TPPA Part 1 – Mustapa Mohamed and MITI should be praised for their public engagements

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the Trans Pacific Partnership Agreement (TPPA) on the 14th January, 2016

TPPA Part 1 – Mustapa Mohamed and MITI should be praised for their public engagements

On Tuesday, 12th of January, I, together with my colleagues from parliament on both sides of the political aisle, attended a special briefing arranged by Minister of Trade and Industry, Mustapa Mohamed, and his team at MITI on the Trans Pacific Partnership Agreement (TPPA). As far as I know, this was the first time since the 13th general election that a Minister had arranged for a bipartisan briefing for all MPs for a motion or a bill which we would vote on in parliament.[1]

The Minister fielded questions from all MPs during the plenary session. He also said that he would propose that a vote be taken on the TPPA during the special parliamentary debate that will take place on the 26th and 27th of January, 2016. He should be commended for organizing this special session especially since the TPPA does not require legislative approval in order to be passed. This special parliamentary session will allow MPs from both sides of the aisle to raise important questions and concerns surrounding the TPPA, of which there are many.

After the plenary session, MPs were invited to choose from one of the following four workshops on hot-topic items: “Intellectual Property and Access to Medicines, Investor State Dispute Settlement (ISDS), Government Procurement (GP) and State-Owned Enterprises (SOEs) and Market Access / Labour / Environment”. I attended the workshop on Market Access / Labour / Environment and I commend the civil servants from MITI and other Ministries for their willingness to answer all of the questions posed to them by MPs from both sides. Their answers were comprehensive and showed a deep familiarity with the issues at hand.

At the same time, the Ministry should be commended for giving public access to the materials associated with the TPPA. This was the first time that two studies – the PriceWaterhouseCoopers’ (PwC) Cost Benefit Analysis (CBA) and the Institute of Strategic and International Studies’ (ISIS) National Impact Assessment (NIA) – were commissioned to evaluate the impact of the TPPA. While these two studies painted a largely positive picture of the TPPA, they also highlighted areas of concern as well as some negative impact that would arise as a result of the TPPA. Both studies were in English but the Ministry recently made available a Bahasa Malaysia (BM) version which is a summary of both studies. The Final Text of the TPPA was also printed for all the MPs and distributed on the final day of the parliamentary session last year (16 volumes in total). Copies of the CBA and the NIA were also given to MPs. A BM summary of the TPPA final text was distributed to MPs on Tuesday. All of this information is available for download from the MITI website on the TPPA.[2] Other relevant information, including past presentations and dialogue sessions conducted by MITI can also be found on this website.

While I have still many existing concerns about the TPPA, which I will raise in a following statement, Mustapa Mohamed and his team at MITI should be commended for their efforts in public engagement, not just with MPs, but also with state governments, industry groups as well as NGO representatives. It is still a learning process especially for the civil servants, in terms of public outreach, but this is a good lesson and a good benchmark for the government moving forward. Such engagements must continue as part of the process of implementing the TPPA, assuming it receives majority support in the upcoming special parliamentary session on the 26th and 27th of January.

Dr. Ong Kian Ming
Member of Parliament for Serdang

[1] I had previously attended a bipartisan briefing on the revamp of the National Service that was arranged by the Ministry of Defense. But this was not in connection with any bill or motion which needed to be passed in parliament.

[2] http://fta.miti.gov.my/index.php/pages/view/71

Is the RM20 price hike by KLIA Express justified after an estimated RM89m increase in annual revenue post KLIA2 extension?

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 7th of December, 2015

Is the RM20 price hike by KLIA Express justified after an estimated RM89m increase in annual revenue post KLIA2 extension?

I was shocked to read about Deputy Transport Minister, Datuk Abdul Aziz Kaprawi trying to justify the RM20 increase in the price of KLIA express tickets from RM35 to RM55 starting 1st of January, 2016 by saying that it was necessary to cover the losses experienced by the company since the beginning of its operations in 2002. I was equally shocked to learn that KLIA Express stated that it is allowed to increase its fare to RM64 under the concession agreement.

According to statistics given by the Ministry of Transportation (MoT), the ridership on KLIA Express increased by 42% from 2,062,223 passengers in 2013 to 2,928,302 passengers in 2014. The ridership on KLIA Transit increased by 44% from 4,373,220 in 2013 to 6,310,323 in 2014. Total ridership increased by approximately 44% from 6,436,443 in 2013 to 9,238,625 in 2014. This increase in ridership can be attributed to the opening of the rail link from KLIA to KLIA2 on the 6th of May, 2014. (Table 1 below) This 44% increase in ridership from 2013 to 2014 can be translated into an additional estimated revenue of RM64 million for KLIA express.[1]

The ridership for KLIA Express from Q1 to Q3 2015 has increased by 26.3% compared to Q1 to Q3 2014 and by 9.0% for KLIA Transit during this period. If this trend continues in Q4 2015, this means that the additional estimated revenue from 2014 to 2015 comes up to RM25 million.

This means that as a result of the KLIA2 extension, the estimated additional revenue earned by Express Rail Link Sdn Bhd is approximately RM89 million in 2015 compared to the baseline year of 2013.

Given that ERL Sdn Bhd did not have to foot a single sen of the construction cost of the KLIA2 extension and that the additional costs of operations for the KLIA2 extension is marginal, why was ERL allowed to increase its fares by such an exorbitant amount? Wouldn’t the increase in revenue as a result of the increase in ridership be sufficient for ERL to make a reasonable profit and recover its capital expenditure?

