Railway and Commercial Developement Should be Supporting Each Other To Be More Viable

There are many cities facing serious traffic problems like KL, including JB and Penang. Many traffic study has been conducted previously recommended the solution to build rail transit line as the backbone of the public transport connectivity to solve the traffic problem. Who will make it happened? State government or federal government? Can it be private initiatives (PFI)?

Looking at Melaka on going masterplan to develop their city. The state government under the leadership of chief minister (TS Ali Rustam) is doing very well to ensure the city planner take consideration the need for efficient public transport network, to ensure the cities major attraction area is well connected with the future monorail network (Aerorail Melaka).

The decision to build Aerorail Melaka was very wise and far sighted by the chief minister of Melaka. Rather than waiting allocation from FedGov to build railway there, the state government has opted to find other source of funding (state enterprise jointly develop the rail project, hotels and business center with private company).

Of course the private company will first evaluate the risk and project viability  before making a deal to sign agreement with the government. The private company  need to consider many aspect, not only the return of investment, the interest from the bank, future operating and maintainance cost, forecast revenue from the fare or any revenue support from state government to support the viability of the project $$$. The developer will definitely need huge amount of loan from the bank, but its not easy to convince bank to finance hundred millions project unless the project is really viable. But reality is nowhere in the world that railway operator can make profit just depending from their ticket sales. The usage of rail is mainly during peak period when people going to work or going back home. During other time, the ridership is quite low at most of the station,probably a bit higher at those station situated near to tourist/commercial area.

Knowing that Japanese Railways has been very famous for their punctuality and service quality, I have further study the article related to Japanese Railway to understand how the railway company run their business to keep their operation so efficient. I found out that  JR group run operation of trains but they also involve in commercial  and developement surrounding the station. JR gain profit from their commercial business, and use the profit to support on the railways maintanance, spare part, and continuous improvement the technologies and infrastructure required to make the railway station more convenient and well connected to surrounding area.

This can be a good reference for Malaysia while we continue develop railway needed to solve the traffic problem in the cities. Following how Japanese Railways did, the development of railway must include the opportunity to tap the benefits from commercial development along the railways line to support the expenses required to run the railway operation efficiently, as well as continuous improvement on the technology and its infrastructure. The railway company can only able to make their repayment for the Capex if there is mechanism to allow them to benefit from the commercial activity surrounding the railway as well as proper study to identify the routes with high ridership demand especially at tourist and commercial area.