Extended Essay Economics
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Fatimah Zahrah
INTERNATIONAL BACCALAUREATE
EXTENDED ESSAY
ECONOMICS SL
MAY 2012 SESSION
“To What Extent Does the Launching of Electric Train Service (ETS) Affects The Demand For the Bus Services as a Public Transportation from Ipoh to Kuala Lumpur?”
Word count: 3999
Name: Centre:
Md. Fauadi, Fatimah Zahrah MARA College Banting
Candidate number: 000592-192 Advisor: Mdm. Siti Norashikin Binti Misman
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
CONTENTS
ABSTRACT ACKNOWLEDGEMENT 1.0 THE INTRODUCTION...…………………………………………………………….1-2 2.0 THE RESEARCH……………………………………………………….…………...3-4 2.1 Objectives 2.2 Hypothesis 2.3 Methods 2.3.1 2.3.2 2.3.3 Interviews Survey Secondary Research 3 4 4
3.0 DATA COLLECTION AND PROCESSING……………………………….……… 5-19 3.1 The demand for bus service 3.2 The demand for Electric Train Service (ETS) 3.3 The determinants of demand 5-11 11-15 15-19
4.0 CONCLUSION…..………………………………………………………………….20-21 APPENDIX BIBLIOGRAPHY
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
ABSTRACT
The public transport service is very crucial in Ipoh. The people depend on the bus service to travel from one place to another. In August 2010, a new mode of public transportation known as Electric Train Service (ETS) was launched for journey from Ipoh to Kuala Lumpur. Therefore, I would like to study whether the demand for the bus service is affected after the launching of ETS service. The research question of this paper is “To what extent does the launching of ETS affects the demand for the bus services as a public transportation from Ipoh to Kuala Lumpur?” The information and data are obtained through interviews, observations, surveys and secondary research. I had interviewed the Chief Operating Officer as well as the Sales and Marketing Manager of ETS, and officers of Konsortium Transnasional Berhad, the largest bus company in Malaysia. The observations are made at the bus and railway station in Ipoh. The surveys are done by distributing 100 questionnaires forms to people in Ipoh in order to know the determinants of demand for each service. At the end of this research, I found that the demand of bus service is actually had started to decrease before the launching of ETS as a result of reduction in the number of foreign workers in Malaysia. After the launching of the ETS, the decrease in demand for the bus service is more significant although the ETS fare is far higher than bus fare. On the other hand, the demand for ETS is increasing in tandem with the decreasing in demand for the bus service. My conclusion is the launching of ETS slightly affects the demand for the bus service as the demand is not only determined by the fare of each service, but also subjected to other determinants of demand. (299 words)
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
ACKNOWLEDGEMENT
First and foremost, I would like to express my gratitude to God Al-Mighty for blessing me with strength to conduct this research until it is completed. Special thanks goes to my parents, Mr. Md Fauadi and Mrs. Norshidah for their support and assistance. I also would like to express my appreciation to my advisor, Miss Siti Norashikin for her guidance throughout the research process. I want to thank everyone who had took part in this research for giving their full cooperation. It is highly appreciated because without their cooperation, this research could never be completed successfully. The Chief Operating Officer of ETS Mr. Azizullah Kinayatullah
The Sales and Marketing Manager of ETS Ms. Shamala Devi
The sales officers of Transnasional Ipoh Mr. Yunus bin Abdul Shukor
The sales officer of Plusliner Ipoh Mrs. Azlina
All respondents who had took part in the survey. Thank you.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
1.0 The introduction
Public transport is a very important sector for the people in Malaysia. Most people in Malaysia depend on it to travel from one place to another especially for a long journey as it is cost-saving. Therefore, it is highly prioritized by the Malaysia government. On 27 July 2009, the Malaysia Prime Minister, Dato’ Sri Mohd Najib bin Tun Abdul Razak launched National Key Result Area (NKRA). One of the six NKRA’s is on improving the urban public transport1. The Ex-Minister Of Transport, Dato’ Sri Ong Tee Keat who was responsible about the matter said their aspiration is to see Malaysia’s public transport system becomes the mode of choice of urban commuters as they try to manage the polarity between the less fortunate, who need the public transport, and the rest who are able to rely on private vehicles2. The government aims that the public transport sector provides efficient and safe service to the people so that the people will get the benefit. In order to achieve this, the government works closely with firms in public transport industry especially the largest public bus operator in Malaysia, Konsortium Transnasional Berhad (KTB).3 The government also invested RM 240 million in Electric Train Service (ETS) project under Malayan Railway Limited (MRL). The investment was made to buy five high-speed trains from Hyundai Rotem to provide more public transport to the people.4 The scope of this research is the public transport in Ipoh. Ipoh is the capital city of Perak. Its population in 2011 is approximately 666,7005. Many people who use public
1
Urban Public Transport NKRA (Update #1).(2010). Retrieved 2011, August 7, from http://transitmy.org/2010/01/18/urban-public-transport-nkra/ 2 PEMANDU Lab Highlights. Urban Public Transport. Retrieved 2011, August 7, from http://transitmy.files.wordpress.com/2010/01/pemandu-lab-highlights-upt.pdf 3 Konsortium Transnasional Berhad. Retrieved 2011, August 8, from http://www.ktb.com.my/ 4 Ravendran, A. (2010, August 13).KTMB eyes more high-speed trains to enhance service. Malaysian Reserve. Retrieved 2011, August 7, from http://www.etstrain.com.my/web/ets/images/media/fwdpressreleaseset5/MReserve.pdf 5 Department of Statistics, Malaysia. (2010). Statistics on the population of people in Ipoh, Perak in year 2009 and 2010.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
transport in Ipoh relied on bus services to travel to other destinations as there was limited choice of public transport available. There is no flight to connect Ipoh to other states except Singapore. This makes the demand for the bus service to rise. In August 2010, the president of MRL, Dr. Aminuddin Adnan announced that they will provide the ETS from Ipoh to Kuala Lumpur6. With that, people in Ipoh have more choices of public transport to travel to Kuala Lumpur. The facilities provided inside the ETS are excellent as compared to bus because it has toilet, power socket, television, CCTV and disabled-friendly. However, ETS fare is quite expensive compared to bus fare. The ETS fare for Ipoh-Kuala Lumpur route is RM30.00 whereas the bus fare set by the Commercial Vehicle Licensing Board of Malaysia is only RM17.40. The purpose of conducting this research is to study the extent to which the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur. I chose to do this research as I am interested to know whether the launching of ETS affects the demand for bus service or otherwise. I would also like to know the determinants of demand for public transport for travelling from Ipoh to Kuala Lumpur. This research would be interesting because although ETS provides many facilities to the users, its fare is quite high. This may affect the decision made by the people.
6
Sidhu, J. (2010, August 13). Electric train service on a roll. The Star Online. Retrieved 2011, August 13, from http://biz.thestar.com.my/news/story.asp?file=/2010/8/13/business/6849374&sec=business
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
2.0 The Research
This section will cover about the objectives of conducting the research, hypothesis and the methods used to carry out the study. 2.1 Objectives The main objective of this research is to study to what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur. In order to achieve the main objective, the following objectives needs to be attained first. 2.1.1 To find out the demand for bus service from Ipoh to Kuala Lumpur starting from January 2010 until April 2011, period which cover before and after the launching of ETS. 2.1.2 To find out the demand for ETS from Ipoh to Kuala Lumpur starting from its launching in August 2010 until April 2011. 2.1.3 To find out determinants of demand for public transport that also lead to a change in demand for both bus and ETS. 2.1.4 To give recommendation for bus industry on how to maintain the demand for their services.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
2.2 Hypothesis In a short run, the demand for bus service will be slightly affected due to the launching of ETS because public would like to experience the new ETS. In a long run, the demand for bus service will be significantly affected because ETS will improve their service and gain higher trust from the public transport users. Methods 2.3.1 Interview Interviews had been conducted several times with officers of the largest operator of bus service, which are Transnasional and Plusliner. An interview was also conducted with the ETS Chief Operating Officer and the Sales and Marketing Manager. The aim of these interviews is to achieve the first and second objectives (2.1.1 and 2.1.2) and to obtain information about ETS for route from Ipoh to Kuala Lumpur. The questions asked during the interviews can be referred to the appendix. 2.3.2 Survey A survey in the form of questionnaires was conducted on the people in Ipoh using the public transport to travel to Kuala Lumpur. 100 sets of questionnaires were distributed to the respondents that were chosen randomly. The result represents the whole population in Ipoh. This method is used to achieve the third objective (2.1.3). 2.3.3 Secondary research Internet research was done to know about the background, journey route, schedule, and fares of both services.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
3.0 Data Collection and Processing
This section will cover the outcome of the research that has been carried out. 3.1 The demand for bus service In order to get information on the demand for bus service, I conducted research on two leading express bus companies, which are Transnasional and Plusliner. These bus companies are the most preferred modes of transport by the public in Malaysia especially in Ipoh as they offer excellent service in terms of punctuality of departure and arrival. The safety of the users is also highly prioritized by the companies. From the interview with Mr. Yunus, the sales manager of Transnasional Ipoh, he said that their company really ensure the safety of their services. This is done by paying the salary of the bus drivers on time so that they will be responsible with their job. Besides that, it is compulsory for their drivers to have an hour break after every trip. Although Transnasional and Plusliner merged as one company and known as Konsortium Transnasional Berhad (KTB) in June 2007, they still maintain their own brand in the market. According to a research carried out by the Malaysian Institute of Road Safety (MIROS), the safest bus service in Malaysia are those operated by the KTB. The ratio of accident involving the KTB is 3:10000 trips with 75% of the accidents caused by third parties7. KTB enjoys the largest market share in the bus service sector.
