Transport Economics of Keretapi Tanah Melayu Berhad

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Generally, transportation is the safe, efficient, reliable, and sustainable movement of persons and goods by over time and space. Several available types of transportation are used widely in the real life, which including railroads, buses, air, automobile, truck and, etc. In addition, the value-added activities, for example, door-to-door service, for transportation is essential to the elderly or disabled. No one can doubt the important of transportation to the economy, for instance; an excellent transportation spurs economic development by giving mobility to production factors, which permits scale economics and increase efficiency. What's more, it also enlarges the area that consumers and industries can draw on for resources and products. KTM Komuter in Malaysia is a well-known transportation company, because it earns its great reputation by the profound history, advanced management, and all. The following parts will focus on the background, the success and limitation, the role and importance of the KTM Komuter to the economy. And the suggestions and recommendations will also be given in details. The various types of services provided by KTMB include Inter-city, commuter train services, ETS and freight services. All these incurred a high operating cost to the company itself. Besides that, the company also benefited greatly from Property and Advertising segments in terms of value creation from its non-core businesses.
The mission of Keretapi Tanah Melayu Berhad (KTMB):
“Be the preferred land transportation system by providing safe, efficient and reliable integrated rail services for people and goods.” To achieve the mission they will:
Be competitive and responsive to market needs.
Achieve our goals through a highly trained and motivated workforce using modern technology and process innovation.
Provide reasonable profit and long term growth to shareholders.

Background of the transportation management
Keretapi Tanah Melayu Berhad (KTMB), or Malayan Railways Limited, is the major rail operator in Peninsular Malaysia. Initially, the railway system was built to transport tin from Taiping to Port Weld (12.8km) at the coast for export. It was on June 1, 1885 where the first train in Malaysia to take its schedule during British colonial era. Previously it was known as the Federated Malay States Railways (FMSR) and the Malayan Railway Administration (MRA). Keretapi Tanah Melayu acquired its current name in 1962. 30 years later, which was on 1992, the company was corporatize but remains wholly owned by the Malaysian government. During the times, fares offered by KTMB are generally reasonable, but the low frequency of the intercity trains does make them competitive with other modes of transportation. However, KTMB has made numerous changes that lead to its current success. Until recently, the turnaround effort to steer KTMB back on track with reasonable profit or at the very least self-sustainable to cover its operating cost has been way too long overdue. Over the years, many of that turnaround effort have been proven failure. In KTMB's latest publicly available financial statement as at December 2009, it was reported that the company managed to rake in net profits of between RM9mil and RM15mil from 1993 to 1995. But after that, it began to post losses from in 2007, RM84.6mil in 2008 and RM92.6mil in 2009. The causes of the losses were due to high operational cost while maintaining a relatively low fare, and a steep decline in its biggest revenue contributor - freight business due to the insufficient train capacity of the State Railway of Thailand to support KTMB's cross-border services. Apart from that, KTMB also did not have enough electric multiple sets to support its commuter train services. StarBiz, in an interview with...
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