS AND CONDITIONS FOR FOREIGN EXCURSION BUS TO ENTER MALAYSIA

1) Foreign excursion bus is only allowed to carry non-Malaysian citizens to Malaysia. 2) All excursion buses must carry the following documents: ➢ The list of tourists including name and passport number (must be typed). ➢ Original copy of the valid Foreign Excursion Bus License issued by SPAD. ➢ Tour itinerary (must be typed). 3) Tourist must spend at least one (1) night in any hotels in Malaysia. Day-trip tours are only allowed for the following geographical limits: ➢ Bus from Singapore – Johore state only. ➢ Bus from Thailand – Kedah/Perlis/Kelantan/Perak state based on

248 SPAD, Terms and Conditions for Foreign Excursion Bus to Enter Malaysia, https://www.spad.gov.my/sites/default/files/termcondition-foreignexcursionbus_0.pdf

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application. Visit to Perak state is allowed for only 25 kilometres from the border. 4) Foreign excursion bus entering and exiting Malaysian border must carry at least 50% of the seating capacity, except day-trip tours to states as stipulated in item 3. No empty run is allowed throughout the journey in Malaysia. 5) Foreign excursion bus entering Malaysia must use the service of tourist guide license by MOTAC. 6) However, the excursion van (8 to 16 seat capacity category only) carrying seven (7) passengers and below is exempted from the tourist guide service requirement. 7) Any tourism activities within Malaysia must be conducted in cooperation with/by the following companies: ➢ Local tour operators/travel agencies that are licensed by MOTAC, Malaysia. ➢ Any foreign tour agencies that set up its local branch office in Malaysia and licensed by MOTAC.

(Source: SPAD, Terms and Conditions for Foreign Excursion Bus to Enter Malaysia, https://www.spad.gov.my/sites/default/files/termcondition-foreignexcursionbus_0.pdf)

Not only that, based on the Guideline for Foreign Bus Excursion License to Enter Malaysia, it is mandatory for the foreign excursion bus to have the vehicle’s insurance policy. The guideline is shown below, for ease of reference:

GUIDELINES FOR FOREIGN EXCURSION BUS LICENSE TO ENTER MALAYSIA

1) Company must be registered and licensed as a tour agency by the relevant authorities in its home country. 2) Excursion bus to be licensed must be registered as a commercial vehicle in accordance to any land transportation law enforced by the respective country’s transport authorities. 3) Application must be submitted at least five (5) days before the date of entry. 4) Excursion bus shall be used exclusively for the conveyance of tourists and in consideration of payment which has no fare stages. 5) Application must use application form which can be downloaded from www.spad.gov.my and attached with the following documents: ➢ A copy of excursion bus registration card.

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➢ A copy of license as a tour agency. ➢ A copy of vehicle’s insurance policy. ➢ List of tourist to be transported including name and passport number (must be typed). ➢ Tour itinerary (must be typed). 6) Only completed application will be accepted and processed. A license fee of RM50.00 is required for each application in the form of postal order or money order or local banker’s cheque payable to Kumpulan Wang SPAD. 7) Submission of name list of tourists and tour itinerary is required for the first application. For the subsequent entries, a name list of tourists and tour itinerary must be carried on the bus at all time and shall be produced on demand by enforcement authorities. 8) The license is valid for three (3) months (multiple entry). 9) Applicants must not have any outstanding offer of compounds/summons issued by the Malaysian authorities. 10) Client charter: five (5) days, provided that application form is duly completed.

(Source: https://www.spad.gov.my/sites/default/files/guideline-foreignexcursionbus.pdf)

In order to obtain the license, the company must be registered and licensed as a tour agency by the relevant authorities in its home country, be registered as commercial vehicle in accordance to any land transportation law enforced by the respective country’s transport authorities, and have vehicle’s insurance policy. Foreign excursion buses must also use the service of tourist guide licensed by MOTAC if they carry more than seven (7) passengers. The license issued by SPAD will only be valid for three (3) months and applicants must not have any outstanding offer of compound/summon issued by the relevant authorities.249

249 SPAD, Guidelines for Foreign Excusion Bus License to Enter Malaysia, https://www.spad.gov.my/sites/default/files/guideline-foreignexcursionbus.pdf

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Analysis

Based on the above, it is clear that foreign buses are not allowed to enter freely into Malaysia as there is a legislative framework by SPAD regulating such buses. Based on the explanation given above, they must fulfil the requirements under the terms and conditions for foreign excursion bus to enter Malaysia. The issues highlighted by the industry maybe more of an enforcement issue as opposed to the lack of a licensing regime.