7
Rama Chandran, S. (2010, January 3) Transnasional buses the safest, thanks to SHE. Retrieved 2011, August 11, from http://www.miros.gov.my/c/document_library/get_file?uuid=43c4cb58-5e13-49c3-8500d0e3bd80f9bc&groupId=10124
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
MONTH COMPANY
NUMBER OF TICKET SOLD
TRANSNASIONAL PLUSLINER TOTAL Jan-10 8,904 11,895 20,799 Feb-10 10,093 12,961 23,054 Mar-10 8855 11,943 20,798 Apr-10 8,249 10,408 18,657 May-10 7,982 9,977 17,959 Jun-10 8,293 11,219 19,512 Jul-10 8,103 12,401 20,504 Aug-10 8,396 11,942 20,338 Sep-10 7,477 9,778 17,255 Oct-10 9,065 9,579 18,644 Nov-10 7,911 9,632 17,543 Dec-10 10,408 12,369 22,777 Jan-11 7,574 10,285 17,859 Feb-11 8,444 10,763 19,207 Mar-11 7,910 10,577 18,487 Apr-11 8,586 11,176 19,762 8 Table 1 shows the number of tickets sold by the bus companies
8
Abdul Shukor, Y (2011, May 26). Personal interview. Azlina (2011, July 15). Personal interview.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
The number of bus ticket sold per month
30,000 25,000
Number of bus ticket sold
20,000 15,000 10,000 5,000 0
The number of bus ticket sold
Month
Diagram 1 shows the trend of ticket sold by the bus companies monthly from Jun 2009 until April 2011. Based on diagram 1, the total number of tickets sold every month fluctuated throughout the period of research. In February 2010, the number of tickets sold was slightly higher from the previous month due to the Chinese New Year celebration. From March until May 2010, the number of tickets sold decreased steadily since there was no special event celebrated by Malaysian. In June and August 2010, the number of bus tickets sold increased because students in Malaysia had semester holiday. Many school students used bus services to go back to their hometown as the fare was cheap. Many parents also took this opportunity to bring their children to Kuala Lumpur for holiday. In August and December every year,
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
‘Malaysia Mega Sales’ is held all over Malaysia including Kuala Lumpur where goods sold are given discount up to 70%. This increased the demand for bus services. In September 2010, Muslims who are the majority group in Malaysia celebrated Eid Celebration.9 This is the biggest festival celebrated in Malaysia. In October 2010, the Hindus celebrated Deepavali. During these two months, the number of tickets sold declined seriously. This is because during festive seasons, many families chose to travel back to their hometown by car since it is easier for them to visit their relatives. Based on my observations, the number of vehicles on the road tripled during the festive season. According to the statistics given by the traffic unit, the number of accidents recorded on the 22nd day of the “Ops Sikap” was 16817.10 There was also some problems involving bus drivers during this time because they worked overtime to get extra money for Eid Celebration. Thus, they felt sleepy while driving and took steroids in order to stay awake. This issue made the public feel insecure to use the bus service.11 In an interview with a father who had a daughter studying in Kuala Lumpur, he said, “I would go to my daughter’s college to fetch her because I was worried about her safety since there had been a lot of accident cases during festive season.” Therefore, the number of tickets sold fell during these months. On 12th August 2010, ETS was launched. Starting from this date, the sales for bus tickets declined as the public had more options on which public transport to be used for travelling to Kuala Lumpur. Another reason that made the sales of tickets decreased
9
Department of Statistics Malaysia. (2001) Population and Housing Census 2000. Retrieved 2011, August 9, from http://web.archive.org/web/20070323094806/http://www.statistics.gov.my/english/census/pre ssdemo.htm 10 Daniel, S. (2010, September 18) Ops Sikap: Vehicles on the road triple but deaths drop by 9.5%. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2010/9/18/nation/20100918162856&sec=nation 11 46 express bus drivers tested positive for drugs.(2009, September 27).The Star Publications. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2009/9/27/nation/20090927210456&sec=nation
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
significantly was due to efforts by the Malaysian Government to reduce the number of foreign workers in Malaysia. According to Mr. Yunus, the loyal customers of their company were not only local people but also foreign workers because most of them do not have their own vehicle. As such, the reduction of number of foreign workers in Malaysia affects the business of bus companies.
Price of bus ticket S1
Pe2
shortage
Pe1 RM 17.40 shortage Maximum price
D2 D1 Quantity of bus ticket 0 Q1 Qe1 Q2 Qe2 Q3
Diagram 2: Market for bus service The data is processed into the demand and supply curve. From diagram 2, the demand curve is D1 and the supply curve is S1. The equilibrium point of D1 and S1 is at Pe1. The government intervenes in the bus industry by setting up maximum fare, which is RM17.40. The maximum fare is set below the Pe1 to help the people from bearing a higher cost when using public transport. In this case, the people get the benefit because they pay less than the actual price that they have to pay. However, the maximum fare also creates shortage from Q1 to Q2. In June, August and December every year, there is an increase in the demand for bus services. As the demand for bus services increase, demand curve shift to the right from D1 to
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
D2. This causes the shortage of bus service to increase. Previously, the shortage is from Q1 to Q2. Now, the shortage is from Q1 to Q3. In order to eliminate shortage, the bus fare should be increased to Pe2 so that market equilibrium can be achieved. However, due to the government intervention of imposing maximum fare, the bus industry cannot react to the shortage by increasing the price. The price mechanism is not functioning to control the demand and supply. Another way to solve the shortage is by increasing the supply for bus service from Q1 to Q3 so that the new market equilibrium can be achieved at the price of RM 17.40 and Q3. However, at price RM 17.40, the bus companies are not willing and able to supply more than Q1 as they have to bear the rise in operational costs. Therefore, the government should give higher subsidies to the bus companies such as giving them low diesel price per litre. Since the bus service is a merit good and necessary for the people especially students, low-income workers and senior citizens, the government should lessen the burden of the bus companies.
Price of bus ticket S1
Pe1
shortage
Pe2
RM 17.40
Maximum price shortage D2 0 Qs Qe2Q2 Qe1 Q1
D1 Quantity of bus ticket
Diagram 3: Market for bus service
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Diagram 3 shows a shifting of demand curve. Starting from March 2010, there is a slight decrease in the number of bus tickets sold from month to month. We can say that the demand for bus services is decreasing. Based on the diagram, it shows that as the demand decreased, the demand curve shift to the left from D1 to D2. The shortage of bus services is decreasing. Previously, the shortage is from Q1 to Qs. However, as there is a decrease in demand, the shortage now is from Q2 to Qs. This means that the shortage problem decreases when demand for bus services decreases. 3.1 The demand for Electric Train Service (ETS) Electric Train Service (ETS) is provided by the Malayan Railways Limited (MRL). MRL is wholly owned by the government.12 Thus, when the government announced the NKRA on public transport, MRL is the best platform for the government to improve the public transport in Malaysia. The Malaysian government made a huge investment in the ETS project to provide better public transport. This investment is valuable to the country because it improves the welfare of the people and leads to economic development of Malaysia. The launching of ETS is welcomed by the people especially for those who live in Ipoh as it makes them easier to travel to Kuala Lumpur. ETS has many advantages compared to other transports in terms of journey time and safety. Besides that, it provides a lot of facilities to the travellers such as power socket and toilet. Besides that, the government also controls the fare for ETS because they want to make sure everyone can afford and reap the benefit from it.
12
Malaysian Investment Development Authority. (n.d). Invest in Malaysia. Retrieved 2011,September 16, from http://www.mida.gov.my/env3/index.php?page=railway-services
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
ELECTRIC TRAIN SERVICE Month Number of ticket sold Aug-10 12,637 Sep-10 18,151 Oct-10 21,248 Nov-10 23,359 Dec-10 31,889 Jan-11 22,904 Feb-11 26,073 Mar-11 28,956 Apr-11 28,672 Table 2 shows the number of ETS ticket sold monthly13
The number of ETS ticket sold monthly
35,000 30,000 Number of ticket sold 25,000 20,000 15,000 10,000 5,000 0 The number of ETS ticket sold
Month
Diagram 5 shows the number of ETS ticket sold monthly from August 2010 until April 2010. Based on diagram 5, it shows that the number of tickets sold is steadily increased in the first few months after its launching in August 2010. From November 2010 to December 2010, the demand increased sharply due to the school holidays and Malaysia Mega Sales.
13
Statistic Department of Electric Train Service.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Many parents brought their family to travel to Kuala Lumpur and chose to have an experience of using ETS service. In an interview conducted with Mr Azizullah, Chief Operating Officer of ETS, he said “The number of ETS passengers is increasing rapidly from month to month. During the first few months after it was launched, the average number of passengers per day is 1200. In April 2011, we managed to get an average number of 1700 passengers per day.” He also added that the reason why ETS is widely accepted by everyone is because it is comfortable, safe and travelling time is short. It is the most popular mode of public transport among the middle-income group, professional, tourist and even senior citizens. In January 2011, the number of tickets sold dropped significantly from the previous month as school holiday had ended. After that, the number of tickets sold increase consistently from January 2011 until April 2011.
