Loss in revenue, gains for the rakyat

The title of this piece is deliberately structured to tell readers that when it comes to public transport, it is important for the public to enjoy it as much as possible i.e lower rates.

However, by giving lower rates, it will also mean that the government will have to subsidise the potential loss in revenue.

According to an article in theedgemarkets.com, KTM recorded a very small profit for FY2017. It posted a pre-tax profit of RM4.5 million, said to be the first in 20 years. Over the longer term, it’s accumulated losses were RM2.9 billion.

Before asking why KTMB has not been profitable, read what Singapore’s Transport Minister said about the MRT network there (which is already used by the majority of Singaporeans).

According to a report in the Straits Times, he said, “On the issue of government grants and subsidies for MRT lines, Mr Khaw said the Government has invested and subsidised heavily to ensure that Singapore’s rail network is ‘reliable, convenient and affordable’.”

If the MRT was a profitable business, there would be no need for subsidies.

This is why the MY100 initiative by Transport Minister Anthony Loke Siew Fook is welcome. He has more good news for all of us who think driving is expensive.

From April 1, Malaysians have enjoyed a 20% discount when using the KTM Komuter service. This is to help reduce the cost of living of Malaysian commuters and increase ridership.

KTM’s revenue is expected to be reduced by RM43 million yearly and this will be met by the Railway Assets Corporation (RAC).

The discount given will be of benefit to around 94,000 commuters daily on five routes.

According to an article in The Star, Loke said, “The public can enjoy the discount for one year and we will be reviewing it to determine its effectiveness. Commuters who are already enjoying a 20% discount when they go cashless will get another 20% discount on top of this.”

It’s not easy to change habits but imagine the potential savings over the long run and the potential that those savings could become savings for the first property?

MY100 has started and now, a 20% discount for KTM’s services have also started. Well, Loke has started the ball rolling. Perhaps it’s time we “score” together.

As for the loss in revenue, when more people take KTMB services, it will be time before the loss in revenue is recovered.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.