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Issue No. 4: Requirement to change Bas Persiaran drivers every four (4) hours

We were informed by the industry that the law requires Bas Persiaran drivers to be changed every four (4) hours. The representatives from the tourism industry commented that this requirement should be removed as the nature of Bas Persiaran is different from an express bus.

Regulation

Based on paragraph 3.5.1 of the Occupational Safety and Health Industry Code of Practice for Road Transport Activities 2010 issued by Department of Occupational Safety and Health (“DOSH”), an employer shall provide a driving hour and working hour system for drivers. This matter should be given due attention because the driver’s potential to feel tired after a long bout of driving will be rather high and may give rise to risks and pose a danger to driving. The matters that need to be considered but subject to the prevailing acts if applicable are as follows:

(a) non-stop driving for a maximum of four (4) hours; (b) total of eight (8) hours of driving per day (maximum); (c) total of twelve (12) hours of work per day (maximum); (d) thirty (30) minutes of rest per four (4) hours of journey; (e) one (1) day of rest after every six (6) days of work; and (f) a minimum of twelve (12) hours of rest before starting first journey.

Analysis

As such and based on the requirement stated above, the drivers only need to take a thirty (30) minute rest every four (4) hours of journey. It is not mandatory to change the driver every four (4) hours so long as the driver takes a half hour break. Study has shown that drivers have been advised to take a break after every four hours of driving as a driver can stay focused up to only four (4) hours.250

More importantly, the requirement is imposed to ensure that the driver takes enough rest and avoid fatigue due to long driving hours which may lead to loss of concentration and thus, may increase accident risk. The driver has the responsibility

250 The Rakyat Post, Drivers advised to rest every 4 hours to stay focused, http://www.therakyatpost.com/life/2017/06/23/drivers-advised-to-rest-every-4-hours-to-stay-focused/

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to take reasonable care for the safety and health of himself and of other persons who may be affected by his acts or omissions at work.251

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251 DOSH, Occupational Safety and Health Industry Code of Practice for Road Transport Activities 2010, http://www.dosh.gov.my/index.php/en/legislation/codes-of-practice/transportation/589-01-code-of-practice-for-road-transport- activities-2010/file

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Issue No. 5: Business owner to be liable for offences committed by drivers

The industry contends that the requirement to have the business owner attend to SPAD’s “interview” for any of the drivers’ fault or accident and that any driving offences committed by drivers must be absorbed by owners are unfair. The representatives from the tourism industry commented that as the offences were not committed by the owner, the driver of the vehicle itself should be held liable.

Regulation

The requirement sets the said requirement is laid down in Section 240 of the Land Transport Act 2010 [Act 715]. The provision is reproduced below, for ease of reference:

Section 240 – Liability of registered owner and others in respect of relevant vehicle

Section 240. Liability of registered owner and others in respect of relevant vehicle

(1) Unless expressly provided otherwise, any act or omission by any servant, agent or partner of the owner of a relevant vehicle shall, for the purpose of any prosecution or proceeding under this Act, be deemed to be the act or omission of the owner, unless he satisfies the court that he has taken all reasonable steps and precautions to prevent such act or omission. (2) In the event of any act or omission by any servant, agent or partner of the owner of a relevant vehicle which would have been an offence against this Act if committed by the owner, that servant, agent or partner shall also be guilty of that offence.

Analysis

Based on the provision stated above, the owner (employer) is liable for the wrongdoing committed by driver. However, the requirement is in line with the doctrine of vicarious liability. Under common law, the doctrine of vicarious liability represents a rule of responsibility which renders the defendant liable for the torts

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committed by another. The classic example is that of employer and employee: the employer is rendered strictly liable for the torts of his employees, provided that they are committed in the course of the tortfeasor’s employment. In such circumstances, liability is imposed on the employer, not because of his own wrongful act, but due to his relationship with the tortfeasor.252

There are many reasons to justify this doctrine and it includes the following:

• Employer is to be held liable for employing a negligent employee or for failure to control the employee; • Since the employer derives benefit from the employee’s work, he should be made liable for any tortious act conduct of the employee in the performance of his work; and • Employer is in a better financial standing as compared to the employees.253