Price of ETS ticket S1
Pe2 shortage Pe1 RM 30 shortage Maximum price
D1
1
D2 Quantity of ETS ticket
0
QsQe1Q1 Qe2
Q2
Diagram 6: Market for ETS The information is transformed into demand-supply curve, which is Diagram 6. Diagram 6 shows that there is an increase in demand of ETS. The demand curve shifts to the right from D1 to D2. The maximum fare of ETS is set by the government at RM30. At first,
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
the shortage is from Qs to Q1 but now it is from Qs to Q2. To eliminate the shortage, the price of tickets should be increased to Pe2. However, if the price is increased, it does not favour certain groups of people. Since it is aimed to serve the people, the government does not want to increase the price. Thus, to eliminate shortage, they can increase the supply. Since ETS is a government project, the management can increase the supply as the government could use the money from tax to cover the cost of operations for the benefit of the people. During the Eid Celebration in September 2010, ETS increased the supply from five trips per day to eight trips per day.14 This shows that the ETS board of directors responds to the shortage.
Price of ETS ticket S1
Pe1
shortage
Pe2 RM 30 shortage Maximum price D1 Quantity of ETS ticket
D2 0 QsQe2Q2 Qe1 Q1
Diagram 7: Market for ETS Diagram 7 shows the situation in the January 2011 in which there was a huge decrement in the number of ticket sold. At first, the demand curve is D1 and the supply curve is S1. The market equilibrium is at price Pe1 and quantity Qe1. Since the government had fixed the maximum price of the ETS fare below the equilibrium point that is RM 30, the quantity
14
More ETS trips during raya.(2010, August 12). The Star Publications. Retrieved 2011, August 12, from http://thestar.com.my/news/story.asp?file=/2010/8/12/nation/6844101&sec=nation
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
supplied is at Qs whereas the quantity demanded is at Q1. There was a shortage of ETS service from Qs to Q1. When the demand decreased, the demand curve shifts to the left from D1 to D2. The supply remains at Qs but the quantity of demand now is at Q2. The shortage of ETS service is from Qs to Q2. This means that the shortage problem falls due to the decrease in the demand. 3.2 The determinants of demand
The survey was conducted in Ipoh and involved 100 respondents that were randomly selected. The results are assumed to represent the whole population in Ipoh.
2%
1. Do you travel by public transport? Yes No
98%
Diagram 8 shows the percentage of people using public transport in Ipoh. Diagram 8 shows that 98% of the respondents are using public transport for travelling. Only 2% do not depend at all on public transport for travelling. This clearly shows the importance of public transport in Ipoh.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
2%
3. What is your most preferred mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Electric Train Service (ETS) 46% B. Bus
52%
C. Others
Diagram 9 shows the preferred mode of transportation by the people in Ipoh. Based on the response for the third question, 52% respondents chose bus and 46% respondents preferred ETS as their mode of public transportation to travel to Kuala Lumpur. The reason that most of the respondents choose bus is because loyal customers have trust in bus service. Besides that, ETS is a new service and not all people in Ipoh are aware about the ETS.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
22% 27%
4. Why do you choose ETS as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Shorter travelling time compared to bus. B. Easy to get connecting public transport at KL Sentral C. A lot of facilities provided in ETS D. Safety is more guaranteed compared to bus
7%
44%
Diagram 10 shows the factors considered by people in Ipoh in choosing ETS service. Based on Diagram 10, 44% of the respondents that preferred ETS service choose it because it is easier to get connecting public transport at KL Sentral. The trip from Ipoh stops at KL Sentral (refer to Appendix), Malaysia’s largest transportation hub. It is connected to six rail networks known as KTM Intercity, KTM Komuter, Kelana Jaya Line, Ampang Line, KL Monorail, Electric Rail Link (ERL). It is also connected to Kuala Lumpur International Airport using KLIA Transit and KLIA Express.15 This is the main reason of why people in Ipoh choose ETS to travel to Kuala Lumpur. The second reason is that the travelling time of ETS is shorter compared to the bus service. It takes only about 2 hours to reach Kuala Lumpur compared to 3 hours if travelling by bus. The third reason is safety. Safety is more guaranteed compared to bus service as risk of accident is very low. In the interview with Mr. Azizullah, he said: “Up until now, 100% of the passengers of ETS that travel from Ipoh to Kuala Lumpur are transported safely.”
15
Malaysian Resources Corporation Berhad. (n.d). A World Class Transportation Hub. Retrieved 2011,November 2, from http://www.klsentral.com.my/Conn_Main.aspx
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192 5. Why do you choose bus as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Cheaper bus fares compared to the price of ticket for ETS. B. The buses are comfortable and relaxing. 6% C. The frequency of bus service for the route Ipoh-Kuala Lumpur. D. The condition of Puduraya bus terminal that is user-friendly.
2% 25%
67%
Diagram 11 shows the factors considered by people in Ipoh in choosing bus service. Diagram 11 shows that 67% of the respondents chose bus because of the frequency of its trip from Ipoh to Kuala Lumpur. Bus service provides more trips per day as compared to ETS. In August 2010 until April 2011, the frequency of the ETS is five trips per day. In contrast, there are more than 30 bus trips provided per day. Since there are more bus services available at different times, people find it is easier to travel using buses as they can choose the departure and arrival time that suits to their schedule. 25% of the respondents chose bus to travel as the fare is cheaper compared to ETS. It means that lower fare also makes it more attractive than ETS for some people.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
13% 27%
6. What is your most important consideration in choosing public transport for travelling? A. Price of the ticket
B. Punctuality of departure and arrival time 9% 51% C. Facilities provided inside the transport D. Safety issue
Diagram 12 shows the determinants of demand for public transport. Diagram 12 shows that 51% of the respondents consider the punctuality of departure and arrival time of the public transport. Time is very essential as delay could spoil their planned schedule. Therefore, punctuality of the service is very important. Safety is also an important factor considered by the public in choosing public transport and followed by the price of the ticket.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
4.0 Conclusion
According to the Law of Demand, when the price of a product is decreased, the demand of the product will increase, ceteris paribus.16 In the beginning of this research, I assumed that bus services and ETS are substitute to each other as they serve the same purpose, have equal function that is transporting people from Ipoh to Kuala Lumpur and satisfy the same need.17 It means that the people will have to choose either one. If they choose to use ETS, they cannot choose the bus service at the same time. Thus, the launching of ETS will surely affect the demand for the bus service. However, it is arguable as the fare of ETS is almost double the bus fare. Nevertheless, as we can see from the previous results, it does not happen that way. Although the bus fare is lower than the ETS, the demand is on decrease while the demand for ETS steadily increase from month to month. It shows that the Law of Demand does not come to reality in this case. This is because there are many determinants of demand that affects the demand for both services. For example, the safety issue, facilities, efficiency and punctuality of the service. The term ceteris paribus which means “all other things being equal” is not fulfilled in this case. Although the ETS fare is higher than the bus, the people in Ipoh are still willing and choose its service as it provides better services compared to bus service. Nevertheless, the demand for bus service is still strong although its performance is decreasing from month to month. The decrement is very slight as its fare is cheaper and successfully retains the demand from the low-income group, senior citizens and students.
