Lacking freedom, KTM piles up RM2.8 billion losses, audit shows

KUALA LUMPUR: Lacking the freedom to make its own decisions on operations and use of its assets, Keretapi Tanah Melayu Berhad (KTMB) accumulated losses of RM2.829 billion at Dec 31 last year, according to the Auditor-General’s Report for 2018.

Among the reasons for the loss was that KTMB was not given the freedom to make its own decisions, particularly on the company’s operations and usage of assets, the report said.

“This indirectly contributes to the less stable financial position of KTMB as it relies solely on train tickets. KTMB is also bound by the government’s current policy especially in determining the rate of the train fares,” said the report which was released today.

KTM’s inter-city and commuter train services recorded losses of between RM39.82 million and RM77.76 million from 2016 to July 2019.

The commuter train (KTM Komuter) service contributed the highest revenue to KTMB from 2015 to 2017, but still recorded losses after deducting its operating expenses, the report said.

There were weaknesses in the performance and implementation of the service.

“The actual number of passengers and revenue showed a drop since 2016 to July 2019. Another weakness was due to the delay in completing the Klang Valley Electrified Double Track project, which disrupted the daily routine of the passengers while some passengers switched to other modes of transport.

“Also, the longest waiting time for the commuter train was 256 minutes (4 hours 16 minutes) compared to 45 minutes as set by the Land Public Transport Agency (APAD),”  the report said.

The auditor-general also found inefficient maintenance of the commuter train set as it was not carried out according to schedule.

The audit also found significant weaknesses in the new ticket system as there were 36,860 complaints from December 2016 to July 2019.

Generally, based on the scope of the audit, the auditor-general concluded that the objectives of the establishment of KTMB through the corporatisation of KTM have yet to be fully realised.

However, the report found that KTMB’s corporate governance was satisfactory, but improvements have to be made in terms of Company Secretary, SOP and Business Strategic Plans and Key Performance Indicators in line with best practices.

Among the recommendations made by the auditor-general was for the management model of KTMB as a corporate company to be reviewed so that it is not restricted to make decision on its operations, in line with KTM’s privatisation objectives.

Other recommendations included for KTMB to ensure that the KVDT project is completed according to schedule and to work closely with the transport ministry to avoid delays in its commuter train service and further losses.