This article first appeared in The Edge Malaysia Weekly on September 11, 2023 - September 17, 2023

ANTHONY Loke Siew Fook wears many hats. The Minister of Transport is not only the secretary-general of DAP but also the member of parliament for Seremban and state assemblyman for Chennah in Negeri Sembilan.

And when Umno president and Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi was granted by the High Court a discharge not amounting to an acquittal (DNAA) for all 47 charges of corruption that he was on trial for, Loke had to put on his DAP secretary-general hat.

In the early hours of Sept 5, he released a statement urging the soon-to-be retired Attorney-General Tan Sri Idrus Harun to clarify the decision to apply for a DNAA. (The Attorney General’s Chambers [AGC] released a statement later that day.)

After releasing his statement, Loke was back to wearing his Minister of Transport hat — launching the Global Shippers Roundtable, followed by an exclusive interview with The Edge.

Improving the transport sector is not an easy task, especially in a country where people very much prefer to have their own cars due to policies that prioritise private vehicles over public transport. Not having the necessary allocation to improve the sector is another obstacle for the Ministry of Transport (MoT). Nevertheless, some things are being upgraded, particularly the public transport systems.

For starters, the new operating agreements (OAs) that the government will sign with Malaysia Airports Holdings Bhd (MAHB) will include, among others, the setting up of an Airport Development Fund (ADF), into which a percentage of the passenger service charges (PSC) will be channelled for the funding of airport developments.

This will change the way airports are developed in the country, moving away from government-funded projects via its annual development expenditure (DevEx) to those undertaken directly by MAHB using the funds in the ADF.

“This is a model [used by] many other countries. Hong Kong, Singapore airports implement this ADF. This, in a way, will help reduce the burden of the government in terms of developing airports,” says Loke during the interview.

The OAs are in the final stage of vetting by the AGC, which has been given the mandate to fine-tune the agreements and ensure that every clause protects the government’s interest, he adds.

“I have told them that we hope to sign the OAs latest by the fourth quarter of this year. We have been shifting our dates, so I said we cannot delay anymore. The OAs are important — they give certainty to MAHB and in terms of moving forward for the development of other airports,” he says.

MAHB currently has two OAs with the government — one for the Kuala Lumpur International Airport and the other for the rest of the airports in the country — which were signed in February 2009. The existing OAs include MAHB’s concession to operate the 39 airports until 2034. While it had obtained in 2019 the cabinet’s approval in principle for a 35-year extension of the concession until 2069, the details are still being finalised with the relevant government agencies.

The new OAs will include a sustainable funding model for the future growth and development of MAHB’s network of airports. This will enable it to plan with greater certainty. A longer concession until 2069 would allow the airport operator to secure more investors for its airports, particularly the land surrounding them.

Another salient point in the new OAs is that the government will allow MAHB to form joint ventures (JVs) with other parties for the development and management of airports, says Loke.

Nevertheless, the government’s principle that all the airports in the country (except Senai International Airport) should be owned and managed by MAHB still stands, even with JVs formed with other parties. Under the new OAs, MAHB can rope in partners through JVs to develop and run less commercially viable airports, he adds.

“For example, discussions are ongoing right now. There are private parties who are interested in [the airports in] Ipoh, Kota Kinabalu and even Melaka. I just spoke to the Melaka chief minister. The state government has certain plans to attract foreign investments and one of the industries it is looking at is aerospace,” says Loke.

“Any aerospace industry needs an airport, runway and so on. So, Melaka Airport is being looked at as well [for a JV between MAHB and other parties]. With the new OAs, MAHB would be more flexible in terms of working with or having JVs with partners.”

The aim of allowing JVs between MAHB and other parties is also to move away from having airport developments being highly dependent on direct government funding through DevEx, he says. The new OA framework will allow the airport operator to undertake capital expenditure on its own or with JV partners.

“If you wait for government development funding, you will never get it done at one go because there are so many airports that need upgrading. Every year, in terms of our budget, we can probably focus on one or two smaller airports. But every airport needs upgrading,” he adds.

However, this does not mean MAHB will have the power to determine which airports will be developed and where. The ultimate decision will still lie with the cabinet, through planning by MoT, says Loke.

“Anything the MAHB wants to carve out, of course it has to refer to MoT and eventually, we have to get the cabinet’s approval. I make it a point that for any decision, we go to the cabinet — let the cabinet decide,” he says.

“The same goes for the Subang Airport Regeneration Plan (SARP). The principle of it has to be approved by the cabinet, and then eventually any business plan — how to go about it — has to go back to the cabinet.”

He adds that the cabinet and prime minister have given a clear directive that MAHB must be the majority stakeholder in any JV.

The SARP is being pursued by WCT Holdings Bhd, the operator of the SkyPark Terminal, under a 30-year sublease concession deal with MAHB that expires in December 2037, with an option to extend for another 29 years.

The property development and construction group had previously proposed redeveloping Subang Airport into a city airport, with the capacity to handle 7.5 million passengers per year. The development involves RM3.7 billion of capital expenditure over 10 years.

