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Final Report FINAL REPORT REDUCING UNNECESSARY REGULATORY BURDENS ON BUSINESS (RURB): TRANSPORT SERVICES VOLUME I: CARRIAGE OF PASSENGERS 31 December 2018 Page | i 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 Page | ii 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 Page |iii 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. Page | iv 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 Page |5 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 Page |6 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 [the remainder of this page has been intentionally left blank] Page |7 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; 1 • 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’.
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