60% FARE SUBSIDY FOR ASIA MOBILITY. A VERY GOOD BUSINESS MODEL.

 Someone sent me this video about that Asia Mobility issue. Its a 47 minute video. I have done a sort of running commentary of the video. My comments are based on the conversation in the video.

 

 

Premesh Chandran co-founder of Msiakini. From their conversation Premesh is apparently a shareholder (co-founder) in this venture. Not bad bro. From running with the hares all these years to now making hay.

Ramachandran Muniandy - CEO of Asia Mobiliti.

DRT or Demand Responsive Transit is actually a high fallutin way of saying "on demand vans" aka "bus on demand" aka "e-hailing minibus shuttle between house and MRT station, heavily subsidised by public funds".  Say what you like but that is what it is to the public, the end user. Because that is what you are getting. Except e-hailing is available 24 hours. This one operates for 14 hours only.

Sgor mobility - from what has been spoken in the video it will cater largely or solely to areas with MRT / LRT train stations. It is a simple shuttle service between your house and the nearest MRT station. There will be no DRT in Kuala Selangor or Banting yet. Not for a long while yet.

November 2023 two zones, 3rd and 4th zones since February 2024.

Contract awarded to Asia Mobiliti by Sgor State govt.

DRT is NOT a new thing at all. "DRT" sounds high fallutin but it is just e-hailing. Here is something from the Ministry of Transport, which describes e-hailing PUBLIC TRANSPORT.

" e-Hailing Services  :   Intermediation business (e-hailing) is a service provided to book public transport services through electronic applications. These services include e-hailing vehicles and taxis.

E-hailing vehicle is a private vehicle used to provide public transport services to passengers who book through electronic applications.

The vehicle shall be a motor vehicle with a seating capacity of four (4) persons and not more than eleven (11) persons (including the driver)."

So Grab, Buddy ?, EzCab, inDrive, Mycar etc are all e-hailing companies. The main difference is the existing e-hailing companies can seat "four (4) persons and not more than eleven (11) persons (including the driver)".

The DRT is targetting the 12 - 19 passengers niche, using mini-buses and drawing heavily upon gomen subsidies. Do read on.

And macha, all e-hailing is a digital experience. Ordering food through Food Panda or Grab Food are all digital experiences. They all sound equally high fallutin.

"to solve the problems of public transport in the cities of the developing world". Wow ! Fantastic. But will other Asian countries give you such generous subsidies to run the business which you are getting now? Your business model is heavily dependent on the State gomen subsidising your passenger fares - at least 60% subsidy. Do read on.

This technology is not new. It is now quite "off the shelf". It is simply e-hailing software which is well established. So many e-taxis, e-parcel delivery services, e-food delivery, e- grocery shopping use pretty much the same software. Of course you have to modify the software for specific requirements.

For example according to Ramachandran the other company Badanbas also had exactly the same app ("that does exactly what we do")- which they got from Japan. Rama also says that this technology has "already been proven in other cities around the world". 

So this technology is quite common already. So brother if this technology is already existing and proven around the world then how are you going to pioneer your DRT services to other cities in Asia? "Asia Mobility" and all? Perhaps it shall remain "Malaysia mobility" after all.

Approved by the Land Transport agency in December 2022? That was just one month after the new PH gomen came to power in November 2022. What can I say except congratulations. Indeed this is meritocracy at its best.

Hannah Yeoh is an MP in the DAP.  Prior to this she was a two term DAP assembly woman in the Selangor State gomen.
 
Now Hannah Yeoh's party the DAP is the single largest party in the PH gomen in  Selangor  with 15 out of 35 PH State seats.  The State Assembly has a total of 56 seats.  The PH (minus BN) has been in power in Selangor for three straight terms.  At the Federal level, the DAP is again the largest party in the PH gomen coalition with 40 Parliamentary seats. Certainly the DAP has significant clout in both the Selangor State and Federal gomen.

Ramachandran says "we have national interest at heart here".
He also talks about "robbing bright people with talent from actually contributing".

Fine bro. But can you do it WITHOUT that 60% subsidy by the public? You said that in your Proof of Concept for the past seven months your cost is RM5.00 for each passenger. You said the State gomen pays you a subsidy of RM3.00 and you collect RM2.00 from the passenger.  That is a 60% subsidy. How bright do you have to be and how much talent do you need to run a business where the State gomen pays you a 60% subsidy for your passenger fare?  You dont have to be a rocket scientist.