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252 Cambridge University Press, Vicarious Liability in Tort: A Comparative Perspective, http://assets.cambridge.org/97811076/27482/excerpt/9781107627482_excerpt.pdf 253 Norchaya Talib, Law of Torts in Malaysia

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Issue No. 6: Multiple enforcement agencies/authorities in Langkawi

Currently, there are four (4) agencies regulating the maritime subsector in Langkawi, namely, the (i) Maritime Department, (ii) Malaysian Maritime Enforcement Agency (MMEA), (iii) Kedah Water Resources Board (“LSANK”) and the (iv) Langkawi Municipal Council. For ease of reference, the four (4) agencies/authorities in charge of regulating maritime subsector in Langkawi can be seen below:

Maritime Department of Malaysia

Malaysian Maritime Enforcement Agency

Kedah Water Resources Board

Langkawi Municipal Council

The industry contends that the lack of understanding of regulations inter-agency has created problems in dealing with the officers from the agencies listed above. In particular, the tourism industry in Langkawi informed us that the agencies are operating in silos and have different interpretation of the maritime regulations.

For example, tour operators in Langkawi highlighted that in order for jet skis to operate in Langkawi, the operator has to obtain the Water Body Activities License from the Kedah Water Resources. In the application form, the applicant is allowed to specify the area, location and coordinates of the operation. The application for license will then have to be approved by the Water Resources Director. For ease of reference, the applicable application form is reproduced below:

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(Source: Form C, Fourth Schedule of the Kedah Water Resources Regulations (Water Body Activities) 2015)

However, notwithstanding the express authority from the Kedah Water Resources to operate within an area, the tour operators highlighted that the jet skis have been stopped by MMEA as the latter contends that jet skis are not supposed to cross ferry lines despite having the requisite approval. Thus, the lack of understanding of regulations has caused different agencies to adhere to different interpretations on the waterways of Langkawi.

Based on the engagement with MMEA’s representatives, they explained that licensing of recreational jet skis is under the purview of the respective State Authorities, which in this case is the LSANK. In this respect, MMEA would interfere if the jet skis contravene the offence under any federal law.

Based on Section 6(1) of the Malaysian Maritime Enforcement Agency Act 2004 [Act 633], MMEA has the power to enforce law and order under any federal law. If

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any vessel contravenes any federal law, MMEA has the power to stop, enter, board, inspect, search, and detain such vessel. However, MMEA can only perform its function within the Malaysian Maritime Zone. MMEA also has the power to perform any other duty for ensuring maritime safety and security or do all matters incidental thereto. In this instance, it is likely that the jet ski operators have contravene the federal law regulated by the Marine Department of Malaysia, being the Merchant Shipping Ordinance 1952, or that they were stopped due to safety reason.

As for LSANK, it has the power to issue license to organizations that need to conduct activities on water resources, and ensure that all licensees comply with requirements under such license. If any person contravenes the legislations and regulations under the purview of LSANK, the enforcement officers under the LSANK has the power to take action against such person.

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Issue No. 7: Lack of regulations on the commercial use of jet skis

The issue raised by the jet ski operators is the fact that there are no regulations regarding the commercial use of jet ski in Malaysia.

We were told by the jet ski operator that there are two (2) different commercial industries for jet skis, namely, the common jet ski rentals and the “jet ski tours”, which allows passengers to follow a guided tour around specific areas. The lack of regulations has caused issues within the industry as the absence of clear guidelines result in an overlap in enforcement protocols among the different authorities in the maritime sector.

Analysis

In this respect, the Maritime Department of Malaysia highlighted that the commercial jet skis is under the purview of the respective State Local Authorities, which in this case is LSANK. The commercial use of jet ski in Langkawi is regulated under the Kedah Water Resources Enactment 2008 and Kedah Water Resources (Water Body Activities) Regulations 2015.

LSANK highlighted that pursuant to Section 2 of the Kedah Water Resources (Water Body Activities) Regulations 2015, ‘recreational water sports activities’ include jet skis. As such, the jet ski operators have to apply for the license to operate jet skis from the Kedah Water Resources Board.

