Barefoot Investor: Getting KTMB back on track

Kuala Lumpur: National railway company Keretapi Tanah Melayu Bhd (KTMB) is segregating its core businesses under a two-phase restructuring plan, with the aim of being more efficient and profitable.

Under the Government Transformation Plan, 33 listed and unlisted government-linked companies will undergo restructuring in various stages, including KTMB, to operate more efficiently.

"The restructuring is a major step for KTMB to focus on its core business of transporting people and goods to be profitable. It has been difficult for KTMB to make money due to high operational cost," a source told Business Times.

Company sources said KTMB's cargo and multi modal units will be combined and parked under a new company called KTMB Logistics Sdn Bhd.

The chief executive officer for KTMB Logistics, now involved in freight train operation services, is Datuk Alias Kadir who is a KTMB board member.

Multi modal provides ocean shipping, road haulages and port clearance services.

A source said KTMB president Dr Aminuddin Adnan will head the passenger train services, railway infrastructure and rolling stocks.

The second phase of the restructuring will see the separation of the train operation services, rolling stocks and railway infrastructure from KTMB's operation. Railway infrastructure includes land, buildings, stations and tracks.

The assets will be managed by Railway Assets Corp (RAC), headed by Abdul Kadir Latiff, the source said. RAC, which owns all the assets and is wholly-owned by the Ministry of Transport, will lease them back to KTMB at a fixed cost.

The assets were acquired by the government over a number of years and were parked under RAC to manage. However, KTMB took over the management of the assets as RAC did not have enough manpower.

It is learnt a consultant has been appointed by the Minister of Finance Inc (MOF) to study the track access fee and leasing cost for KTMB.

According to the Auditor-General's report tabled in Parliament last October, KTMB recorded RM1.45 billion in accumulative net losses up until 2008 and cannot "afford" to pay back its own operational costs and loans.

KTMB has been bleeding red ink since it was corporatised in 1992 due to high operating costs. Nevertheless, it did make a net profit of RM9 million to RM15 million from 1993 to 1995, before falling into the red again in the following years.

It is understood that the company broke even last year, led by cost-cutting measures and improvement in train services.

Meanwhile, Aminuddin's contract, which expires on August 1, has been extended by the MOF by two years.

The source said that Aminuddin has accepted the offer. He was not available for comment.(Business Times)


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