16
Blink, J. & Dorton, I.(February 2007). IB Diploma Programme Course Companion, Economics. Where it is published. Oxford. 17 Piana, V. (2005). Substitute Goods. Retrieved 2011, September 16, from http://www.economicswebinstitute.org/glossary/substitute.htm
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Furthermore, the frequency of bus trip per day is very high. This makes people more comfortable in choosing the time that suits their schedule. In order to stop the demand from decreasing, the bus companies should promote more people to use their service through advertisement. They can increase the demand by improving the service in terms of punctuality of departure and arrival time, standard of road safety, make travelling by bus more comfortable and relaxing and provide more facilities inside the bus. As conclusion, the launching of ETS slightly effect the demand for bus services. The demand for bus services decreased with the presence of ETS. However, the decrement is very minimal. The reason behind the falling in demand for bus service is not solely due the presence of ETS. It was affected by other determinants of demand that had been mentioned before. In the future, I predict that the demand for bus will decrease more significantly because ETS will improve their services and reduce the fare to ensure the people in Malaysia will get the benefit from it. In May 2011, ETS introduced three new packages of different fare so that more people can afford it. This will surely affect the demand for bus services. However, the demand for bus services will level off. This is because there is always some loyal users of bus service whom will continue to choose this mode of transportation for travelling from Ipoh to Kuala Lumpur, Malaysia’s capital city.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX A :MAP OF MALAYSIA
This map shows the North South Expressway route from Ipoh to Kuala Lumpur. The distance is 202 km (source : Google Maps, date taken: 08.08.2011)
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX B : QUESTIONNAIRES AND RESPONSES QUESTIONS 1. Do you travel by public transport? Yes No ( quit at this question ) 2. How often do you travel from Ipoh to Kuala Lumpur using public transport? A. Once in a year B. 2 times per year C. 3 times per year D. More than 3 times per year 3. What is your most preferred mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Electric Train Service (ETS) (go to question 4, ignore question 5) B. Bus ( proceed to question 5 ) C. Others 4. Why do you choose ETS as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Shorter travelling time compared to bus. B. Easy to get connecting public transport at KL Sentral C. A lot of facilities provided in ETS D. Safety is more guaranteed compared to bus 5. Why do you choose bus as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Cheaper bus fares compared to the price of ticket for ETS. B. The buses are comfortable and relaxing. C. The frequency of bus service for the route Ipoh-Kuala Lumpur. D. The condition of Puduraya bus terminal that is user-friendly. 6. What is your most important consideration in choosing public transport for travelling? A. Price of the ticket B. Punctuality of departure and arrival time C. Facilities provided inside the transport D. Safety issue 7. How much is your net income per month? A. below RM 1000 B. RM 1000 – RM 3000 C. RM3001– RM7000 D. above RM 7001 NUMBER OF SCORE 98 2
21 18 6 53
45 51 2
12 20 3 10
13 3 34 1
13 50 9 26 15 26 39 18
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX C : A SET OF QUESTIONS ASKED DURING INTERVIEW Interview with officers from Electric Train Service 1. What are the advantages of using ETS compared to other public transport? Is there any possibility that the bus users change to ETS? 2. Who are the loyal customers of ETS? 3. How many trips that ETS offered in a day from Ipoh to Kuala Lumpur ( August 10April 11), and when is the peak time that the service is highly demanded? 4. What is the trend of the ticket sales since its launching in August 2010 until April 2011 for trip from Ipoh to Kuala Lumpur? 5. What is the estimated number of passengers monthly for the trip from Ipoh to Kuala Lumpur from August 2010 until April 2011? 6. What are the actions taken by ETS to attract public to use ETS as their transport for travelling? Interview with officers from Transnasional and Plusliner (Konsortium Transnasional Berhad). 1. What are the advantages of using bus services as compared to other public transport? 2. Who are the loyal customers of bus services? 3. How many trips that the bus company offered per day from Ipoh to Kuala Lumpur (June 09- April 11), and when is the peak time that the service is highly demanded? Is there any changes in the number of trips per day? 4. What is the trend of the ticket sales since June 2009 until April 2011 for trip from Ipoh to Kuala Lumpur? 5. What is the estimated number of passengers monthly for the trip from Ipoh to Kuala Lumpur from June 2009 until April 2011? 6. How far does the trend of ticket sales change starting from August 2010? 7. What are the actions taken by bus companies to attract public to use bus as their transport for travelling?
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX D: INTERVIEW SESSIONS
Company Electric Train Service
Transnasional Express
Plusliner
Date of interview 01 June 2011 (at the ETS head quarters, with the Chief Operating Officer of ETS, Mr. Azizullah Kinayatullah) 15 July 2011 (phone interview with the Sales and Marketing Manager of ETS, Miss Shamala) 26 May 2011 (at the Transnasional office with Mr Yunus) 14 July 2011 (at the Transnasional office with Mr Yunus) 15 July 2011 (at the Plusliner office with Pn Azlina)
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
BIBLIOGRAPHY
Blink, J. & Dorton, I. (2007). IB Diploma Programme Course Companion, Economics. New York. Oxford University Press. Department of Statistics, Malaysia. (2010). Statistics on the population of people in Ipoh, Perak in year 2009 and 2010. Abdul Shukor, Y (2011, May 26). Personal interview. Azlina (2011, July 15). Personal interview. Kinayatullah, A & Devi, S (2011, June 1). Personal interview. All transportation routes in Kuala Lumpur. (n.d). ETS website. Retrieved 2012, January 17, from http://www.ets-train.com.my/web/ets/images/content/route/route_all.pdf Daniel, S. (2010, September 18) Ops Sikap: Vehicles on the road triple but deaths drop by 9.5%. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2010/9/18/nation/20100918162856&sec=n ation Department of Statistics Malaysia. (2001) Population and Housing Census 2000. Retrieved 2011, August 9, from http://web.archive.org/web/20070323094806/http://www.statistics.gov.my/english/ce nsus/pressdemo.htm Konsortium Transnasional Berhad. Retrieved 2011, August 8, from http://www.ktb.com.my/ Malaysian Resources Corporation Berhad. (n.d). A World Class Transportation Hub. Retrieved 2011,November 2, from http://www.klsentral.com.my/Conn_Main.aspx Malaysian Investment Development Authority. (n.d). Invest in Malaysia. Retrieved 2011, September 16, from http://www.mida.gov.my/env3/index.php?page=railway-services More ETS trips during raya.(2010, August 12). The Star Publications. Retrieved 2011, August 12, from http://thestar.com.my/news/story.asp?file=/2010/8/12/nation/6844101&sec=nation PEMANDU Lab Highlights. Urban Public Transport. Retrieved 2011, August 7, from http://transitmy.files.wordpress.com/2010/01/pemandu-lab-highlights-upt.pdf Piana, V. (2005). Substitute Goods. Retrieved 2011, September 16, from http://www.economicswebinstitute.org/glossary/substitute.htm Rama Chandran, S. (2010, January 3) Transnasional buses the safest, thanks to SHE.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Retrieved 2011, August 11, from http://www.miros.gov.my/c/document_library/get_file?uuid=43c4cb58-5e13-49c38500-d0e3bd80f9bc&groupId=10124 Ravendran, A. (2010, August 13).KTMB eyes more high-speed trains to enhance service. Malaysian Reserve. Retrieved 2011, August 7, from http://www.etstrain.com.my/web/ets/images/media/fwdpressreleaseset5/MReserve.pdf Sidhu, J. (2010, August 13). Electric train service on a roll. The Star Online. Retrieved 2011, August 13, from http://biz.thestar.com.my/news/story.asp?file=/2010/8/13/business/6849374&sec=bus iness Urban Public Transport NKRA (Update #1).(2010). Retrieved 2011, August 7, from http://transitmy.org/2010/01/18/urban-public-transport-nkra/ 46 express bus drivers tested positive for drugs.(2009, September 27).The Star Publications. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2009/9/27/nation/20090927210456&sec=n ation
Bibliography: Blink, J. & Dorton, I. (2007). IB Diploma Programme Course Companion, Economics. New York. Oxford University Press. Department of Statistics, Malaysia. (2010). Statistics on the population of people in Ipoh, Perak in year 2009 and 2010. Abdul Shukor, Y (2011, May 26). Personal interview. Azlina (2011, July 15). Personal interview. Kinayatullah, A & Devi, S (2011, June 1). Personal interview. All transportation routes in Kuala Lumpur. (n.d). ETS website. Retrieved 2012, January 17, from http://www.ets-train.com.my/web/ets/images/content/route/route_all.pdf Daniel, S. (2010, September 18) Ops Sikap: Vehicles on the road triple but deaths drop by 9.5%. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2010/9/18/nation/20100918162856&sec=n ation Department of Statistics Malaysia. (2001) Population and Housing Census 2000. Retrieved 2011, August 9, from http://web.archive.org/web/20070323094806/http://www.statistics.gov.my/english/ce nsus/pressdemo.htm Konsortium Transnasional Berhad. Retrieved 2011, August 8, from http://www.ktb.com.my/ Malaysian Resources Corporation Berhad. (n.d). A World Class Transportation Hub. Retrieved 2011,November 2, from http://www.klsentral.com.my/Conn_Main.aspx Malaysian Investment Development Authority. (n.d). Invest in Malaysia. Retrieved 2011, September 16, from http://www.mida.gov.my/env3/index.php?page=railway-services More ETS trips during raya.(2010, August 12). The Star Publications. Retrieved 2011, August 12, from http://thestar.com.my/news/story.asp?file=/2010/8/12/nation/6844101&sec=nation PEMANDU Lab Highlights. Urban Public Transport. Retrieved 2011, August 7, from http://transitmy.files.wordpress.com/2010/01/pemandu-lab-highlights-upt.pdf Piana, V. (2005). Substitute Goods. Retrieved 2011, September 16, from http://www.economicswebinstitute.org/glossary/substitute.htm Rama Chandran, S. (2010, January 3) Transnasional buses the safest, thanks to SHE. Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur” Md. Fauadi, Fatimah Zahrah 000592-192 Retrieved 2011, August 11, from http://www.miros.gov.my/c/document_library/get_file?uuid=43c4cb58-5e13-49c38500-d0e3bd80f9bc&groupId=10124 Ravendran, A. (2010, August 13).KTMB eyes more high-speed trains to enhance service. Malaysian Reserve. Retrieved 2011, August 7, from http://www.etstrain.com.my/web/ets/images/media/fwdpressreleaseset5/MReserve.pdf Sidhu, J. (2010, August 13). Electric train service on a roll. The Star Online. Retrieved 2011, August 13, from http://biz.thestar.com.my/news/story.asp?file=/2010/8/13/business/6849374&sec=bus iness Urban Public Transport NKRA (Update #1).(2010). Retrieved 2011, August 7, from http://transitmy.org/2010/01/18/urban-public-transport-nkra/ 46 express bus drivers tested positive for drugs.(2009, September 27).The Star Publications. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2009/9/27/nation/20090927210456&sec=n ation
Fatimah Zahrah
INTERNATIONAL BACCALAUREATE
EXTENDED ESSAY
ECONOMICS SL
MAY 2012 SESSION
“To What Extent Does the Launching of Electric Train Service (ETS) Affects The Demand For the Bus Services as a Public Transportation from Ipoh to Kuala Lumpur?”
