When I first learned that Metrobus Nationwide, the operator of the Metrobus service in the Klang Valley, was suing the Commercial Vehicle Licensing Board (CVLB), I did not know whether to laugh or cry.

I had heard recently that Metrobus was unhappy with the competition from RapidKL, especially since April 2007. I also knew that Metrobus was losing money from that competition. Yet, I never expected that Metrobus would launch a lawsuit against the CVLB.

The fact that this company would go ahead and sue the CVLB is not a laughing matter. In fact, it is a sad reflection of the messy state of public transportation in this country.

To be brutally honest, I have nothing but contempt for the urban bus services offered by Metrobus and I know that many people would agree. Their buses clog the streets of Kuala Lumpur and suburban areas, especially in the city centre around Central Market and the Kota Raya complex. Their drivers are reckless, driving at excessive speeds and taking risks with passenger safety. Many of their buses are old and poorly maintained, and belch putrid black smoke. Overall, Metrobus operations are unreliable and they give public transportation a bad name.

On the other hand, the operations of Metrobus are just a symptom of the rot that has been created in public transportation. I have made my feelings clear about the CVLB. If you want to know why more Malaysians do not use public transportation, you need to look no further than the CVLB. It is the CVLB that grants huge numbers of permits to these bus companies and does not enforce the rules that it sets out. It is the CVLB that continues to allow these bus companies to use unsafe buses. It is the CVLB that allows the companies to hire reckless and dangerous bus drivers to operate their buses and pay them unbelievably low wages. It is the CVLB that continues to grant operations permits to drivers with multiple summonses.

Ignoring the responsibility

The CVLB does all of this because it is a part of the Ministry of Entrepreneur and Cooperatives Development. The function of the CVLB is to encourage the development of entrepreneurs and cooperatives. This is based on two principles: first, to provide jobs, and second, to bring more competition into the market, as it is believed that competition leads to lower prices.

Therefore, the CVLB only needs to care about issuing permits for bus services to operate. It chooses to ignore the responsibility that it has, which is to ensure that those companies are operating in the interest of the public.

In Penang bus services reached a crisis point, thanks to horribly lax enforcement by the CVLB. It was so bad that the people in Penang approached the Ministry of Domestic Trade and Consumer Affairs in order to get someone to listen to their pleas. In 2006 the Penang government even proposed to cancel the existing permits and proposed a state-funded, state operated bus service, Bas Negeri Pulau Pinang, to replace them.

The CVLB told them that they had no authority to do so. Clearly, the CVLB had no interest in listening to the people of Penang and it had no interest in enforcing its own rules.

The problems caused by the CVLB are, of course, only part of the problems within public transportation. We must ask why the government continues to believe that public transportation (especially urban bus services) should be in the realm of private, competitive operators. We must ask why the government refuses to understand that proper urban transport services require subsidy in order to operate. We must ask why the government still believes that competition in public transportation is in the interests of Malaysians. We must ask the government why the CVLB is still allowed to exist and operate, when it is clearly working against the public transportation industry.

I began by describing the problems caused by bus operator Metrobus and the CVLB a government regulator. I also linked these problems to the existing set up for public transportation. That takes me to the reason for this issue, namely, the competition offered by RapidKL.

When RapidKL was created in 2004 it was supposed to be a reliable alternative to the existing competitive bus companies. When it began the restructured "hub and spoke" bus operations from January 2006, it was supposed to provide more frequent and more reliable services to a larger area. Unfortunately the "hub and spoke" operations could not stand up to the traffic congestion on Malaysian roads. There were no proper interchanges that were easy for passengers to use. Malaysian passengers were also not used to the idea of changing buses, and RapidKL did not make this system work properly because it did not have enough buses and did not plan routes carefully.

rapid kl bus public transportation 021107That is why RapidKL was forced to restructure their operations and began new services from April 1, 2007. However, these new operations put RapidKL in direct competition with Metrobus and other bus operators.

I have stated many times that RapidKL was premature in restructuring their system. I have expressed my views that RapidKL should be working to increase the market for public transportation, not compete with other operators within the market. But the people at RapidKL are happy to compete with other companies. They are happy that in the past year they have increased the number of passengers on their buses (the load factor) because it means that they have increased profits. In other words, they are happy to be operating like Metrobus and the other bus companies, putting profits first, rather than service.

Unfair business

The problems within the public transportation industry simply cannot be fixed by setting up a government operator under the current system and giving it more money than the other companies. This is an unfair business practice and it wastes resources.

