Challenges for the MRT and public transportation in the Klang Valley

The full MRT line from Sungai Buloh to Kajang has been operational for a week already. After the initial fanfare and trains packed with ministers, MRT has to now face the challenges of (i) reaching its daily ridership targets (ii) ensuring accessibility, affordability and integration and (iii) maintaining financial sustainability.

1) Reaching its daily ridership targets

This may seem like an obvious statement but the main challenge for the MRT is to get more and more people to use it. According to MRT, the planned capacity for the Sungai Buloh-Kajang line (Line 1) is a daily ridership of about 400,00 passengers. Each train set has four cars with a total capacity of 1,200 passengers and the trains will run at a frequency of approximately 3.5 minutes. More recently, this figure has been revised downwards to a ridership of 150,000 a day.[2]

It will take some time before users get used to taking the MRT including getting to know the MRT route, the feeder bus schedules and route, how to use the MRT to connect to other forms of public transportation such as the LRT, KTM and Rapid KL buses and the stations which have car parks.

To put the 150,000 daily ridership number in context, it is useful to compare to the daily ridership numbers for the Kelana Jaya and Ampang LRT lines (See Figure 1 below)

The Kelana Jaya line is the busiest with a daily ridership of 218,888 in Q1 2017 followed by the Ampang line with a daily ridership of 155,217. The KTM Komuter has a daily ridership of 111,163 and the KL Monorail trails behind with a daily ridership of 54,725.

The daily ridership of the LRT, KTM Komuter and Monorail experienced a decline in Q1 2016 due to the significant fare hike which took place in December 2015. In fact, all these rail lines have not recovered from their pre-Q1 2016 daily ridership numbers even though the LRT extension to Putra Heights started its operations in June 2016.

The increase in the daily ridership numbers from Q2 2016 to Q3 2016 was hardly significant. The daily ridership of the KL Monorail reached a four year low in Q1 2017 partly due to the delay in the delivery of the four car monorail by SCOMI to Prasarana (The dispute between SCOMI and Prasarana is still tied up in the courts).

The whole point of building an MRT line rather than a less expensive LRT line is to increase the passenger capacity. While the initial targeted daily ridership of 150,000 is a good target to aim for in the short term, in the longer run, the MRT Line 1 ridership should eventually exceed that of the Kelana Jaya LRT line.

In the meantime, MRT has to face the challenge to increase its daily ridership by ten-fold, from 15,000 before the line was fully operational, to Kajang to the targeted 150,000 now that Line 1 is fully operational.

2) Accessibility, Affordability and Integration

To increase its ridership, MRT has to be aware of the need for accessibility to its stations, the need to maintain affordable fares and integration to other rail lines.

In terms of accessibility, MRT has done a decent job in its feeder bus network that connects nearby housing areas to its stations. (The feeder bus network to LRT stations in comparison is far more limited). The bus routes can be downloaded from the MRT website although as far as I know, the routes and the bus schedules have not been installed at the bus stops yet. There is also no MRT app which shows these bus routes. Making this information more accessible will channel more people to take the MRT.

In terms of affordability, the price of the MRT fares is not too different from the LRT. A cashless trip from Kajang to Sungai Buloh costs RM5.50 compared to RM5.30 for a cashless trip from Gombak to Putra Heights. SPAD set the MRT fares so that they would be in line with the LRT fares. Dollar for dollar, our LRT and MRT fares are still more expensive than Singapore especially since Singapore practices integrated fares where a journey from home to work involving a bus trip and an MRT trip counts as one trip whereas, in Malaysia, one has to pay separately for a bus trip, an LRT trip and an MRT trip.

Many people are taking advantage of the 50% discounted fare now, which lasts until August 31. I think this is a good move in that it will allow more people to get used to taking the MRT during this period. The test will come after the date when fares revert to their normal rates. Will there be a significant fall in ridership similar to what was experienced by the Sunway BRT when ridership fell by more than 60% as a result of the imposition of ridiculously expensive fares? Only time will tell.

One way in which MRT can make it more affordable is to introduce a monthly pass at a cost of between RM100 to RM150 which entitles a passenger to make unlimited trips. Most metro lines in the world have some form of a weekly or monthly pass with unlimited trips. My Rapid used to offer this card for the LRT but has since been phased out. One of the challenges in introducing this monthly card may be the fear of lost revenue on the part of My Rapid(more on this below).

Finally, the MRT needs to be integrated with other forms of rail transportation in order to increase its ridership. For Line 1, there are numerous stations which connect to the KTM (Kajang MRT), to the Ampang LRT Line (Maluri MRT, Merdeka MRT), to the Sri Petaling LRT Line (Merdeka MRT), to the Kelana Jaya LRT Line (Pasar Seni MRT) and to KL Sentral (Muzium Negara MRT).

