The urgent issue of the deplorable state of the private sector stage bus operators in West Malaysia (and also East Malaysia) and their expected demise

 

The dysfunctional  stage bus industry and the affected public transportation system are the inevitable outcome of years of misguided forced amalgamation exercise and poorly executed transport policies, that have insidiously undermined a once vibrant private sector stage bus industry.

Datuk Mohamad Ashfar Ali (President) Pan Malaysian Bus Operators Association

It is now common knowledge to industry players, regulators, and policy makers that the whole stage bus industry is in the doldrums despite massive amounts of public capital outlay and mounting public subsidy (see NST,04-01-2013, p9.81,82,'Prasarana plans RM6b sukuk to fund projects').

The dysfunctional  stage bus industry and the affected public transportation system are the inevitable outcome of years of misguided forced amalgamation exercise and poorly executed transport policies, that have insidiously undermined a once vibrant private sector stage bus industry.

PMBOA notes the existence of the following:

(1)  The lack of a level playing field between state-owned and government-linked companies (GLCs) such as Prasarana/Rapid and MARA, and the private sector operators;(2)  The hotchpotch of government transport policies that not only go against the essence of NEM, but creates government privileges for special interests that hurt productivity and reduce efficiency;(3)  The urgent need to have transparent operating rules and regulations, and an inclusive consultation mechanism that promote the rule of law and protect the individual private sector, stage bus operators from arbitrary government regulations to ensure fairness, and promote higher incomes  and faster growth.(4)  The omission of any mention of the role of private sector bus operators in the Draft National Land Public Transport Master Plan(5)  Numerous outstanding issues facing the private sector bus operators which have not been addressed/resolved for years by the government despite being repeatedly highlighted.

PMBOA feels that private sector stage bus operators have lost economic freedom due to a lack of a level playing field, the encroachment of its corridor from predatory public backed stage bus operators, and the arbitrary operational rules and regulations.

The true cost of lost of economic freedom is not only slower economic growth but also poorer performance on social indicators such as health, poverty eradication, environmental protection, and loss of many productive hours due to traffic gridlock.

The government can no longer feign ignorance of the decimation of the private sector stage bus operators, and the entailed economic, social and political costs. The private sector stage bus operators are under mounting financial and public pressures to its shareholders and the public commuters, respectively, to improve on its fare collection through the expansion of new buses so to provide world-class service to the public commuters. This comes down to a fiduciary responsibility to the shareholders and taxpayers, as well as the exercising of public trust (amanah) when utilizing public subsidy.

As a positive step forward - which is to create a freer national economy that is better to achieve such progressive social goals than economies that rely more on government regulation and centralized control - PMBOA recommends the followings:

(1) The riqht to exit from the staqe bus industrv bv private sector operators staqe bus.

The private sector stage bus operators who do not or cannot continue to operate economically should be given the right to exit the stage bus industry. This must be accompanied by fair compensation to be paid by the government based on "the Melaka formula". The collective appeal for the right to compensation is not a form of veiled threat of economic boycott by the private sector stage bus operators, as it is undertaken on a case-by-case voluntary basis. lt no longer makes any business sense for the government to continuing bankrolling Rapid, MARA and other state-owned stage bus companies, to compete head-on with partially subsidized private sector stage bus operators. The end result is financial hemorrhaging for both set of players, and increasing the ire of taxpayers and voters in an election year;

(2) The rationale of "the Melaka formula"

"The Melaka formula" (adopted by the Melaka State Government when it recently acquired all private stage bus operations in the State of Melaka) is based on the market valuation of operational buses of the existing private sector stage bus operators + retrenchment compensation for all its employees + a lump sum payment to help the operator wind up its affairs.

The government has over the last decade gradually expanded the network of Rapid nationwide unilaterally (from Kuala Lumpur to Penang and now Kuantan) for social and increasingly, political considerations, such as the recent BN campaign promise to introduce Rapid service to Kota Baru, once Kelantan is wrestled from the current PAS-led government and the announcement by the Prime Minister during the 2013 Budget that Rapid will be expanded to lpoh and Seremban.

Since the intention of the government is abundantly clear that Rapid, (despite Rapid KL's operating cost of RM280 million against a bus revenue of RM180 million last year), is to nationalize the stage bus industry, then it is only fair to compensate the private sector stage bus operators who do not/or cannot continue to operate economically and want to cease operations. Failure to compensate private sector stage bus operators is tantamount to backdoor nationalization without compensation, which is another by-word for outright expropriation.

(3) A level playing field

For those private sector stage bus operators wanting to continue operating, there must be a restoration of the corridor system so that each well-demarcated corridor is served solely/jointly by Rapid and/or the private sector operators. Any form of fair and healthy competition is good for the consumers, the industry, and the national economy. There must be no favoritism in the allocation of corridor and all players must be genuine operators; no rent-seekers who operate on the pajak-system are to be allowed.

PMBOA (founded in 1951) consists of responsible members that have operated for as long as three generations (some since the 1930's). Many of these privately owned stage bus companies have been owned and managed by a succession of capable individuals in the "can do" spirit of "Malaysia Boleh": they have steered their bus companies through the Great Depression of the 1920-30s, the Japanese Occupation 1941-45, the communist insurgency 1948-60, the tumultuous events of May 13, 1969, and the endless business cycle of boom and bust. PMBOA members have been speaking collectively and diffidently for a fair deal, whether to continue in the business on a level playing field, or to exit in an equitable and dignified manner.

For a popularly elected government, and one that has undertaken the lslamization of the administration, its management of economic affairs must be based on the inclusive spirit of mushawarah (mutual  consultation), and compassion. Mushawarah means greater transparency and inclusiveness for all stakeholders, big or small; compassion means compensating hardworking rakyat for their 'blood, sweat, and tears" justly, whether in a small and medium enterprise or a government-linked company.

lt is the duty of any responsible government of the day to show that it is acting in good faith - after years of unilaterally and surreptitiously encroaching on the routes of the private sector stage bus operators by declaring it as a public policy to compensate those loss-making private sector stage bus operators that may decide to exit from the stage bus industry.

It is not for PMBOA to submit a list of members/operators, who may plan to curtail their losses and exit from the industry, a priori to the declaration of a policy of compensation by the government. For doing so would again be misconstrued by public policy makers as another veiled threat by PMBOA members to mount a stoppage of an essential public service, and taken by publicly owned companies such as Rapid as a pretext to further expand their route coverage which is the case of Rapid's expansion to Kuantan and the announced expansion to Kota Baru, lpoh and Seremban.

PMBOA's members deserve due recognition, in whatever and which-way they are being evaluated, for their contribution in nation-building, and as taxpaying corporate citizens. An amicable solution can only bring about greater accountability to public finance, an end to the sclerosis of the stage bus industry, and the promotion of greater economic freedom for all economic players, big or small, and the restoration of good faith in the government.

PMBOA members have their legal right to demand for fair compensation if it is the government's intention through Rapid to take over the entire or partial stage bus industry, or any industry, that it deems of national interests. lt is about the right to the protection of individual and property right, which is the essence of liberal democracy, as much as living up to our shared Asian cultural value of repaying gratitude for those who have made sacrifices for the local community, the local economy, and the well-being of our nation.