Word count: 3999
Name: Centre:
Md. Fauadi, Fatimah Zahrah MARA College Banting
Candidate number: 000592-192 Advisor: Mdm. Siti Norashikin Binti Misman
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
CONTENTS
ABSTRACT ACKNOWLEDGEMENT 1.0 THE INTRODUCTION...…………………………………………………………….1-2 2.0 THE RESEARCH……………………………………………………….…………...3-4 2.1 Objectives 2.2 Hypothesis 2.3 Methods 2.3.1 2.3.2 2.3.3 Interviews Survey Secondary Research 3 4 4
3.0 DATA COLLECTION AND PROCESSING……………………………….……… 5-19 3.1 The demand for bus service 3.2 The demand for Electric Train Service (ETS) 3.3 The determinants of demand 5-11 11-15 15-19
4.0 CONCLUSION…..………………………………………………………………….20-21 APPENDIX BIBLIOGRAPHY
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
ABSTRACT
The public transport service is very crucial in Ipoh. The people depend on the bus service to travel from one place to another. In August 2010, a new mode of public transportation known as Electric Train Service (ETS) was launched for journey from Ipoh to Kuala Lumpur. Therefore, I would like to study whether the demand for the bus service is affected after the launching of ETS service. The research question of this paper is “To what extent does the launching of ETS affects the demand for the bus services as a public transportation from Ipoh to Kuala Lumpur?” The information and data are obtained through interviews, observations, surveys and secondary research. I had interviewed the Chief Operating Officer as well as the Sales and Marketing Manager of ETS, and officers of Konsortium Transnasional Berhad, the largest bus company in Malaysia. The observations are made at the bus and railway station in Ipoh. The surveys are done by distributing 100 questionnaires forms to people in Ipoh in order to know the determinants of demand for each service. At the end of this research, I found that the demand of bus service is actually had started to decrease before the launching of ETS as a result of reduction in the number of foreign workers in Malaysia. After the launching of the ETS, the decrease in demand for the bus service is more significant although the ETS fare is far higher than bus fare. On the other hand, the demand for ETS is increasing in tandem with the decreasing in demand for the bus service. My conclusion is the launching of ETS slightly affects the demand for the bus service as the demand is not only determined by the fare of each service, but also subjected to other determinants of demand. (299 words)
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
ACKNOWLEDGEMENT
First and foremost, I would like to express my gratitude to God Al-Mighty for blessing me with strength to conduct this research until it is completed. Special thanks goes to my parents, Mr. Md Fauadi and Mrs. Norshidah for their support and assistance. I also would like to express my appreciation to my advisor, Miss Siti Norashikin for her guidance throughout the research process. I want to thank everyone who had took part in this research for giving their full cooperation. It is highly appreciated because without their cooperation, this research could never be completed successfully. The Chief Operating Officer of ETS Mr. Azizullah Kinayatullah
The Sales and Marketing Manager of ETS Ms. Shamala Devi
The sales officers of Transnasional Ipoh Mr. Yunus bin Abdul Shukor
The sales officer of Plusliner Ipoh Mrs. Azlina
All respondents who had took part in the survey. Thank you.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
1.0 The introduction
Public transport is a very important sector for the people in Malaysia. Most people in Malaysia depend on it to travel from one place to another especially for a long journey as it is cost-saving. Therefore, it is highly prioritized by the Malaysia government. On 27 July 2009, the Malaysia Prime Minister, Dato’ Sri Mohd Najib bin Tun Abdul Razak launched National Key Result Area (NKRA). One of the six NKRA’s is on improving the urban public transport1. The Ex-Minister Of Transport, Dato’ Sri Ong Tee Keat who was responsible about the matter said their aspiration is to see Malaysia’s public transport system becomes the mode of choice of urban commuters as they try to manage the polarity between the less fortunate, who need the public transport, and the rest who are able to rely on private vehicles2. The government aims that the public transport sector provides efficient and safe service to the people so that the people will get the benefit. In order to achieve this, the government works closely with firms in public transport industry especially the largest public bus operator in Malaysia, Konsortium Transnasional Berhad (KTB).3 The government also invested RM 240 million in Electric Train Service (ETS) project under Malayan Railway Limited (MRL). The investment was made to buy five high-speed trains from Hyundai Rotem to provide more public transport to the people.4 The scope of this research is the public transport in Ipoh. Ipoh is the capital city of Perak. Its population in 2011 is approximately 666,7005. Many people who use public
1
Urban Public Transport NKRA (Update #1).(2010). Retrieved 2011, August 7, from http://transitmy.org/2010/01/18/urban-public-transport-nkra/ 2 PEMANDU Lab Highlights. Urban Public Transport. Retrieved 2011, August 7, from http://transitmy.files.wordpress.com/2010/01/pemandu-lab-highlights-upt.pdf 3 Konsortium Transnasional Berhad. Retrieved 2011, August 8, from http://www.ktb.com.my/ 4 Ravendran, A. (2010, August 13).KTMB eyes more high-speed trains to enhance service. Malaysian Reserve. Retrieved 2011, August 7, from http://www.etstrain.com.my/web/ets/images/media/fwdpressreleaseset5/MReserve.pdf 5 Department of Statistics, Malaysia. (2010). Statistics on the population of people in Ipoh, Perak in year 2009 and 2010.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
transport in Ipoh relied on bus services to travel to other destinations as there was limited choice of public transport available. There is no flight to connect Ipoh to other states except Singapore. This makes the demand for the bus service to rise. In August 2010, the president of MRL, Dr. Aminuddin Adnan announced that they will provide the ETS from Ipoh to Kuala Lumpur6. With that, people in Ipoh have more choices of public transport to travel to Kuala Lumpur. The facilities provided inside the ETS are excellent as compared to bus because it has toilet, power socket, television, CCTV and disabled-friendly. However, ETS fare is quite expensive compared to bus fare. The ETS fare for Ipoh-Kuala Lumpur route is RM30.00 whereas the bus fare set by the Commercial Vehicle Licensing Board of Malaysia is only RM17.40. The purpose of conducting this research is to study the extent to which the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur. I chose to do this research as I am interested to know whether the launching of ETS affects the demand for bus service or otherwise. I would also like to know the determinants of demand for public transport for travelling from Ipoh to Kuala Lumpur. This research would be interesting because although ETS provides many facilities to the users, its fare is quite high. This may affect the decision made by the people.
6
Sidhu, J. (2010, August 13). Electric train service on a roll. The Star Online. Retrieved 2011, August 13, from http://biz.thestar.com.my/news/story.asp?file=/2010/8/13/business/6849374&sec=business
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
2.0 The Research
This section will cover about the objectives of conducting the research, hypothesis and the methods used to carry out the study. 2.1 Objectives The main objective of this research is to study to what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur. In order to achieve the main objective, the following objectives needs to be attained first. 2.1.1 To find out the demand for bus service from Ipoh to Kuala Lumpur starting from January 2010 until April 2011, period which cover before and after the launching of ETS. 2.1.2 To find out the demand for ETS from Ipoh to Kuala Lumpur starting from its launching in August 2010 until April 2011. 2.1.3 To find out determinants of demand for public transport that also lead to a change in demand for both bus and ETS. 2.1.4 To give recommendation for bus industry on how to maintain the demand for their services.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
2.2 Hypothesis In a short run, the demand for bus service will be slightly affected due to the launching of ETS because public would like to experience the new ETS. In a long run, the demand for bus service will be significantly affected because ETS will improve their service and gain higher trust from the public transport users. Methods 2.3.1 Interview Interviews had been conducted several times with officers of the largest operator of bus service, which are Transnasional and Plusliner. An interview was also conducted with the ETS Chief Operating Officer and the Sales and Marketing Manager. The aim of these interviews is to achieve the first and second objectives (2.1.1 and 2.1.2) and to obtain information about ETS for route from Ipoh to Kuala Lumpur. The questions asked during the interviews can be referred to the appendix. 2.3.2 Survey A survey in the form of questionnaires was conducted on the people in Ipoh using the public transport to travel to Kuala Lumpur. 100 sets of questionnaires were distributed to the respondents that were chosen randomly. The result represents the whole population in Ipoh. This method is used to achieve the third objective (2.1.3). 2.3.3 Secondary research Internet research was done to know about the background, journey route, schedule, and fares of both services.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
3.0 Data Collection and Processing
This section will cover the outcome of the research that has been carried out. 3.1 The demand for bus service In order to get information on the demand for bus service, I conducted research on two leading express bus companies, which are Transnasional and Plusliner. These bus companies are the most preferred modes of transport by the public in Malaysia especially in Ipoh as they offer excellent service in terms of punctuality of departure and arrival. The safety of the users is also highly prioritized by the companies. From the interview with Mr. Yunus, the sales manager of Transnasional Ipoh, he said that their company really ensure the safety of their services. This is done by paying the salary of the bus drivers on time so that they will be responsible with their job. Besides that, it is compulsory for their drivers to have an hour break after every trip. Although Transnasional and Plusliner merged as one company and known as Konsortium Transnasional Berhad (KTB) in June 2007, they still maintain their own brand in the market. According to a research carried out by the Malaysian Institute of Road Safety (MIROS), the safest bus service in Malaysia are those operated by the KTB. The ratio of accident involving the KTB is 3:10000 trips with 75% of the accidents caused by third parties7. KTB enjoys the largest market share in the bus service sector.
