Double-tracking: stop the madness!

Kim Quek

The award of the RM12.5 billion contract to build the Ipoh – Padang Besar (Thai border) double-tracking railway is destined to create the most wasteful white elephant among the many white elephants already existing in this country.

 

This is crystal clear from a cursory glance at the current operation of the state-owned monopoly Keretapi Tanah Melayu Berhad (KTMB) or The Malayan Railways Ltd.

 

Traversing the Malaysian Peninsular with a network of 1,700 km of railways, KTMB only raked in RM288 million in transportation revenues in 2006, made up as follows:

 

               Intercity services                                                    RM  71 million

               Commuter services in Kuala Lumpur areas             RM  85 million

               Freight services                                                      RM 132 million

               Total                                                                      RM 288 million

 

Excluding the commuter services in the KL areas (175 km), from our calculations, the total pan-peninsular transportation revenue is RM 203 million, yielded by a network of 1,525 km of railways (1,700 – 175).  Apportioning 30% of this total revenue to the Ipoh – Padang sector of 329 km (though this sector forms only 22% of the total linear length of 1,525 km), the corresponding revenue is RM60 million.

 

Granted that traffic volume will increase substantially after completion of the double-tracking project, but there is a limit to this increase.  Assuming a generous revenue growth of 7 folds, future annual revenue for this sector will be RM 420 million  – a mere 3.3% of the initial capital investment of RM12.5 billion.

 

Such meager revenues simply mean that due to its low usage, this project will not have any significant impact on the economy or on transportation in this sector after its completion. 

 

On the other hand, let us pause for a moment to ponder over what this astronomical sum of public funds – RM12.5 billion – means to the people.   

 

In the first place, it means every family in this country will have to shoulder an average burden of RM 2,500/-. 

 

Then, if this money is spent for other purposes, the government can complete any one of the following feats:

 

• plant 1.2 million hectares of matured oil palm, which are capable of generating annual revenues of RM 10 billion (5 million tons of palm oil @ RM 2,000 per ton),or
• build 400,000 low cost housing units, which is capable of housing to 2 million have-nots, or
• establish 100 medium sized institutions of higher learning, capable of taking in 300,000 students for tertiary education, or
• build 1,200 km of expressways (equivalent to one more north-south expressway plus one more east-west highway).  

 

The glaring contrast in returns between building the double-tracking project and any of the abovementioned alternative usages clearly indicates that this project is of very low priority at this stage of our development when the country is still short of funds to address many social-economic needs urgently.  But our government has chosen to implement it, and worst, doing it in circumstances that are most deplorable.

 

First, there has never been a proper cost/benefit analysis.  For a project that is labeled as the largest ever undertaken (when completed from north to south), this omission is shocking though perhaps understandable, as the cabinet should have been aware that the project proposition could not have survived the preliminary round of analysis.

 

Second, this project has never been properly discussed in the cabinet – not in Mahathir’s reign when the contract was first dubiously awarded to Gamuda Bhd – MMC Corp Bhd joint venture in Oct 2003 (but shelved in Dec 2003) (see note 1), nor during Abdullah’s premiership when it was revived in Mar 2007 (see note 2).

 

Third, it was the Cabinet Committee on Public Transport – not the Cabinet – which made the decision to revive the project and to award the contract to the same contractor in a subcommittee meeting held on 16 Mar 2007 chaired by Deputy Prime Minister Najib Tun Razak, who also made the announcement.  That such an important project should have been left to Najib’s subcommittee to decide reflected Prime Minister Abdullah’s weak leadership as well as serious-flaw in the decision-making process of his government.  One cannot help but ask: Did Najib usurp the authority of the Prime Minister and the cabinet?

 

Fourth, no open tender has been called for this project.  Worst, the decision to award the contract to Gamuda – MMC was made even before prices were known to the government, thus weakening the latter’s bargaining position and throwing the door wide open for collusion and corruption.  For a contract of this size, billions of ringgit could easily have been leaked, further burdening the taxpayers.  What happened to Abdullah’s promises of open tender, transparency and accountability?

 

Fifth, it is most improper that the momentous announcement on the official award of this contract with a finalized price should have been left to the contractor, who also doubled up as the spokesman to speak in length to drum up the project’s economic justification, while the government was keeping completely mum?  Is it any of the contractor’s business to justify public expenditure to the taxpayers?  Shouldn’t that be the responsibility of cabinet ministers? Why have they hidden behind the contractor?  Shouldn’t the ministers have appeared in full force to bask in the glory of launching of such a stupendous project, if they really believe it will yield handsome rewards to the people?

 

Noting the absurd return of this project in relation to its huge capital layout, a series of serious questions beg for answers.

 

Why did former premier Mahathir Mohammad push for the double-tracking project so urgently, to the extent of clandestinely issuing the letter of offer to Gamuda – MMC only days before he stepped down on 31 Oct 2003?   The contract then was for the construction of both the northern Ipoh-Padang sector and the southern Seremban-Johor Bahru sector for a total contract sum of RM 14.5 billion.

 

Having rightly shelved the project by the new Abdullah cabinet in Dec 2003 due to its low priority, why was it revived in Mar 2007?  What was the rationale for its revival?  Who made the decision?

 

Finding no compelling economic or social rationale, what conclusion can we draw other than to attribute the motivation behind this project to the base human instinct of greed – both on the part of giver and recipient of the contract?

 

 

Note 1: The circumstances under which the double-tracking project was awarded in Oct   2003 (under Mahathir) and shelved in Dec 2003 (under Abdullah) were described in my article listed in Malaysiakini on 17.12.2003 under the title “Double tracking: government back on track”, and also published in my book “Where to, Malaysia?” as Article No. 71.

 

Note 2: I commented on the revival of the project in Mar 2007 in my article listed in Malsaysiakini on 19.03.2007 under the title “Najib runaway train or Pak Lah Express changes route?”.