[sustran] Re: monorial in malaysia

[Karl Fjellstrom]

Walter and Craig, thanks for the information below. I can add that
Transcoach, a subsidiary of the MTrans Group, has a 51% owned factory in
Kunming.

Originally the concessionaire for the monorail controlled by Vincent
Chan and David Chew. But now the monorail, which is still the only
non-government rail operator in KL (though it has received very
substantial govt assistance to stay afloat) is owned by KL
Infrastructure Group which is in turn owned by MTrans. MTrans is
controlled by David Chew and are aggressively trying to expand their
monorail business.

Originally there was a turnkey contract with Itochu (which subcontracted
Hitachi and Toyo Engineering to build the monorail system) but after
1998 the government decided to cut costs by building the system locally.
MTrans are now marketing themselves as the only monorail builder outside
Japan.

The familiar pattern (e.g. with STAR and PUTRA) involves an initially
private operator on some kind of BOT arrangement which during the
construction of the system makes a fat margin as a contractor. The
private sector investor's equity investment in the operator of the
system is guaranteed by the government and it quickly became apparent
with STAR and PUTRA that there was no realistic chance of commercial
viability or a return on the investment (let alone repayment of loans)
during the operating phase. Therefore the operators had little incentive
to operate efficiently or try to take innovative measures which might
have a short term impact on revenues but a longer term benefit, such as
better integration facilities. In the end what happened with both STAR
and PUTRA was that the government had to bail them out in Nov 2001 and
take ownership. A subsidiary of the MOF is now the operator. With PUTRA
after 3 years of operation debts were more than US1.4bn. Another
interesting facet of the PUTRA arrangement was that Renong, a
politically very well-connected conglomerate, was a major contractor
during construction, the operator, one of the major bankers financing
the system, as well as apparently the supplier of the Independent
Checking Engineer who not surprisingly failed to shed light on massive
cost overruns during the construction of the system. Typically many of
the aspects of the arrangements whereby the government guarantees the
operators are a bit murky.

The end result, sadly, is that the government bears the risk of very
aggressive ridership forecasts and ends up being consigned to redeeming
ill-conceived projects. These projects are a massive financial burden
for the country and city, and don't meet the mobility needs of the
people. STAR, PUTRA and the monorail together, which amount to about
65km of rail, won't carry much more than about 2% of motorised trips in
KL; much less than the existing and severely neglected bus system.
Another undesirable side-effect is that such govt guarantees provide an
incentive for high cost megaprojects and dilute normal principles of
private sector risk in approaching such projects.

Monorail's prospects are probably better in that they may at least be
able to cover their operating costs given the prime location of the
route.

I don't know the details of their involvement in Jakarta but presumably
they'll be looking for high profit margins on design and construction
contracts and some kind of guarantee of their equity investment (or
alternatively as with Putra a minimisation of their equity investment by
relying almost wholly on debt) in the operator of the system, in case
the operator goes bankrupt!

Regards, Karl

-----Original Message-----
From: sustran-discuss-bounces+karl=dnet.net.id at list.jca.apc.org
[mailto:sustran-discuss-bounces+karl=dnet.net.id at list.jca.apc.org] On
Behalf Of Walter Hook
Sent: Tuesday, 14 October 2003 9:12 PM
To: Asia and the Pacific sustainable transport
Subject: [sustran] Re: monorial in malaysia


interesting.  thanks.  we are working with Jakarta on a bus rapid
transit system, and of course this monorail caused the usual confusion.
i ran into this malaysian company in Kunming, where they were also
proposing an elevated structure.  It sounds like part of Malaysia's
industrial policy to try and prop up this failed company which they now
own.


----- Original Message -----
From: "Craig Townsend" <townsend at central.murdoch.edu.au>
To: "Asia and the Pacific sustainable transport"
<sustran-discuss at list.jca.apc.org>
Sent: Monday, October 13, 2003 11:07 PM
Subject: [sustran] Re: monorial in malaysia


> Walter,
>
> I know a bit about the project, but I would be interested to learn 
> more if anyone else could add anything (or if anything I've written is
inaccurate),
> particularly concerning which entity owns and runs the KL monorail, 
> who owns the technology, its performance since opening, etc.
>
> In 1982, a Swiss firm was hired by a government-linked Malaysian 
> company
to
> develop a 5 kilometre cableway, an aerial tram running on cables 20 
> feet above the central business and shopping district. In 1983 a 
> Transport Planning Committee set up by the Federal Territory Ministry 
> officially approved the overhead cable car system which was to be 
> developed by Swiss companies, and a technical appraisal of an "Aerobus

> Pilot Line" was produced in the same year. The project didn't progress

> much further, and
in
> the 1990s a turnkey concession contract was signed between the 
> Malaysian government and Hitachi of Japan to build a monorail in the 
> same general alignment. The project was under construction when the 
> 1997/8 financial crisis hit, and liquidity problems for the project 
> led to government assistance and "nationalization" to a Malaysian 
> company run by Vincent
Tan,
> a Chinese Malaysian tycoon with close links to Prime Minister 
> Mahathir.
>
> More recently, the Malaysian government has been seeking new projects 
> at home and abroad for transport infrastructure companies, including
companies
> involved with the monorail and the LRTs. Malaysian road 
> building/maintenance companies have picked up some contracts in 
> Australia and India. The national government has also been pursuing 
> road and bridge projects in Penang, where there has been some local 
> opposition to the projects. Some government ministers have also 
> suggested that KL-type LRTs could be built in Penang, although locals 
> there have been arguing for less capital-intensive public transport 
> projects.
>
> Craig
>
>
> At 12:36 PM 13/10/2003 -0400, you wrote:
> >does anyone have the low down on this monorail project in Kuala 
> >Lumpur?
The
> >company, Mtrans Holding, has tied up with some indonesian companies 
> >and
is
> >promising to invest $400 million into a monorail in Jakarta.  Mtrans
Holding
> >seems to be the manufacturer of the rolling stock.  i assume they are

> >insulated from the financial consequences of a bankrupcy in the
operations.
> >does anyone understand the mechanism for this?
> >
> >walter hook
>
>