7
Rama Chandran, S. (2010, January 3) Transnasional buses the safest, thanks to SHE. Retrieved 2011, August 11, from http://www.miros.gov.my/c/document_library/get_file?uuid=43c4cb58-5e13-49c3-8500d0e3bd80f9bc&groupId=10124
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
MONTH COMPANY
NUMBER OF TICKET SOLD
TRANSNASIONAL PLUSLINER TOTAL Jan-10 8,904 11,895 20,799 Feb-10 10,093 12,961 23,054 Mar-10 8855 11,943 20,798 Apr-10 8,249 10,408 18,657 May-10 7,982 9,977 17,959 Jun-10 8,293 11,219 19,512 Jul-10 8,103 12,401 20,504 Aug-10 8,396 11,942 20,338 Sep-10 7,477 9,778 17,255 Oct-10 9,065 9,579 18,644 Nov-10 7,911 9,632 17,543 Dec-10 10,408 12,369 22,777 Jan-11 7,574 10,285 17,859 Feb-11 8,444 10,763 19,207 Mar-11 7,910 10,577 18,487 Apr-11 8,586 11,176 19,762 8 Table 1 shows the number of tickets sold by the bus companies
8
Abdul Shukor, Y (2011, May 26). Personal interview. Azlina (2011, July 15). Personal interview.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
The number of bus ticket sold per month
30,000 25,000
Number of bus ticket sold
20,000 15,000 10,000 5,000 0
The number of bus ticket sold
Month
Diagram 1 shows the trend of ticket sold by the bus companies monthly from Jun 2009 until April 2011. Based on diagram 1, the total number of tickets sold every month fluctuated throughout the period of research. In February 2010, the number of tickets sold was slightly higher from the previous month due to the Chinese New Year celebration. From March until May 2010, the number of tickets sold decreased steadily since there was no special event celebrated by Malaysian. In June and August 2010, the number of bus tickets sold increased because students in Malaysia had semester holiday. Many school students used bus services to go back to their hometown as the fare was cheap. Many parents also took this opportunity to bring their children to Kuala Lumpur for holiday. In August and December every year,
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
‘Malaysia Mega Sales’ is held all over Malaysia including Kuala Lumpur where goods sold are given discount up to 70%. This increased the demand for bus services. In September 2010, Muslims who are the majority group in Malaysia celebrated Eid Celebration.9 This is the biggest festival celebrated in Malaysia. In October 2010, the Hindus celebrated Deepavali. During these two months, the number of tickets sold declined seriously. This is because during festive seasons, many families chose to travel back to their hometown by car since it is easier for them to visit their relatives. Based on my observations, the number of vehicles on the road tripled during the festive season. According to the statistics given by the traffic unit, the number of accidents recorded on the 22nd day of the “Ops Sikap” was 16817.10 There was also some problems involving bus drivers during this time because they worked overtime to get extra money for Eid Celebration. Thus, they felt sleepy while driving and took steroids in order to stay awake. This issue made the public feel insecure to use the bus service.11 In an interview with a father who had a daughter studying in Kuala Lumpur, he said, “I would go to my daughter’s college to fetch her because I was worried about her safety since there had been a lot of accident cases during festive season.” Therefore, the number of tickets sold fell during these months. On 12th August 2010, ETS was launched. Starting from this date, the sales for bus tickets declined as the public had more options on which public transport to be used for travelling to Kuala Lumpur. Another reason that made the sales of tickets decreased
9
Department of Statistics Malaysia. (2001) Population and Housing Census 2000. Retrieved 2011, August 9, from http://web.archive.org/web/20070323094806/http://www.statistics.gov.my/english/census/pre ssdemo.htm 10 Daniel, S. (2010, September 18) Ops Sikap: Vehicles on the road triple but deaths drop by 9.5%. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2010/9/18/nation/20100918162856&sec=nation 11 46 express bus drivers tested positive for drugs.(2009, September 27).The Star Publications. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2009/9/27/nation/20090927210456&sec=nation
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
significantly was due to efforts by the Malaysian Government to reduce the number of foreign workers in Malaysia. According to Mr. Yunus, the loyal customers of their company were not only local people but also foreign workers because most of them do not have their own vehicle. As such, the reduction of number of foreign workers in Malaysia affects the business of bus companies.
Price of bus ticket S1
Pe2
shortage
Pe1 RM 17.40 shortage Maximum price
D2 D1 Quantity of bus ticket 0 Q1 Qe1 Q2 Qe2 Q3
Diagram 2: Market for bus service The data is processed into the demand and supply curve. From diagram 2, the demand curve is D1 and the supply curve is S1. The equilibrium point of D1 and S1 is at Pe1. The government intervenes in the bus industry by setting up maximum fare, which is RM17.40. The maximum fare is set below the Pe1 to help the people from bearing a higher cost when using public transport. In this case, the people get the benefit because they pay less than the actual price that they have to pay. However, the maximum fare also creates shortage from Q1 to Q2. In June, August and December every year, there is an increase in the demand for bus services. As the demand for bus services increase, demand curve shift to the right from D1 to
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
D2. This causes the shortage of bus service to increase. Previously, the shortage is from Q1 to Q2. Now, the shortage is from Q1 to Q3. In order to eliminate shortage, the bus fare should be increased to Pe2 so that market equilibrium can be achieved. However, due to the government intervention of imposing maximum fare, the bus industry cannot react to the shortage by increasing the price. The price mechanism is not functioning to control the demand and supply. Another way to solve the shortage is by increasing the supply for bus service from Q1 to Q3 so that the new market equilibrium can be achieved at the price of RM 17.40 and Q3. However, at price RM 17.40, the bus companies are not willing and able to supply more than Q1 as they have to bear the rise in operational costs. Therefore, the government should give higher subsidies to the bus companies such as giving them low diesel price per litre. Since the bus service is a merit good and necessary for the people especially students, low-income workers and senior citizens, the government should lessen the burden of the bus companies.
Price of bus ticket S1
Pe1
shortage
Pe2
RM 17.40
Maximum price shortage D2 0 Qs Qe2Q2 Qe1 Q1
D1 Quantity of bus ticket
Diagram 3: Market for bus service
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Diagram 3 shows a shifting of demand curve. Starting from March 2010, there is a slight decrease in the number of bus tickets sold from month to month. We can say that the demand for bus services is decreasing. Based on the diagram, it shows that as the demand decreased, the demand curve shift to the left from D1 to D2. The shortage of bus services is decreasing. Previously, the shortage is from Q1 to Qs. However, as there is a decrease in demand, the shortage now is from Q2 to Qs. This means that the shortage problem decreases when demand for bus services decreases. 3.1 The demand for Electric Train Service (ETS) Electric Train Service (ETS) is provided by the Malayan Railways Limited (MRL). MRL is wholly owned by the government.12 Thus, when the government announced the NKRA on public transport, MRL is the best platform for the government to improve the public transport in Malaysia. The Malaysian government made a huge investment in the ETS project to provide better public transport. This investment is valuable to the country because it improves the welfare of the people and leads to economic development of Malaysia. The launching of ETS is welcomed by the people especially for those who live in Ipoh as it makes them easier to travel to Kuala Lumpur. ETS has many advantages compared to other transports in terms of journey time and safety. Besides that, it provides a lot of facilities to the travellers such as power socket and toilet. Besides that, the government also controls the fare for ETS because they want to make sure everyone can afford and reap the benefit from it.
12
Malaysian Investment Development Authority. (n.d). Invest in Malaysia. Retrieved 2011,September 16, from http://www.mida.gov.my/env3/index.php?page=railway-services
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
ELECTRIC TRAIN SERVICE Month Number of ticket sold Aug-10 12,637 Sep-10 18,151 Oct-10 21,248 Nov-10 23,359 Dec-10 31,889 Jan-11 22,904 Feb-11 26,073 Mar-11 28,956 Apr-11 28,672 Table 2 shows the number of ETS ticket sold monthly13
The number of ETS ticket sold monthly
35,000 30,000 Number of ticket sold 25,000 20,000 15,000 10,000 5,000 0 The number of ETS ticket sold
Month
Diagram 5 shows the number of ETS ticket sold monthly from August 2010 until April 2010. Based on diagram 5, it shows that the number of tickets sold is steadily increased in the first few months after its launching in August 2010. From November 2010 to December 2010, the demand increased sharply due to the school holidays and Malaysia Mega Sales.
13
Statistic Department of Electric Train Service.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Many parents brought their family to travel to Kuala Lumpur and chose to have an experience of using ETS service. In an interview conducted with Mr Azizullah, Chief Operating Officer of ETS, he said “The number of ETS passengers is increasing rapidly from month to month. During the first few months after it was launched, the average number of passengers per day is 1200. In April 2011, we managed to get an average number of 1700 passengers per day.” He also added that the reason why ETS is widely accepted by everyone is because it is comfortable, safe and travelling time is short. It is the most popular mode of public transport among the middle-income group, professional, tourist and even senior citizens. In January 2011, the number of tickets sold dropped significantly from the previous month as school holiday had ended. After that, the number of tickets sold increase consistently from January 2011 until April 2011.