As the rail network in the Klang Valley expands after the MRT Line 2 and the LRT Line 3 are built, more stations will be integrated with the MRT lines. This kind of integration not only increases ridership on MRT Line 1 but will also have a positive spillover effect on the other LRT lines.

The only negative effect may be for some of the KTM stations such as Kajang since the frequency of trains for the MRT is much higher than the KTM Komuter.

3) Financial sustainability

Any discussion on the sustainability of public transportation has to involve the question of cost. The cost of constructing the MRT Line 1 has been the subject of public debate. The government announced that the total construction cost (not including land acquisition and the rolling stock i.e. the trains) was RM21 billion, two billion lower than the initially projected cost of RM23 billion. Others have disputed this cost, including how much was paid to MMC-Gamuda, the project delivery partner (PDP).

What is less well-known and less debated is the fact that MRT Corp, which is the asset owner of the MRT line, does not own the debt associated with the cost of construction. A Special Purpose Vehicle (SPV) called Dana Infra have issued bonds to finance the MRT Line 1. At the time of writing, Dana Infra has issued a total of RM36.9 billion in bonds (We don’t have a breakdown of how much of this was spent on MRT Line 1). This amount is projected to increase as the construction of Line 2 begins.

The advantage of the separation of debt and asset ownership is that MRT Corp does not have to worry about the debt servicing costs, which even based on the construction cost of RM21 billion, will amount to approximately RM1 billion a year. This way, MRT can focus on expanding its ridership and earning non-fare revenue through other means.

As the asset owner, MRT has signed an agreement with Rapid Rail Sdn Bhd, which is owned by Prasarana, to operate and run the train and feeder bus services. Prasarana already has the experience and the facilities to hire and train both bus and train drivers so it makes sense for the operations to be given to Rapid KL.

The agreement between MRT and Rapid Rail also states that MRT will receive all non-fare revenue while Rapid Rail will collect all fare revenue (MRT fare as well as feeder bus fare).

The challenge for Prasarana is to ensure that its MRT related operations are profitable. I had written last year regarding the financial challenges facing Prasarana. Because of its high accumulated debt, its revenue of roughly half a billion ringgit was barely sufficient to cover its financing costs. With the increase in Prasarana’s debt from the LRT extension and from the ongoing construction of the LRT 3 line, its debt servicing cost will definitely increase.

It remains to be seen if Prasarana can earn an operational profit from its MRT operations. The feeder bus network is likely to be loss making, at least initially, while the train operations will only be profitable if the ridership targets can be met. How long will Prasarana be willing to run these operations at a loss? How long will the Ministry of Finance subsidise Prasarana while it is running up these operational losses for the MRT line? We have to wait and see.

In the meantime, MRT faces the challenge of raising its income through non-fare revenue strategies such as property development around its stations, advertising and retail. Since MRT has no fare related revenue, this has put more emphasis on the need to look for non-fare revenue sources.

MRT opened up advertising concession agreements for its interior, outdoor and train advertising packages. Big Tree Outdoor (BTO) which won the outdoor advertising concession, estimates that as much as RM300 million can be generated from this 10-year contract.

MRT has also sold station naming rights at four of its stations which cost RM1.2 to RM1.5 million a year.

According to MRT’s commercial and land management director, Haris Fadzilah Hassan, MRT Corp is expecting to earn between RM22 million and RM25 million from retail, advertising and parking revenue annually. Whether or not this is sufficient for MRT to cover its operational expenses remains to be seen, especially since its administrative expenses for the Financial Year 2016 totalled RM53 million.

Perhaps, MRT can supplement its income via transit oriented property development, especially in selected locations along the MRT Line 2 which runs from Sungai Buloh through Serdang and all the way to Putrajaya.

Is MRT a game-changer?

Some people have commented that MRT is a ‘game-changer’. I don’t quite agree, at least for now. There is no denying that the rail system in the Klang Valley has increased its area of coverage over the past 20 years. The introduction of the MRT should be seen as an additional rail service in this larger rail network.

This is not to deny that taking the new MRT trains is a much more pleasant experience compared to the LRT. The stations are larger and better designed, there are more Park & Ride facilities available and the trains are wider. On Saturday, I parked at the Kajang MRT and took the train to Muzium Negara and then to Pasar Seni before going back to Kajang.

I have also seen many of the MRT feeder buses going to previously unserved housing areas in my parliamentary constituency to connect passengers to the Cheras Batu 11, the BTHO, the Taman Connaught and the Bukit Dukung MRT stations, just to name a few.

Perhaps the MRT can be called a game-changer when Line 2 (and perhaps Line 3) has been built and opened. But for now, I will do my part in encouraging the voters in my constituency to use public transportation especially the MRT and at the same time, monitor closely to see if MRT can successfully face the challenges I’ve posed in this statement. I wish them nothing but the best!

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ONG KIAN MING is the MP for Serdang  - Mkini