For ease of reference, the relevant provisions regulating the commercial use of jet skis are reproduced below:

Section 14. Kehendak kawalan aktiviti rekreasi sukan air

(1) Mana-mana orang yang menjalankan aktiviti rekreasi sukan air hendaklah (2) membuat permohonan kepada Pengarah dalam Borang C Jadual Keempat. (3) Pemegang lesen yang menjalankan aktiviti sukan air hendaklah tidak melebihi kawasan aktiviti yang dinyatakan dalam lesen. (4) Pemegang lesen hendaklah memasang boya atau tambatan atau apa-apa kaedah penandaan kawasan aktiviti.

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(5) Pemegang lesen dikehendaki mengadakan insurans perlindungan kepada aktiviti dan sesalinan insurans itu hendaklah dikemukakan kepada Pengarah bersama- sama permohonan lesen. (6) Pemegang lesen hendaklah memastikan aktiviti rekreasi sukan air sentiasa berada dalam kelas atau kategori yang dinyatakan dalam lesen dan tidak akan menyebabkan perubahan atau kerosakan pada struktur badan perairan itu. (7) Pemegang lesen hendaklah mengadakan suatu tempat khas untuk dijalankan kerja-kerja penyelenggaraan kelengkapan yang bersesuaian. (8) Kawasan kerja penyelenggaraan itu hendaklah berada dalam keadaan baik sepanjang masa dan tidak mencemarkan badan perairan. (9) Mana-mana pemegang lesen yang tidak mematuhi mana-mana subperaturan di atas adalah melakukan suatu kesalahan.

Section 15. Kawalan mitigasi

(1) Pengarah boleh mengkehendaki mana-mana orang yang menjalankan aktiviti rekreasi sukan air untuk mengemukakan perancangan kawalan mitigasi, kaedah pelan kontigensi dan pelan pemulihan merangkumi asas tapak kerja, pembaikan di luar tapak kerja dan langkah-langkah yang difikirkan perlu. (2) Mana-mana pemegang lesen yang tidak mematuhi subperaturan (1) adalah melakukan suatu kesalahan.

Section 16. Keselamatan aktiviti rekreasi sukan air

(1) Pemegang lesen hendaklah memastikan aktiviti rekreasi sukan air sentiasa berada dalam keadaan selamat pada setiap masa dan praktikal bagi membolehkan aktiviti dijalankan tanpa gangguan. (2) Pemegang lesen hendaklah memastikan aktiviti rekreasi sukan air dilarang berada di dalam kawasan laluan trafik vesel dari mana-mana anak sungai atau alur sungai pada mana-mana masa dalam mana-mana keadaan yang boleh menghalang trafik ke hulu dan hilir laluan layar tersebut. (3) Mana-mana pemegang lesen yang tidak mematuhi mana-mana subperaturan diatas adalah melakukan suatu kesalahan.

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Non-Transport Service Related Issues

Issue No. 1: Immigration Issue

Some of the representatives from the industry highlighted on the inefficiency of the immigration process. For example, the immigration counters typically gets busy during early morning, afternoon and 8pm and during these hours, in which the immigration counter will be packed with tourists and at such times, under staffed. The industry contends that it will normally take about two (2) hours for tourist to get out from the airport. Usually travel agents will wait even if they are stuck in immigration and this will waste their time. As such, they proposed that the immigration department should study the peak hours and adjust manpower based on time.

Issue No. 2: Insurance issue

The boat/yacht operators in Langkawi highlighted that most of the boats in Langkawi are not registered under Marine Department of Malaysia because they cannot afford to pay for insurance. Currently, in order to get a license, there is a pre-requisite requirement to have passenger insurance.254 By virtue of Section 361 of the Merchant Shipping (Amendment and Extension) Act 2011 [Act A1393], any ship shall not enter or leave a port in Malaysia, or any part of Malaysian waters or the exclusive economic zone, unless there is in force in respect of the ship a contract of insurance or other financial security satisfying the requirements of the Convention in respect of the limits of liability. Thus, it covers both boat, and passenger insurance.

However, they operators stated that they could not afford to apply for such insurance because it is too expensive. The operators stated that the insurance premium for one (1) boat is around generally around RM1,200 per year. Although the amount seemed little, it is burdensome to them considering the fact that they have a few boats.