Price of ETS ticket S1
Pe2 shortage Pe1 RM 30 shortage Maximum price
D1
1
D2 Quantity of ETS ticket
0
QsQe1Q1 Qe2
Q2
Diagram 6: Market for ETS The information is transformed into demand-supply curve, which is Diagram 6. Diagram 6 shows that there is an increase in demand of ETS. The demand curve shifts to the right from D1 to D2. The maximum fare of ETS is set by the government at RM30. At first,
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
the shortage is from Qs to Q1 but now it is from Qs to Q2. To eliminate the shortage, the price of tickets should be increased to Pe2. However, if the price is increased, it does not favour certain groups of people. Since it is aimed to serve the people, the government does not want to increase the price. Thus, to eliminate shortage, they can increase the supply. Since ETS is a government project, the management can increase the supply as the government could use the money from tax to cover the cost of operations for the benefit of the people. During the Eid Celebration in September 2010, ETS increased the supply from five trips per day to eight trips per day.14 This shows that the ETS board of directors responds to the shortage.
Price of ETS ticket S1
Pe1
shortage
Pe2 RM 30 shortage Maximum price D1 Quantity of ETS ticket
D2 0 QsQe2Q2 Qe1 Q1
Diagram 7: Market for ETS Diagram 7 shows the situation in the January 2011 in which there was a huge decrement in the number of ticket sold. At first, the demand curve is D1 and the supply curve is S1. The market equilibrium is at price Pe1 and quantity Qe1. Since the government had fixed the maximum price of the ETS fare below the equilibrium point that is RM 30, the quantity
14
More ETS trips during raya.(2010, August 12). The Star Publications. Retrieved 2011, August 12, from http://thestar.com.my/news/story.asp?file=/2010/8/12/nation/6844101&sec=nation
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
supplied is at Qs whereas the quantity demanded is at Q1. There was a shortage of ETS service from Qs to Q1. When the demand decreased, the demand curve shifts to the left from D1 to D2. The supply remains at Qs but the quantity of demand now is at Q2. The shortage of ETS service is from Qs to Q2. This means that the shortage problem falls due to the decrease in the demand. 3.2 The determinants of demand
The survey was conducted in Ipoh and involved 100 respondents that were randomly selected. The results are assumed to represent the whole population in Ipoh.
2%
1. Do you travel by public transport? Yes No
98%
Diagram 8 shows the percentage of people using public transport in Ipoh. Diagram 8 shows that 98% of the respondents are using public transport for travelling. Only 2% do not depend at all on public transport for travelling. This clearly shows the importance of public transport in Ipoh.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
2%
3. What is your most preferred mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Electric Train Service (ETS) 46% B. Bus
52%
C. Others
Diagram 9 shows the preferred mode of transportation by the people in Ipoh. Based on the response for the third question, 52% respondents chose bus and 46% respondents preferred ETS as their mode of public transportation to travel to Kuala Lumpur. The reason that most of the respondents choose bus is because loyal customers have trust in bus service. Besides that, ETS is a new service and not all people in Ipoh are aware about the ETS.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
22% 27%
4. Why do you choose ETS as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Shorter travelling time compared to bus. B. Easy to get connecting public transport at KL Sentral C. A lot of facilities provided in ETS D. Safety is more guaranteed compared to bus
7%
44%
Diagram 10 shows the factors considered by people in Ipoh in choosing ETS service. Based on Diagram 10, 44% of the respondents that preferred ETS service choose it because it is easier to get connecting public transport at KL Sentral. The trip from Ipoh stops at KL Sentral (refer to Appendix), Malaysia’s largest transportation hub. It is connected to six rail networks known as KTM Intercity, KTM Komuter, Kelana Jaya Line, Ampang Line, KL Monorail, Electric Rail Link (ERL). It is also connected to Kuala Lumpur International Airport using KLIA Transit and KLIA Express.15 This is the main reason of why people in Ipoh choose ETS to travel to Kuala Lumpur. The second reason is that the travelling time of ETS is shorter compared to the bus service. It takes only about 2 hours to reach Kuala Lumpur compared to 3 hours if travelling by bus. The third reason is safety. Safety is more guaranteed compared to bus service as risk of accident is very low. In the interview with Mr. Azizullah, he said: “Up until now, 100% of the passengers of ETS that travel from Ipoh to Kuala Lumpur are transported safely.”
15
Malaysian Resources Corporation Berhad. (n.d). A World Class Transportation Hub. Retrieved 2011,November 2, from http://www.klsentral.com.my/Conn_Main.aspx
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192 5. Why do you choose bus as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Cheaper bus fares compared to the price of ticket for ETS. B. The buses are comfortable and relaxing. 6% C. The frequency of bus service for the route Ipoh-Kuala Lumpur. D. The condition of Puduraya bus terminal that is user-friendly.
2% 25%
67%
Diagram 11 shows the factors considered by people in Ipoh in choosing bus service. Diagram 11 shows that 67% of the respondents chose bus because of the frequency of its trip from Ipoh to Kuala Lumpur. Bus service provides more trips per day as compared to ETS. In August 2010 until April 2011, the frequency of the ETS is five trips per day. In contrast, there are more than 30 bus trips provided per day. Since there are more bus services available at different times, people find it is easier to travel using buses as they can choose the departure and arrival time that suits to their schedule. 25% of the respondents chose bus to travel as the fare is cheaper compared to ETS. It means that lower fare also makes it more attractive than ETS for some people.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
13% 27%
6. What is your most important consideration in choosing public transport for travelling? A. Price of the ticket
B. Punctuality of departure and arrival time 9% 51% C. Facilities provided inside the transport D. Safety issue
Diagram 12 shows the determinants of demand for public transport. Diagram 12 shows that 51% of the respondents consider the punctuality of departure and arrival time of the public transport. Time is very essential as delay could spoil their planned schedule. Therefore, punctuality of the service is very important. Safety is also an important factor considered by the public in choosing public transport and followed by the price of the ticket.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
4.0 Conclusion
According to the Law of Demand, when the price of a product is decreased, the demand of the product will increase, ceteris paribus.16 In the beginning of this research, I assumed that bus services and ETS are substitute to each other as they serve the same purpose, have equal function that is transporting people from Ipoh to Kuala Lumpur and satisfy the same need.17 It means that the people will have to choose either one. If they choose to use ETS, they cannot choose the bus service at the same time. Thus, the launching of ETS will surely affect the demand for the bus service. However, it is arguable as the fare of ETS is almost double the bus fare. Nevertheless, as we can see from the previous results, it does not happen that way. Although the bus fare is lower than the ETS, the demand is on decrease while the demand for ETS steadily increase from month to month. It shows that the Law of Demand does not come to reality in this case. This is because there are many determinants of demand that affects the demand for both services. For example, the safety issue, facilities, efficiency and punctuality of the service. The term ceteris paribus which means “all other things being equal” is not fulfilled in this case. Although the ETS fare is higher than the bus, the people in Ipoh are still willing and choose its service as it provides better services compared to bus service. Nevertheless, the demand for bus service is still strong although its performance is decreasing from month to month. The decrement is very slight as its fare is cheaper and successfully retains the demand from the low-income group, senior citizens and students.