But how can you guarantee that the mini-buses will not run empty? You say that to save cost  "if there is no booking the mini-bus will not run". Ok but supposing only THREE people book the mini-bus at a certain time then the mini-bus will still have to go and pick them up, even though there are only THREE passengers for a 19 seater mini-bus. That is not cost effective at all. It can suddenly become a very high cost per passenger operation. This is where you need that 60% fare subsidy from the State.

There is some confusion over that 60% gomen subsidy. Right now the feeder buses are free. The people do not have to pay a fare. (But their schedules are not reliable). There is also no subsidy because the feeder buses are run by the gomen. But in this new business model the gomen  has to pay DRT RM3.00 per passenger or a 60% subsidy. That is using public funds. Plus the public must now pay RM2.00 each. So the public has to pay for the entire RM5.00 "cost" of operating this business.

Ramachandran says for seven months they have 17,000 riders a day. So DRT has been earning 17,000 x RM3.00 = RM51,000 subsidy per day or about RM1.5 million subsidy per month. The past seven months DRT has already "earned" RM10.5 million in subsidies.

The three senior Press guys in the video did not ask what is the total project cost? Billion Ringgit figures have been mentioned. What is the exact figure? And how are the funds going to be applied? Capex versus Opex etc. Things like that. What is the Capex breakdown? The devil is always in the details.

And how long is the concession period? There must be a concession period. 5 years? 15 years? 30 years? What?

Are there any other subsidies, cash grants, soft loans, financial concessions granted by the gomen? For example who will own or pay for the mini-buses? DRT or the State?

No this is not a great model of a public-private partnership. This is a straight forward cash-subsidy using public funds business model. Public funds have a socio-economic objective whereas the private partner always has a profit motive. Not exactly the best mix.

And no the State CANNOT have ANY SKIN here because the State is playing with public funds. It is Mr Public Taxpayer who has ALL the skin in this venture. RM3.00 subsidised by public funds and RM2.00 paid as fares by each passenger. That is 100% public footing the bill.  

Premesh says they welcome competitors. Really? How very christian bro. Does that mean the State will be ready to provide another 60% subsidy for the other "competitors" as well? Or will you be the only beneficiary of that 60% cash subsidy from the State? If the State continues dishing out 60% subsidies I am sure even the Arabs will suddenly want to become mini-bus shuttle operators here in Selangor.

But if the State will not provide 60% cash subsidies to other new competitofrs, then DRT will likely become yet another monopoly in this country.  Who will be fool enough to run public transport without State subsidies.

I have some other suggestions.

1. Why not go full meritocracy? 

Why not allow anyone with a 12 to 19 seater minibus to operate this glorified shuttle-bus service between house-to-MRT-station in Selangor ? And without any subsidies having to be paid by the gomen? Just break open the market. 

The fares will have to be regulated but the gomen can quid pro quo by cutting import duties and other taxes on mini-buses used for these shuttle services. That will make the purchase price of the mini-buses cheaper and make lower fares feasible. But it must be at market risk. Anyone and everyone who is interested can operate these services. This is 100% meritocracy.

2.  Tell the Ministry of Transport to make a tiny, tiny change to this part of the e-hailing definition  "The vehicle shall be a motor vehicle with a seating capacity of up to nineteen (19) persons (including the driver)." 

This may attract the existing e-hailing fellows to begin operating these mini-bus shuttle services along all the MRT routes in Selangor / Wilayah. They will know how to sort it out. No need for subsidies, using public funds etc.

3.  In Rome they have a very simple system. At every bus stop there is a simple LCD monitor which tells you when the next bus will be arriving and the bus route number. And of course there is a bus stop near every subway station. Or while you are at home or in the office you can visit the public transport homepage and based on your mobile phone's location it will instantly tell you the bus stop nearest to you and when the buses will be arriving plus the bus route number as well as the train arrival times at the nearest subway station. So if your house is a seven minute walk to the nearest bus stop, you can time yourself to board the bus as well as time yourself for the next train at the subway station. This is a wonderfully easy system that we used while we were in Rome a few years ago. They just make sure that the buses and trains arrive as per schedule. It works very well. Apa susah sangat. No need for 60% subsidies. 

The views expressed are those of the writers and do not necessarily reflect those of MMKtT.