If the SARP is undertaken via a JV between MAHB and WCT, the latter will not get the majority stake in the partnership, going by what Loke says in the interview. At the moment, the government has yet to decide on the SARP.

When asked whether a private company other than MAHB could undertake airport development, Loke says the government does not have any reference point in terms of having a new airport built entirely by a third party.

“There is no reference point. All existing airports are being built by the government. With the exception of klia2, which was built under MAHB,” he points out.

“Even Senai Airport was built by the government. It is just that the operating rights were given to a different party other than MAHB. As far as building a new airport by a third party [is concerned], we have to look at it in detail.”

While there are many proposals for new airports, Loke says the development of the country’s airports is governed by the National Airport Strategic Plan (NASP). The government is also guided by the National Transport Policy when it comes to managing the capacity of airports. The policy focuses on utilising existing capacity and infrastructure and upgrading them to achieve optimal efficiencies.

“As far as airports are concerned, we are not lacking airports right now. The country does not lack airports. We have big and small, altogether — including STOLports (short take-off and landing airports) — 39 in a country with a population of 33 million,” he adds.

“Every state has airport facilities, except for two — Perlis and Negeri Sembilan. Does it mean that Negeri Sembilan must have an airport? I am a pragmatic person, I am the Minister of Transport, but I never allocated for an airport in Negeri Sembilan.

“This is because from Seremban to KLIA is less than one hour, nearer than [for] those living in Kuala Lumpur. Negeri Sembilan does not need an airport. We are so near to KLIA, so we must utilise the current facilities and infrastructure.”

At the same time, MoT is developing a national blueprint on green aviation. The blueprint will determine how the country moves forward in terms of green aviation to reduce carbon emissions in the sector and improve its sustainability.

“As a member of ICAO (International Civil Aviation Organization), this is a very important agenda. And how do we reduce our emissions? There are a few pillars to that,” says Loke.

“First, it is operational efficiency in terms of flight movements, landing path — all these are operational efficiency. We need to ensure that planes do not burn more fuel than they are supposed to.

“The other part is sustainable aviation fuel. That is also important to airlines. Every airline is looking and taking steps to reduce emissions. This is under CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), the carbon offset is an obligation.”

Under CORSIA, airlines must publish their emissions levels and the steps taken to reduce these. If airlines can’t reduce carbon emissions, they have to undertake carbon offsetting by paying for carbon credits and through other measures.

According to Loke, Malaysia needs to have a national blueprint on green and sustainable aviation.

“Some of the things can be done by the airlines, but some must be supported by the government. I have been approached by airlines on this matter. So I took it very seriously. I told them that I want to have a roundtable for the authorities and all the airlines on how we can put in place some of the new policies,” he says.

“A lot of that are operational procedures — how do we change our operational procedure, for example, air traffic management? How do we make it more efficient? That is a major part of it because if we have better and more efficient air traffic management, airlines will take a shorter time to land.”

While airport development is a big-ticket item that gets a lot of media coverage, the development of public transport in the country, especially in major cities and urban areas, is just as important. However, running public transport systems is not cheap and attracting users is not easy.

One of the things that MoT has undertaken to entice the people to use public transport is the My50 programme, whereby users pay only RM50 a month to use all the land public transport systems run by Prasarana Malaysia Bhd in the country.

The subsidy for the My50 pass is budgeted at RM115 million for six months and the ministry requires about RM200 million to subsidise the My50 programme for a year, says Loke. The cost to Prasarana is about RM200 a month per passenger.

For Loke, this subsidy for public transport usage must continue if the government wants to entice more users to take up public transport and leave their cars at home. The My50 programme has indirectly led to improvements in passenger traffic on the public transport systems.

The total monthly ridership number on all five rail lines operated by Prasarana have increased this year, from 16.2 million in January to 20.4 million in July, according to the company. The average daily ridership has almost recovered to pre-pandemic levels, at 701,173 per week as at Sept 1. In 2019, the average daily ridership on all lines (excluding the Putrajaya Line, as it had not been completed and commissioned then) was 768,251.

Meanwhile, the average daily ridership on buses operated by Prasarana is still far from pre-pandemic levels, although the numbers are increasing. For the year to Sept 1, the average daily ridership on the Rapid Bus network stood at 230,216, compared with the average of 472,782 in 2019.

“We have to discuss with the Ministry of Finance how to go about it. If it wants to maintain the current rate (RM50 per month), it will have to provide us with the funding. The discussion is ongoing with MoF, but we are committed to this programme,” says Loke. “We think this is a good initiative, whether we [need] to adjust the fare a little bit or structure it, we will continue to discuss.”

MoT is also undertaking the Stage Bus Service Transformation (SBST), with an allocation of RM97 million, and another RM50 million to RM60 million for the Interim Stage Bus Supporting Fund (ISBSF).

The SBST is a programme to ensure that certain bus routes continue to be served even when the demand makes it not viable commercially for the stage bus service operators to continue running them. The programme was implemented in 2015.

All in, excluding the subsidy for rural air services, MoT is operating these programmes with a budget of less than RM300 million only, says Loke. He wants to expand the stage bus programmes to more cities, but it would require more funding from MoF.

