This article first appeared in The Edge Financial Daily on September 19, 2017 - September 25, 2017
PUTRAJAYA: Transport Minister Datuk Seri Liow Tiong Lai is confident that the incoming chief at Keretapi Tanah Melayu Bhd (KTMB) will “facilitate and smoothen” the process of transferring KTMB’s assets and liabilities to Railway Asset Corp (RAC) by early 2018.
Liow said KTMB’s new chief executive officer Mohd Rani Hisham Samsudin is expected to spearhead the long-stalled process to transfer KTMB’s assets to RAC, as part of the Railway Network Access Agreement (RNAA) that was inked on Dec 22, 2016.
“I would say that we are very positive [about the asset transfer move] because [the] RNAA will benefit all stakeholders in the transport industry,” Liow told reporters after launching RAC’s silver jubilee celebration.
“We are also passionate and want to understand the problems KTMB or its union wants to raise,” he added, noting that his ministry had asked KTMB’s union to come out with its own proposal to ensure that all of the terms spelled out in the RNAA can be carried out effectively.
According to Liow, the transfer of assets and liabilities to RAC will allow KTMB, the 151-year old government-owned railway firm, to “strengthen its financial footing and operate efficiently” and in turn reduce the hefty debt load.
As at end-2015, KTMB’s assets stood at RM623.86 million versus liabilities of RM1.92 billion.
At the same time, Liow said the transfer of KTMB’s assets will lead to RAC maximising the capacity utilisation of the country’s 1,560km of railway tracks by allowing other rail operators to share the infrastructure.
“Currently, the country’s railway tracks are operating at 40% of their capacity, which is not optimum enough, as compared with the services owned and offered by Prasarana Malaysia Bhd. By transferring the assets, this will allow for multiple rail operators to share and utilise the tracks, which will subsequently bring this to a much more optimal level,” he added.
Under the RNAA, KTMB is expected to transfer the ownership and maintenance of all its assets, which include land, buildings, rolling stocks, bridges and related infrastructure to RAC. At the same time, KTMB is also expected to novate all of its lease agreements for the land and space in its buildings to RAC.
As for RAC, Liow said the railway asset company has been able to pare down its loans to around RM420.24 million for the financial year ended Dec 31, 2015 (FY15), from RM1.07 billion a year earlier, on “prudent and sound liquidity management.”
Among RAC’s outstanding loans is the credit facility of RM21.09 million, which it had received in 1974 from the federal government under the UK Malaysia Aid scheme. The loans have been restructured for 21 years until 2028, and comes with an annual interest rate of 6.5%, translating into a yearly finance of RM2.34 million.
“Debt is good if it is for the good of the country. At the ministry level, we will ensure that RAC will continue to meet its obligations to reduce debt,” Liow said, adding that “necessary actions such as refinancing and restructuring the loans will be taken if applicable.”
On the appointment of Datuk Shaharuddin Khalid as the new director-general of the road transport department (JPJ), Liow said, “let’s not speculate on his appointment and I welcome his promotion as the new head.”
Shaharuddin replaces Datuk Seri Nadzri Siron, who is now with the human resources ministry. Nadzri was grilled by the Malaysian Anti-Corruption Commission in June over an allegation of corrupt practices involving a golf set gift worth RM45,000.