254 AWANI, Passengers' awareness on safety aspects can prevent boat tragedy, http://english.astroawani.com/malaysia- news/passengers-awareness-safety-aspects-can-prevent-boat-tragedy-131041

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Issue No. 3: Parking issue for disabled

One of the concerns raised by the industry is that there are no designated parking for disabled vehicles at the same level of departure and arrival in Kuala Lumpur International Airport (KLIA). As such, it is inconvenient for disabled tourists to have to walk all the way to the parking bays.

Issue No. 4: Parking issue for excursion buses

The industry also highlighted that there is no parking provided for excursion buses in tourists attractions such as Dataran Merdeka. Thus, they can only drop the tourists and wait for the tourists elsewhere, which is usually quite far.

Apart from that, it is also burdensome for the industry as there is no designated parking for buses at KLIA as well. As such, when there is a delay, the bus drivers are not able to park their buses in KLIA to wait for their passengers.

Issue No. 5: Inconvenient for the tourism industry in Langkawi to renew TOBTAB License

The industry in Langkawi contends that it is logistically troublesome for them to renew their tour business license every year as they have to travel to Alor Setar to renew such license. Besides that, many of the stakeholders that were interviewed said that they have to wait for a long time when they want to renew their license as the office in Alor Setar only has three (3) officers. The industry proposed for MOTAC to allow online application in order to renew such license.

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Modes of Tourist Transportation in Langkawi Island 4.4 Case Study on Transport Services in the Tourism subsector in Langkawi Island

•Tourism being a major Land•Langkawi Island continuously contributor to the economic hosts international events boost to the State's economy, Hirewhich and Driveincludes Car, the widely Langkawi Island has become acclaimed Langkawi the hub for the rapid growth of ExcursionInternational Bus, Maritime and the transportation industry, E-hailingAerospace operators,Exhbition (LIMA), providing a large market for TaxisTour De Langkawi, and transportation servces to Langkawi Art Biennale which operate. attracts a heavy traffic of visitors into Langkawi Island. A hub for Host to Rail modes of various transport international services events Cable Car

Why Langkawi Island?

•Langkawi is an archipelago World tourist Duty Free of 99 islands in the Andaman •The 7th Prime Minister of sea, making it an attractive destination Status Malaysia, Y.A.B Tun Dr. tourist destination. The Mahathir has announced that Langkawi Island has been a Langkawi will retain its duty- focus of the Malaysian free status with an increase of government to further develop purchase limit from RM500 to its tourism sector with a RM5 RM1000 for tourists from billion investment value for a mainland. target of RM9 billion income by year 2020.

Arrival of Visitors in Langkawi Island in

2018 "We need tourism based projects that

600,000 can attract tourists

487,974 every year" - Prime 500,000 Minister Y.A.B Tun

400,000 Dr. Mahathir in

reiterating the need 290,646 300,000 to maintain

Langkawi Island as 200,000

119,245 a popular resort Number of Visitors of Number destination for 100,000 47,173 local and 0 international Jetty Kuah, Cruise, Yacht, Scheduled & Chartered Flight tourists. Pulau Payar & Langkawi Port

Domestic International

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Air Land Scheduled Airlines, Hire and Drive Car, Non-scheduled Excursion Bus, Airlines, E-hailing operators, Helicopters Taxis

Maritime Rail

Boats, Cruise, Cable Car Jetskis, Yachts, Ferries

Air Land Maritime Rail

Passenger air transport Passenger land Sea and coastal water Rail transport services includes: transport includes: transport for passenger include: includes:  non-scheduled air  city bus services;  urban and suburban transport;  operation of railway passenger  renting of air transport  express bus excursion, cruise or transport; equipment with operator services; sightseeing boats; for the purpose of  hill tramway services; passenger  employee bus  operation of ferries, and transportation; services; water taxis; and  transportation of  cable cars services. passengers by air over  school bus  rental of pleasure regular routes and on services; boats with crew for regular schedules; and sea and coastal  taxi operation and water transport.  air transport services limousine performed by airlines to services; carry passengers (including scenic and  rental of cars with sightseeing flights using drivers; helicopters) on an unscheduled or charter  charters, basis. excursion and other occasional coach services; and

 airport shuttles.