Let me be specific. Currently Metrobus and RapidKL compete on 40 routes and according to the submission, Metrobus is losing RM88,000 per day as a result of this competition. But the truth is that passengers are losing the most! Vital resources are being wasted with this competition. Instead of competing on 40 routes, RapidKL and Metrobus could each offer 40 distinct routes instead. Instead of 40 routes, there would be 80 routes! That would truly benefit the people and increase the market for public transportation.

But there is no way that Metrobus can offer these routes. Metrobus has to fund its operations 100% from fares paid by passengers. There is no way, under this current setup, that Metrobus can offer bus services on non-profitable or "social" routes. RapidKL can offer these routes, but why should a government operated company be forced to operate at a loss while a private company is allowed to profit?

If the government wishes to achieve its stated goal of increasing the market share of public transportation, then it must change the way Malaysians see public transportation. The best solution is to change the current setup into one that promotes public transportation as a vital service. The only way to do this is to have operator that think as service providers, not profit-conscious businesses. The best way to encourage companies to think of service first is to provide them with the incentive to do so.

First there is the financial incentive. Providing subsidies to RapidKL is allowing better service. However, if the Ministry of Finance is providing subsidies to RapidKL, it must provide subsidies to all urban bus operators. This would be fair to all operators. It would increase the amount of funds available to the bus operators, allowing them to improve service. This improved service would restore the confidence of passengers, who would be more willing to use public transportation.

At least, this should happen in theory. But, as I have stated before, I am not confident that this would occur. My observations of Metrobus suggest an improved subsidy would be no guarantee of better operations. What has been happening with RapidKL bus operations over the past year is an example. RapidKL may have the subsidy but it does not operate enough buses, and it focuses too much on profits and competition and not enough on service. RapidKL drivers are well-paid, but some are even starting to behave like Metrobus drivers, shouting at customers and insulting people. Clearly, having money does not mean that the companies will provide better services.

Control the purse strings

So how can we make this solution work? Well, the answer is actually quite easy. The government needs to control the purse strings. Instead of offering a direct subsidy, the government should offer indirect subsidies. The government can fund the capital costs of the bus companies, allowing them to use the farebox revenues to pay for their operations. The companies are then tied to the government.

This system is already operating in Malaysia. Prasarana, the National Infrastructure Company, owns the buses which are operated by RapidKL. This means that RapidKL has been able to save money because it does not have to pay the capital costs of a new bus fleet.

I recommend that Prasarana extend this service to the other bus companies. Prasarana can buy buses from local manufacturers like Nissan Diesel, and buy bus chassis or fully built buses from China. These buses can be fitted out by local coachbuilders like SKS and Scomi Coach (formerly known as MTrans Bus). Prasarana can then lease these buses at preferential rates to the urban bus operators like Metrobus and Len Seng/Permata Kiara and SJ Bus. This would allow these companies to retire the old buses in their fleets. The money they save by getting new buses at a low cost can be used to fund their operations, expand their services, and hire high quality employees.

Beyond the financial incentive, there is also the market incentive. It is absolutely important that Prasarana retain absolute control over the bus fleet and this should be a condition of the agreement. The bus operators would only be operators under contract, just as RapidKL is an operator under contract. Being under contract will be an incentive for the companies to work harder. If they do not work hard, they would lose access to the market and have their routes given to a competitor.

The terms of the contract should be very strict and clear. There should be a strong set of Key Performance Indicators set out by Prasarana, as well as strong enforcement of these KPI and of course, Malaysian law. For consistency, the bus operators should also be required to operate using the standard of service and the same integrated fare and daily pass used by RapidKL. They should also offer the option of payment using the Touch N Go card.

Most importantly, the contracts should have a time limit, with an option to renew. To be able renew the contract the company must gather positive feedback from passengers over the length of the contract period. If feedback is poor Prasarana should have the option of taking over the buses and giving them to the other bus companies to operate. The risk of losing access to the market, and losing control over their buses, or losing their contract for not pleasing passengers would encourage the bus companies to operate proper high quality bus services.

More reliable service

Together, these incentives would encourage the bus operators to operate better, more reliable services. The improved services would appeal to more Malaysians, who would become more confident in using public transportation.

As long as the system is properly regulated and enforced, the bus operators will provide a high quality of service and the interests of passengers will be taken care of.

This can be done and it can be done starting now. But first, we have to do something about the CVLB. I believe that the time has come for the CVLB to give up its responsibility for urban bus services.

That is why I propose that all urban bus operators should be licensed by the Ministry of Finance instead of the CVLB.

This would allow the ministry to introduce a proper and effective system of subsidies and regulations and enforcement, such as the ones outlined in this article.