MRT Co to operate mass rapid transit?

Updated: Saturday May 24, 2014 MYT 7:36:15 AM

MRT Co to operate mass rapid transit?

BY SHARIDAN M ALI

In an unexpected turn of events, Mass Rapid Transit Corp Sdn Bhd (MRT Co) has expressed its interest in being the operator of the multi-billion ringgit mass rapid transit system instead of national infrastructure and urban rail operator, Syarikat Prasarana Negara Bhd.

This is line with the intention to promote healthy competition and deliver the best world class public rail transport services in the Klang Valley, says Mass Rapid Transit Corp Sdn Bhd (MRT Co) chief executive officer Datuk Wira Azhar Abdul Hamid.

“When the paper was first done for MRT Line 1, Prasarana was naturally named as the operator but MRT Co had not yet been formed at that point in time.

“Now, I think that Prasarana already has a lot on its plate with the operation of the existing light rail transit (LRT), the extension of the LRT, monorail as well as the stage buses system.

“And today, what is important for us is to do the right thing that centres around giving the best services to the public,” he says.

Azhar is confident that MRT Co would have the capability to be the operator.

He says this will keep both MRT Co and Parasarana on their toes and the quality of services in proper check and balance.

“Improvement is inevitable in this process if we have two operators. If you compare Kuala Lumpur to other developed cities in the regions such as Hong Kong, Singapore and Seoul, there is more than one urban rail operator there.

“This is also in line in meeting Government’s expectations to expand the home-grown rail industry beyond local shores that will attract more people to get involved in this industry,” he says citing MTR from Hong Kong which has exported their rail operation and maintenance services to as far as Europe.

He adds they would have no problem employing people to manage the MRT Line 1 once its ready.

For Line 1, in terms of value, only the system contract worth RM5bil is awarded to foreign entity and the rest of the project is locally handled.

Ultimately, Azhar says the main point of aiming for the best quality of services covering the crucial catchment areas in the Klang Valley would solve all the congestion problem the city is beginning to suffer currently.

“We must increase the modal share of public transport and the public must be convinced to leave their cars at home and take the train as a mode of travelling.

“The MRT as a whole must carry high relevancy to the public in their mobility choices,” he says.

MRT Co is now overseeing the development of the RM23bil first line that spans from Sungai Buloh to Kajang.

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Second line is around the corner

Azhar admits that ideally, the development of line 2 that is proposed to be from Sungai Buloh to Putrajaya should start as soon as possible.

“But, I suppose the Government wants to go through certain processes before they finalise it. Thus, we just have to wait for their directive,” he says.

Ideally, he explains that the development of line 2 should begin as soon as the civil works for line 1 is completed and most of these civil works will be completed throughout the course of the whole of next year.

“Thus, we are supposed to start physical work on Line 2 next year to maintain uninterrupted continuity of the whole MRT project in the Klang Valley.

“If we start late on Line 2, contractors may deploy their workforce and machineries to other projects and to source those back could take some time as well,” he says.

Azhar agrees that earlier roll-out of Line 2 would also be better for MRT Co to comfortably do public display and resolve the most crucial and challenging issue of MRT development that revolves around land acquisition matters.

“We could not underestimate the problems that we might have to face and amicably resolve in land matters especially with private land owners. I think we have done pretty well in Line 1 where land acquisition cost is around RM1.5bil,” he says.

Azhar has been told that the Cabinet has already approved the Line 2 proposal in February and now it’s up to the Government when they want to officially announce the roll-out.

Performance counts

As the Government is waiting for the right time to announce the roll-out of the mass rapid transit (MRT) line 2 project, the contractors inclusive of the project delivery partner (PDP) that involved with the first line could be rest assured they will have some advantages in bagging some more MRT jobs in the near future.

Azhar says they have collaborated with Construction Industry Development Board (CIDB) and its independent checking engineers to come up with a programme that identifies and reward the good contractors in terms of extra points when they put up their bids for jobs in second line.

Azhar explains that those contractors that have a good track record in line 1 would be given extra points when they bid for the jobs in line 2 and he thinks this is fair.

“We evaluate our tenderers using point system and Ministry of Finance is also agreeable to this,” he says.

In terms of PDP, that is currently undertaken by Gamuda Bhd and MMC Corp Bhdjoint-venture for line 1, Azhar admits that they have gone through thick and thin to get the project on the ground and it will carry an advantage for them to spearhead in line 2.

“People could criticise but the most important objective is for Klang Valley to have a good rail infrastructure. It’s like selecting the players for a football match, if you already have a team of success, why change?” he questions.

How much costlier?

Personally, Azhar thinks the construction cost of building Line 2 would not differ much from the first line in per km basis.

“The things that could make the difference are the length of line 2 that is anticipated to be longer, the length of the underground portions, number of stations plus other variables as well.

“In terms of raw materials, our only concern is on concrete and steel but fortunately their future prices are expected to be stable,” he says.

MRT Line 1 from Sg Buloh to Kajang is just over 50km where the length of the underground section of the project is 9.5km while the elevated section, divided into the northern and southern sections, is 41.5km. The entire line has 31 stations, of which seven are underground.

Line 2 is expected to be well over 60km. But with the implementation of Goods and Services Tax (GST) next year, Azhar does expect some escalation in cost due to this.

Nevertheless, he says it will be costlier to the nation if the Government does not embark on a good urban rail transport project.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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