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Snapshot of Tourism Transport Services Issues in Langkawi

Land Transport Issues Illegal operations of Hire and Drive Cars services ❖, The illegal operations of Hire and Drive Car services provided by unlicensed individuals are prevalent in Langkawi Island due to the lax regulatory enforcement by Suruhanjaya Awam Pengangkutan Darat (SPAD). ❖ Consequently, this compromises the growth of the business of the legitimate operators for Hire and Drive Cars services they could not compete with the illegal Hire and Drive Cars operators whom do not subject themselves to regulatory compliance cost.

❖ Maritime Transport Issues Limited number of passengers for boats and yachts ❖ The current rules regulating boats and yachts transportation/charter limits the number of passengers to be only twelve (12) passengers or less at any given time. However, the rule is deemed to be archaic as no amendment has been made to the rule in the last forty (40) years since it was implemented. ❖ This hinders for the optimized usage of the boats and yachts as there is no allowance for bigger boats and yachts to cater to larger group of passengers.

Difficulties to obtain Passenger Certificate ❖ Only boats and yachts with a Passenger Certificate are exempted from the requirement of limiting the number of passengers on boats and yachts. ❖ However, there is no guideline with respect to the application and issuance of Passenger Certificate which causes delay for the boat and yachts owners to obtain the said Passenger Certificate.

Non-insured boats and yachts ❖ Most boats and yachts operators do not insure the boats and yachts used for the transport services due to the imbalance between the regulatory compliance cost and the net income of carrying out the boats and yachts transportation/charter services.

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Snapshot of Tourism Transport Services Issues in Langkawi

Air Transport Issues Business closure of recreational sky-diving operators ❖ There have been cases where operators providing services for recreational sky diving activities have to ceased operations their business due to commercial reasons. ❖ However, in relation to regulatory framework governing the air transport services, there are no legal issues reported by the stakeholders.

Rail Transport Status Quo Cable car operations ❖ The cable car operator is a wholly owned company under the Langkawi Development Authority (LADA). Currently there is no specific regulation governing the licensing operation of cable car operators exclusively. ❖ However, the operator must comply to other regulations and/or guidelines relating to safety requirements issued by the Department of Occupational Safety and Health under the purview of the Ministry of Human Resources in addition to complying to the height limit set by the local authority in Langkawi Island.

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RURB Recommendations relating to Transport Services in the Tourism subsector in Langkawi Island

Mode of Transportation LAND MARITIME

Illegal operations Limited number of Difficulties to obtain Non-insured Issues of Hire and Drive passengers for boats Passenger boats and Car services and yachts Certificate yachts

RURB Recommendations Stricter Soft approach to Review the current enforcement Issue clear, publicly incentivize boat and regulation in order to available guidelines yacht owners increase the number of As the regulator, on how to obtain a passengers allowed on SPAD should Passenger The Marine boats and yachts. take the Certificate Department should

necessary steps contemplate in the Passenger boats and in carrying out its A clear guideline next course of action yachts at this present time duties as should be made to encourage boat are more structurally provided under publicly available on and yacht owners to advanced in comparison to the law. how to obtain a PC subscribe for the those in the time when the Surveillance in and likewise, the appropriate current rule was passed. dense/popular officers in the Marine insurance policy such The regulators may rely on area where illegal Department of as to collaborate with the manufacturer’s operations are Malaysia should be insurance companies compliance plate, to prevalent such as well-versed with the to create an determine the maximum the airport or jetty process of issuing PC affordable scheme number of adults a boat can should be carried to ensure consistency. for low income boat legally carry. out more and yacht owners to

frequently. subscribe to.

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APPENDIX 1 – ISSUE PAPER FOR TOURISM SUBSECTOR

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APPENDIX 2 - DETAILED DESCRIPTION OF THE RELEVANT GROUPS RELATING TO TRANSPORTATION UNDER MSIC 2008

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APPENDIX 3 –

LISTS OF THE ASSOCIATIONS INTERVIEWED

No. Tourism Associations

1. Tourism Productivity Nexus

2. Malaysia Inbound Tourism Association

3. Malaysian Association of Tour & Travel Agents

4. Malaysia Chinese Tourism Association

5. BUMITRA Malaysia

6. Malaysian Indian Travel & Tours Association

7. Caravan Camping Association

8. Pengusaha Bas Persiaran Semenanjung Malaysia

9. Langkawi Tourism Association

10. Malaysian Inbound Tourism Association Langkawi

11. Malaysian Association of Hotels

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APPENDIX 4 – PASSENGER CERTIFICATE SURVEY CHECKLIST

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