Quoted from Business Times Article dated 4 Dec 2000 on status of KTMB privatization

BUSINESS TIMES
Associated Press
Eirmalasare Bani
December 04, 2000

FAILURE to produce a financially-viable proposal is one of the reasons why the effort to privatize national railway service provider KTM Bhd (KTMB) has been halted, according to an industry observer.

He said the only profitable division of KTMB at present is its freight services, while KTM Komuter and long distance passenger services have been losing a considerable amount of money with little hope of ever breaking even.

''The only way for the Government to make those viable is to agree what subsidy it is willing to pay rail commuters and long distance passengers. At the moment it is unwilling to do that.
''Ploughing more money into infrastructure does not help KTMB's financial performance,'' he told by Business Times in Kuala Lumpur.

The industry observer, who has been involved in various transportation projects in Malaysia said, ``With so few passengers, the extra maintenance costs surpass the possible additional extra revenue''.

Freight train services contributed 30 per cent to KTMB's turnover in 1998. This contributions are expected to increase to between 40 per cent and 45 per cent this year.

KTMB suffered RM133 million in losses in 1997 but managed to narrow it down to RM78 million in 1998.

Transport Minister Datuk Seri Dr Ling Liong Sik, when asked to clarify over KTMB's privatization status on Wednesday, said the Government may have to ``rethink'' the whole process to determine whether it is a viable proposition.

His statement makes it seem as though the Government is having second thoughts to proceed with KTMB's privatization, which has been assigned to Marak Unggul Sdn Bhd, a consortium which consists of Renong (50 per cent equity), DRB-Hicom Group (25 per cent), Bolton Properties Bhd (20 per cent) and Jasa Meta Sdn Bhd (5 per cent)

''Marak Unggul was set up to take over (privatise) KTMB. To date, it is not financially viable and so Renong won't take it,'' the industry observer said.

The consortium's original intent was also said to involve advancing a maximum of RM100 million towards the privatization capital. It took over the management of KTMB in August 1997, but the latter remains as a wholly-owned Government company until the privatization effort materialised.

KTMB was corporatised in 1992 and was given five years to work on going private. The privatization effort was also to pave way for the company to be listed on the Kuala Lumpur Stock Exchange.

It was also put on hold during the economic crisis, pending a review and study, among others, by the Corporate Debt Restructuring Committee. - sources : Business Times 4 Dec 2000