It is normal practice for a concession holder to sign a supplementary agreement with the government whenever there is a major change to the original concession agreement. For example, BESRAYA signed a supplementary agreement with the government in 2011 as a result of the BESRAYA Eastern Extension (BEE) to Ampang. The concession holder for the KLIA Express and KLIA Transit, ERL Sdn Bhd, would also have signed a supplementary agreement with the government as a result of the KLIA2 extension. This supplementary agreement would have included details such as the allowable fare increase over time. Was the government negligent in allowing for a huge fare increase for ERL Sdn Bhd in the supplementary agreement knowing that the KLIA2 extension would bring about a significant increase in ridership? Why didn’t the government squeeze the concession holder to limit or even prevent a fare hike given that the KLIA2 extension was fully paid for by the government?

I call upon the government to disclose the concession agreement involving ERL Sdn Bhd so that all Malaysians can evaluate for themselves on whether the fare hike is justified or if the government was negligent is allowing the concessionaire to enjoy exorbitant profits at the expense of ordinary Malaysians.

Dr. Ong Kian Ming
Member of Parliament for Serdang

[1] Assuming a fare of RM35 for passengers on KLIA Express and an average fare of RM17.50 for passengers on KLIA Transit, some of whom use this service to go to Putrajaya and Cyberjaya.

Minister of Transportation, Liow Tiong Lai must explain why he allowed “daylight robbery” by not stopping KLIA Express from increasing its one way fare to KLIA from RM35 to RM55

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 2nd of December, 2015

Minister of Transportation, Liow Tiong Lai must explain why he allowed “daylight robbery” by not stopping KLIA Express from increasing its one way fare to KLIA from RM35 to RM55

It was announced yesterday that starting on the 1st of January, 2016, the fares for KLIA Express will be increased. A one way ticket from KL Sentral to KLIA / KLIA2 will cost RM55 starting 1st of January, 2016, an increase of RM20 or a 57% increase from the current RM35. It is not only the passengers who are travelling to KLIA and KLIA2 who will feel the hit of the rise in the price of tickets. Passengers going from KL Sentral to Putrajaya / Cyberjaya will also experience a price hike of RM4.5, from RM9.50 to RM14, an increase of 47% (See full fare increase comparison in Appendix 1 below).

This exorbitant price increase must be explained by the Minister of Transport, Liow Tiong Lai especially in the light of the following facts.

Firstly, KLIA Express has seen an estimated increase of 40% in ridership since the opening of the KLIA2 extension so much so that 6 new train units were ordered at the end of 2014.[1] The increase in ridership would surely have increased the revenue as well as profits of KLIA Express[2]. In addition, I want to remind the public that the cost of constructing the KLIA2 extension, which was RM100 million, was paid for totally by the government.[3] This means that KLIA Express gets to enjoy the monetary benefits of the increase in ridership without having to spend any additional capital expenditure.

Secondly, KLIA Express has signed a long term lease with the Railway Asset Corporation (RAC) / Perbadanan Aset Keretapi (PAK) to use the railway link connecting KL Sentral and KLIA and KLIA2. I highly doubt that the leasing rates which KLIA Express is paying RAC has increased by more than 50% in order to justify this upcoming fare increase. In fact, I highly doubt that the leasing rate has increased at all. Liow Tiow Lai should disclose the terms of the leasing agreement between RAC and KLIA Express as a matter of public interest.

Thirdly, KLIA Express receives money from part of the airport tax which is collected by Malaysia Airports Holding Berhad (MAHB). In a parliamentary reply in 2009, then Transport Minister Ong Tee Keat confirmed that RM5 from the airport tax of RM51 for international flights was paid to KLIA Express. The airport tax is now RM65 for international flights.[4] Does KLIA Express continue to receive payments from part of the airport tax? Has this increased as a result of the increase in the airport tax? If so, why must KLIA Express still increase its fare by such an exorbitant amount? Liow Tiong Lai must explain.

Finally, I hope that the Transport Minister has not forgotten that the express rail line to KLIA was built with significant government support including a RM940m loan from the Bank Pembangunan dan Infrastruktur Malaysia Berhad. I also hope that the Minister has not forgotten that one of the members of the consortium which was awarded the RM2.4 billion contract to construct the railway link to KLIA was Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd (SPYTL), a wholly owned subsidiary of YTL Corporation Bhd. YTL Corporation is also the majority owner of KLIA Express. This means that YTL Corporation would have reaped at least some profits from the building of the railway link to KLIA.

This exorbitant fare increase by KLIA Express is yet another example of the socialization of costs and the ‘piratization’ of profits which occurs in many projects in Malaysia.

I call upon Liow Tiong Lai to suspend indefinitely the proposed fare increase by KLIA express and to conduct an open inquiry as to what a reasonable fare revision may entail. To do this, the Minister must disclose the full contents of the 30 year concession agreement with KLIA Express, any supplementary concession agreements which were signed as a result of the KLIA2 extension, all of the maintenance contracts which KLIA express has with other companies such as its wholly owned subsidiary ERL Maintenance Support Sdn Bhd and the long term lease between KLIA Express and the Railway Asset Corporation.

Dr. Ong Kian Ming
Ahli Parlimen Serdang

[1] http://www.railwaygazette.com/news/traction-rolling-stock/single-view/view/express-rail-link-orders-cnr-trains-for-50-capacity-increase.html

[2] The company which runs the ERL trains is Express Rail Link Sdn Bhd. When I use KLIA Express in this press statement, I am referring to the  company, Express Rail Link Sdn Bhd.

[3] http://www.thestar.com.my/news/nation/2014/05/01/erl-construction-cost-to-be-borne-by-govt-says-hisham/

[4] http://english.astroawani.com/malaysia-news/klia2-mahb-and-govt-agreed-rm100-mil-erl-deal-analyst-34934