16
Blink, J. & Dorton, I.(February 2007). IB Diploma Programme Course Companion, Economics. Where it is published. Oxford. 17 Piana, V. (2005). Substitute Goods. Retrieved 2011, September 16, from http://www.economicswebinstitute.org/glossary/substitute.htm
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Furthermore, the frequency of bus trip per day is very high. This makes people more comfortable in choosing the time that suits their schedule. In order to stop the demand from decreasing, the bus companies should promote more people to use their service through advertisement. They can increase the demand by improving the service in terms of punctuality of departure and arrival time, standard of road safety, make travelling by bus more comfortable and relaxing and provide more facilities inside the bus. As conclusion, the launching of ETS slightly effect the demand for bus services. The demand for bus services decreased with the presence of ETS. However, the decrement is very minimal. The reason behind the falling in demand for bus service is not solely due the presence of ETS. It was affected by other determinants of demand that had been mentioned before. In the future, I predict that the demand for bus will decrease more significantly because ETS will improve their services and reduce the fare to ensure the people in Malaysia will get the benefit from it. In May 2011, ETS introduced three new packages of different fare so that more people can afford it. This will surely affect the demand for bus services. However, the demand for bus services will level off. This is because there is always some loyal users of bus service whom will continue to choose this mode of transportation for travelling from Ipoh to Kuala Lumpur, Malaysia’s capital city.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX A :MAP OF MALAYSIA
This map shows the North South Expressway route from Ipoh to Kuala Lumpur. The distance is 202 km (source : Google Maps, date taken: 08.08.2011)
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX B : QUESTIONNAIRES AND RESPONSES QUESTIONS 1. Do you travel by public transport? Yes No ( quit at this question ) 2. How often do you travel from Ipoh to Kuala Lumpur using public transport? A. Once in a year B. 2 times per year C. 3 times per year D. More than 3 times per year 3. What is your most preferred mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Electric Train Service (ETS) (go to question 4, ignore question 5) B. Bus ( proceed to question 5 ) C. Others 4. Why do you choose ETS as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Shorter travelling time compared to bus. B. Easy to get connecting public transport at KL Sentral C. A lot of facilities provided in ETS D. Safety is more guaranteed compared to bus 5. Why do you choose bus as a mode of transportation for travelling from Ipoh to Kuala Lumpur? A. Cheaper bus fares compared to the price of ticket for ETS. B. The buses are comfortable and relaxing. C. The frequency of bus service for the route Ipoh-Kuala Lumpur. D. The condition of Puduraya bus terminal that is user-friendly. 6. What is your most important consideration in choosing public transport for travelling? A. Price of the ticket B. Punctuality of departure and arrival time C. Facilities provided inside the transport D. Safety issue 7. How much is your net income per month? A. below RM 1000 B. RM 1000 – RM 3000 C. RM3001– RM7000 D. above RM 7001 NUMBER OF SCORE 98 2
21 18 6 53
45 51 2
12 20 3 10
13 3 34 1
13 50 9 26 15 26 39 18
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX C : A SET OF QUESTIONS ASKED DURING INTERVIEW Interview with officers from Electric Train Service 1. What are the advantages of using ETS compared to other public transport? Is there any possibility that the bus users change to ETS? 2. Who are the loyal customers of ETS? 3. How many trips that ETS offered in a day from Ipoh to Kuala Lumpur ( August 10April 11), and when is the peak time that the service is highly demanded? 4. What is the trend of the ticket sales since its launching in August 2010 until April 2011 for trip from Ipoh to Kuala Lumpur? 5. What is the estimated number of passengers monthly for the trip from Ipoh to Kuala Lumpur from August 2010 until April 2011? 6. What are the actions taken by ETS to attract public to use ETS as their transport for travelling? Interview with officers from Transnasional and Plusliner (Konsortium Transnasional Berhad). 1. What are the advantages of using bus services as compared to other public transport? 2. Who are the loyal customers of bus services? 3. How many trips that the bus company offered per day from Ipoh to Kuala Lumpur (June 09- April 11), and when is the peak time that the service is highly demanded? Is there any changes in the number of trips per day? 4. What is the trend of the ticket sales since June 2009 until April 2011 for trip from Ipoh to Kuala Lumpur? 5. What is the estimated number of passengers monthly for the trip from Ipoh to Kuala Lumpur from June 2009 until April 2011? 6. How far does the trend of ticket sales change starting from August 2010? 7. What are the actions taken by bus companies to attract public to use bus as their transport for travelling?
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
APPENDIX D: INTERVIEW SESSIONS
Company Electric Train Service
Transnasional Express
Plusliner
Date of interview 01 June 2011 (at the ETS head quarters, with the Chief Operating Officer of ETS, Mr. Azizullah Kinayatullah) 15 July 2011 (phone interview with the Sales and Marketing Manager of ETS, Miss Shamala) 26 May 2011 (at the Transnasional office with Mr Yunus) 14 July 2011 (at the Transnasional office with Mr Yunus) 15 July 2011 (at the Plusliner office with Pn Azlina)
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
BIBLIOGRAPHY
Blink, J. & Dorton, I. (2007). IB Diploma Programme Course Companion, Economics. New York. Oxford University Press. Department of Statistics, Malaysia. (2010). Statistics on the population of people in Ipoh, Perak in year 2009 and 2010. Abdul Shukor, Y (2011, May 26). Personal interview. Azlina (2011, July 15). Personal interview. Kinayatullah, A & Devi, S (2011, June 1). Personal interview. All transportation routes in Kuala Lumpur. (n.d). ETS website. Retrieved 2012, January 17, from http://www.ets-train.com.my/web/ets/images/content/route/route_all.pdf Daniel, S. (2010, September 18) Ops Sikap: Vehicles on the road triple but deaths drop by 9.5%. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2010/9/18/nation/20100918162856&sec=n ation Department of Statistics Malaysia. (2001) Population and Housing Census 2000. Retrieved 2011, August 9, from http://web.archive.org/web/20070323094806/http://www.statistics.gov.my/english/ce nsus/pressdemo.htm Konsortium Transnasional Berhad. Retrieved 2011, August 8, from http://www.ktb.com.my/ Malaysian Resources Corporation Berhad. (n.d). A World Class Transportation Hub. Retrieved 2011,November 2, from http://www.klsentral.com.my/Conn_Main.aspx Malaysian Investment Development Authority. (n.d). Invest in Malaysia. Retrieved 2011, September 16, from http://www.mida.gov.my/env3/index.php?page=railway-services More ETS trips during raya.(2010, August 12). The Star Publications. Retrieved 2011, August 12, from http://thestar.com.my/news/story.asp?file=/2010/8/12/nation/6844101&sec=nation PEMANDU Lab Highlights. Urban Public Transport. Retrieved 2011, August 7, from http://transitmy.files.wordpress.com/2010/01/pemandu-lab-highlights-upt.pdf Piana, V. (2005). Substitute Goods. Retrieved 2011, September 16, from http://www.economicswebinstitute.org/glossary/substitute.htm Rama Chandran, S. (2010, January 3) Transnasional buses the safest, thanks to SHE.
Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur”
Md. Fauadi, Fatimah Zahrah 000592-192
Retrieved 2011, August 11, from http://www.miros.gov.my/c/document_library/get_file?uuid=43c4cb58-5e13-49c38500-d0e3bd80f9bc&groupId=10124 Ravendran, A. (2010, August 13).KTMB eyes more high-speed trains to enhance service. Malaysian Reserve. Retrieved 2011, August 7, from http://www.etstrain.com.my/web/ets/images/media/fwdpressreleaseset5/MReserve.pdf Sidhu, J. (2010, August 13). Electric train service on a roll. The Star Online. Retrieved 2011, August 13, from http://biz.thestar.com.my/news/story.asp?file=/2010/8/13/business/6849374&sec=bus iness Urban Public Transport NKRA (Update #1).(2010). Retrieved 2011, August 7, from http://transitmy.org/2010/01/18/urban-public-transport-nkra/ 46 express bus drivers tested positive for drugs.(2009, September 27).The Star Publications. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2009/9/27/nation/20090927210456&sec=n ation
Bibliography: Blink, J. & Dorton, I. (2007). IB Diploma Programme Course Companion, Economics. New York. Oxford University Press. Department of Statistics, Malaysia. (2010). Statistics on the population of people in Ipoh, Perak in year 2009 and 2010. Abdul Shukor, Y (2011, May 26). Personal interview. Azlina (2011, July 15). Personal interview. Kinayatullah, A & Devi, S (2011, June 1). Personal interview. All transportation routes in Kuala Lumpur. (n.d). ETS website. Retrieved 2012, January 17, from http://www.ets-train.com.my/web/ets/images/content/route/route_all.pdf Daniel, S. (2010, September 18) Ops Sikap: Vehicles on the road triple but deaths drop by 9.5%. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2010/9/18/nation/20100918162856&sec=n ation Department of Statistics Malaysia. (2001) Population and Housing Census 2000. Retrieved 2011, August 9, from http://web.archive.org/web/20070323094806/http://www.statistics.gov.my/english/ce nsus/pressdemo.htm Konsortium Transnasional Berhad. Retrieved 2011, August 8, from http://www.ktb.com.my/ Malaysian Resources Corporation Berhad. (n.d). A World Class Transportation Hub. Retrieved 2011,November 2, from http://www.klsentral.com.my/Conn_Main.aspx Malaysian Investment Development Authority. (n.d). Invest in Malaysia. Retrieved 2011, September 16, from http://www.mida.gov.my/env3/index.php?page=railway-services More ETS trips during raya.(2010, August 12). The Star Publications. Retrieved 2011, August 12, from http://thestar.com.my/news/story.asp?file=/2010/8/12/nation/6844101&sec=nation PEMANDU Lab Highlights. Urban Public Transport. Retrieved 2011, August 7, from http://transitmy.files.wordpress.com/2010/01/pemandu-lab-highlights-upt.pdf Piana, V. (2005). Substitute Goods. Retrieved 2011, September 16, from http://www.economicswebinstitute.org/glossary/substitute.htm Rama Chandran, S. (2010, January 3) Transnasional buses the safest, thanks to SHE. Extended Essay Economics SL “To what extent does the launching of ETS affects the demand for bus service as a public transportation from Ipoh to Kuala Lumpur” Md. Fauadi, Fatimah Zahrah 000592-192 Retrieved 2011, August 11, from http://www.miros.gov.my/c/document_library/get_file?uuid=43c4cb58-5e13-49c38500-d0e3bd80f9bc&groupId=10124 Ravendran, A. (2010, August 13).KTMB eyes more high-speed trains to enhance service. Malaysian Reserve. Retrieved 2011, August 7, from http://www.etstrain.com.my/web/ets/images/media/fwdpressreleaseset5/MReserve.pdf Sidhu, J. (2010, August 13). Electric train service on a roll. The Star Online. Retrieved 2011, August 13, from http://biz.thestar.com.my/news/story.asp?file=/2010/8/13/business/6849374&sec=bus iness Urban Public Transport NKRA (Update #1).(2010). Retrieved 2011, August 7, from http://transitmy.org/2010/01/18/urban-public-transport-nkra/ 46 express bus drivers tested positive for drugs.(2009, September 27).The Star Publications. Retrieved 2011, August 10, from http://thestar.com.my/news/story.asp?file=/2009/9/27/nation/20090927210456&sec=n ation
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