“Of course, it is not enough. We hope we can get at least more than RM500 million a year just to run these initiatives and expand the current stage bus programmes, because there are many other cities that we would need to commit to, to bring the stage bus services,” he says.

“That means we have to appoint operators to run the services and once you appoint the operators, we need to pay them every month to run the services. The programme that we are running right now is that we pay based on their services, not based on passengers.

“So we [the government] pay a certain amount, you [the operator] must run certain buses on those particular routes and [decide] how many buses must ply a route. So, the certainty in terms of the services is there, but it also comes with a cost that the government must pay.”

The federal government has allocated RM150 million for the expansion of the SBST programme to Melaka, Kuala Terengganu, Kota Kinabalu and Kuching. An allocation of RM230 million was also made available for the SBST programme this year under Budget 2023.

The federal government has also allocated RM209 million under Budget 2023 for the subsidy for rural air services in Sabah and Sarawak. Meanwhile, it has allocated RM33 million to subsidise the operating cost of less-economical train services in the east coast of Peninsular Malaysia.

While much has been done, there is still more to be done to improve the country’s public transport systems, and funding is always a major problem. Therefore, MoT has advocated for the return of Kumpulan Wang Amanah Pengangkutan Awam (KWAPA), which comes under the purview of MoF.

“We used to have this many years ago, during Datuk Seri Najib Razak’s time. It was allocated, I think, RM500 million. But after the funds were utilised, there were no more funds available. So, I have advocated to MoF that the government should set up or revive this KWAPA,” says Loke.

“Every year, we must have a certain percentage or a certain amount of money to be contributed to this fund, so that the fund can be utilised for public transport projects or initiatives, either building infrastructure or subsidising public transport.”

With KWAPA, MoT could directly fund programmes requiring medium-term certainty for them to be implemented, rather than yearly renewable contracts based on the budget provided by MoF, he adds.

For example, if MoT signs a contract with bus companies to run stage bus services, the contractual commitment should be at least three to five years. If the commitment is renewed on an annual basis, not many operators will want to deal with the government to provide the service, says Loke.

While the government is committed to improving the public transport network in the country, the adoption has been rather low compared with other major urban centres of comparable development levels as the Klang Valley, such as Bangkok, Bogota and Mexico City.

Based on figures cited in the Low Carbon Nation Aspiration 2040 plan, which was launched in September 2022, the percentage of urban public transport modal share was just 20% in 2018.

For comparison, the Bangkok Mass Rapid Transit Authority (MRTA) stated in its 2019 annual report that the share of active (such as walking) and public transport of the total daily traffic in the Bangkok Metropolitan Region was 32.4%.

Meanwhile, according to the Deloitte City Mobility Index, public transport made up 36% of the journey modal split in Bogota, Colombia. According to the same report, the public transport modal share in Mexico City was 71%.

Malaysia, Thailand, Colombia and Mexico are in the same income group, that is, the upper middle income bracket.

The National Land Public Transport Master Plan 2012-2030 has set a 20-year timeline, which targets to increase public transport modal share for urban areas from 16.4% in 2011 to 40% in 2030, and improve public transport access to rural areas. Based on the Low Carbon Nation Aspiration 2040 plan, the target is for 50% urban public transport use by 2040.

However, despite the many programmes to encourage the use of public transport, especially in the Klang Valley, as well as the billions of ringgit that have been poured into developing the public transport network, will Malaysians change their habit of driving their cars everywhere?

This has been the biggest challenge for MoT. At the same time, the ministry is not ready to adopt a “stick” approach to discourage driving among the population, especially in the Klang Valley.

“We cannot have the stick approach right now because, of course, we do not have that luxury yet, where we can provide everyone with public transport. So, it is not that we do not have the policy tools, we need to have the right policy tools,” says Loke.

“For example, in Singapore, they charge ERP (electronic road pricing). If you go into the city centre, they charge you during peak hours. We can’t do that right now in Kuala Lumpur, even though a lot of people have advocated congestion charges in the city during peak hours.

“But the moment you do that, you will have a public outcry. And you do not have a good alternative in place. So right now, we are still focusing on providing alternatives. Once the alternatives are provided, hopefully people can change and can take up public transport, but the progress is slow.”

The government is still going to use persuasion when it comes to encouraging public transport adoption among the people of the Klang Valley. Besides the My50 programme, MoT is also trying out more dedicated bus lanes in Kuala Lumpur, in collaboration with City Hall.

“We will have more dedicated bus lanes, and we want to see how effective this approach is in order for people to take buses. So for example, one area that we are working on right now is in Jalan Ampang. From Ampang to KLCC, we have a dedicated bus lane in the morning. So that helps in terms of reducing the travelling time between their homes and the city centre. And at a cheap fare, then you encourage people to take buses,” he says.

All these are just some of the programmes and reforms being undertaken by MoT to improve the country’s public transport systems. One thing for sure is, MoT is looking at all options to improve public transport for everyone across the country. The question is whether the public will be persuaded.

See also 'Government committed to both MRT3 and Penang LRT, says MoT'  

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