Raise cost efficiency to reduce transport expenses

Nick Tan

Private parking facilities in the KL downtown business district typically cost more than RM300 a month, a substantial cost to many households. – The Malaysian Insight file pic, November 28, 2022.

PRIME Minister Anwar Ibrahim’s immediate task must be to tackle high prices of goods and living costs. 

In a previous article, I showed that motor vehicle loans accounted for a significant portion of household expenditure, especially for low- and middle-income groups. 

Public transport use is limited by a lack of first- and last mile connectivity. The urban design is car-centric, which leads to time-saving for drivers.

This article proposes a way to achieve transport-related cost efficiency from the perspective of the people.

The monthly pass for public transport is beneficial, especially for the working class and could increase ridership. But in reality, motor vehicle use is still significant.

As inflation rises and we are not a welfare state, the government has to find ways to achieve cost efficiency for transport expenses.

Reducing highway tolls

The Pakatan Harapan (PH) manifesto promises to lower certain highway tolls.

It is impossible to abolish all toll concessions as it involves large amounts of compensation.

Too many highway concessions have been awarded in the past, heavily favouring the concessionaires, becauses the highways were financed on a build-operate-transfer model.

So is it wise for the government to acquire selected highways?

Besides compensation, the government still needs to consider the long-term commitment of refinancing the current highway owners because the highways are to be financed by a bond instrument.

Other factors need to be considered, such as the usage rate of highways by motor vehicle owners.

The recent takeovers of a several Gamuda highways by a private company, which has proposed to establish a trust and refinancing mechanism to fund the buyouts, indicate that there is still a need to keep tolls for sustainability.

The multi-tier pricing of the congestion charge to replace standard toll fees proposed by the previous PH administration met with opposition and calls for clarification on whether traffic would be diverted to other highways.

How else can the government reduce toll fees or assure motorists that the rates would not be raised?
The possibilities include setting the rates according to distance on different highways, establishing a consortium for material pooled procurement, speeding up the implementation of multi-lane free flow (MLFF) on tolled highways (like Singapore’s ERP system), and raising the economic scale of outsourced cleaning workers (while not compromising their welfare).

Reduce parking costs

Parking is a substantial cost to many households. It costs RM4 a day to park at the LRT Park-N-Ride and up to RM80 a month for 20 working days.

Private parking facilities in the KL downtown business district typically cost more than RM300 a month.

Perhaps the government should consider introducing a monthly parking pass system for target groups in Prasarana or MRT Corp-owned parking facilities.

Scale up e-payment usage

Scaling up digitisation usage will lead to cost efficiency for businesses and consumers alike.

For example, the use of Touch ‘N’ Go (TNG) NFC cards for parking or public transport rides will help the commuters avoid the incurred surcharge by reloading the card through phone.

The usage of RFID for the tolls and for the parking facilities and petrol stations in future, would be cheaper and more efficient compared to the continued use of SMART Tag.

With the aforementioned MLFF to be implemented by year 2025, I hope that the economic scale of RFID usage can reduce the cost of installing RFID detection systems for the operators.

For the operators, they can further integrate e-payment to achieve cost efficiency, and gradually retire the token machines for trains as well as ticket payment for parking facilities. E-Payment systems can be seen installed in many places such as TNG and payWave systems.

In short, achieving cost efficiency in highway management and E-Payment systems will prevent further hike in toll charges in future and have possibilities to reduce the charges by a certain percentage. 

The government should also explore ways to cash-aid targeted income groups for Park-N-Ride. Perhaps this could also benefit some middle-class people from the social aid the government has provided. – November 21, 2022.

* Nick Tan Beng Teong graduated with Bachelor of Economics at University of Malaya. A member of Agora Society, Tan believes in policy reforms in order to build a better nation.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.

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