Infrastructure
Rapid economic growth had led to capacity constraints of infrastructure
in the early 1990's, which required immediate attention to increase capacity and
accessibility. To accelerate infrastructural development, private sector participation
complemented public sector efforts. However, infrastructure projects have high capital
costs and long gestation periods and are highly susceptible to economic slowdowns.
The most immediate impact of the current slowdown is the deferment of projects.
The following measures are recommended:-
- Infrastructure projects should be continued to provide a catalyst
for sustaining a reasonable rate of economic growth.
- As selection criteria for infrastructure projects to be implemented
under the current situation, the following factors must be taken into account:
- Projects with low import content
- Projects which improve the quality of life
- The Government will identify the specific projects for implementation.
- Corporatised entities and port authorities that have either
surplus revenue or investible funds should focus on their core business activities
and not indulge in the stock market, as was the case in certain corporatised entities
and port authorities.
The volume of traffic handled by ports has declined due to
lower imports and only a marginal increase in exports. Overall, the growth rate is
expected to drop from 13.4 per cent to 10.2 per cent. This has resulted in a drop
in revenue. To compound the matter, shipping lines and other port users have asked
for reduced rates as they too have been affected by the crisis. There have been demands
for variations in rates for port facilities, particularly for berths, into peak and
slack periods.
The lower trade volume has also resulted in underutilisation
of facilities and resources, which has greatly increased costs. The lower revenue,
higher costs and underutilisation of facilities have forced the deferment of capital
expenditure and investments, e.g. expansion of NBCT Phase II including land reclamation,
Jetty LNG II in Bintulu Port.
West Port Terminal Operator has problems with obtaining funds
for development and high interest rates. Clients are unable to fulfil guaranteed
throughput especially fertiliser and grains. There is underutilisation of facilities
and an increase in the dwelling time of containers. There is also pressure to reduce
rates.
Tanjung Pelepas Port Phase I is estimated to cost RM2.8 billion
but has escalated due to the crisis.
The following measures are recommended:
- Operational costs should be reviewed and unnecessary expenditures
and excesses cut.
- Increase efficiency and productivity of port operations.
- Initiate more intensive marketing of Malaysian ports to encourage
greater use of local ports.
- Deferment of extensive expansion plans which are of very high
cost. However, projects for upgrading facilities and medium-term capacities should
continue to ensure adequate capacity when the economy recovers.
- Maintenance of port facilities such as structural repairs
of wharves, dredging, refurbishment of equipment should be continued to ensure operational
efficiency, minimise cost in terms of repairs and down-time as well as increase safety.
- The phasing and implementation of Tanjung Pelepas Port in
Johor be reviewed. However, construction of one wharf and bunkering facilities should
be expedited.
The volume of traffic handled at Malaysian airports in terms
of passengers, cargo and aircraft movements have declined after reaching very healthy
growth rates during the past 10 years. The drop in revenue is due to the dismal passenger
load factors of all airlines. MAS's average load factor dropped from about 70 per
cent to 60 per cent. Airlines have cut back on flights and reduced the size of aircraft
servicing routes.
The operational and maintenance costs at KLIA, Sepang will
be very much higher than those in Subang, but tariffs are to remain at Subang airport
level to make KLIA competitive for the first three years. Currently, certain airports
at Ipoh and Kuala Terengganu are already not profitable and are being cross subsidised
by the more profitable airports in Subang, Penang, Kuching and Kota Kinabalu. With
the move to KLIA and the good road system, more airports will experience greater
drop in traffic and revenue. It is estimated that there will be a drop of 2 million
passengers a year from airports in Ipoh, Penang, Johor and Kuantan.
The following measures are recommended:
- Increase non-aeronautical revenue by promoting retailing at
airports. However, commercial activities should not be carried out at the expense
of airside operations and safety and passenger comfort i.e. commercial activities
should not subjugate airport operations and management.
- Optimise efficiency and productivity to control costs including
efficient maintenance practices and contract management.
- Operate KLIA efficiently and competitively to promote KLIA
as a ëhubí airport for the region. This will attract more airlines to use
KLIA and thus increase revenue.
- Promote KLIA duty-free shopping by offering competitive and
high quality duty-free goods.
- Provide world class facilities and services for customer satisfaction.
- Promote tourism and entertainment in KLIA Sepang eg. car racing.
- Other domestic airports should not be neglected especially
in terms of passenger facilities. Terminal buildings should be upgraded and maintained
at an appropriate standard while air safety requirements should be of top priority
even though returns may be slow.
- Where possible, provide permanent facilities for large courier
companies, and other courier companies should be encouraged to use Malaysian airports.
The rail sector experienced a 20 per cent decrease in freight
volume as a result of the current economic slowdown. The recent investment into electrification
and double tracking, has resulted in KTMB having a high gearing and large overdrafts.
Coupled with operational inefficiencies and high costs, funding has become a major
problem. Hence development plans for expansion have to be reviewed.
The following measures are recommended:-
- Several major rail projects, which are of very high cost but
providing low returns, should be reviewed with the aim of deferment such as the Tilting
Train and the Kulai - Johor Bahru electrification projects.
- Rail links to ports and airports need to be implemented for
long term demand and to promote multimodal transport.
- The implementation of the rail links to Tanjung Pelepas Port
should be slowed down as demand in early years of operations are not expected to
be high, while the cost is tremendous.
- Rail links for the IMT-GT should be expedited.
The development allocation for the roads subsector is divided
into two parts, namely public roads and privatised roads. Allocation for privatised
roads is for land acquisition and support loan. Privatised projects which have not
begun are experiencing financing problems. However, since the privatised areas are
expected to have high returns, the lack of financing is expected to be only a temporary
setback. Once the financial situation stabilises, these projects will be able to
be implemented.
The following measures are recommended:-
- Allocation provided for certain less priority roads that have
been privatised and are now deferred should be used to finance public roads of high
priority, including rural roads.
- Privatised roads in the Klang Valley that are designed to
relieve heavy traffic congestion should be continued.
- Rural roads should be given priority to contribute to the
expansion of new industrial activities in rural areas and to promote the efficient
marketing and distribution of rural produce, especially food items, to urban centres
to reduce imports.
The supply capacity for the Klang Valley in 1997 and 1998 is
at 2553 million litres per day (mld) while demand is expected to increase from 2454
mld. in 1997 to 2658 mld. in 1998. Disruption of water supply is caused by:
- Interruption of electricity supply which affects pumping stations
and treatment plant operations.
- Pollution of source water through careless discharge of effluents.
- Burst pipes that are not repaired immediately.
- Realignment of pipes.
The shortage of raw water is due to massive and indiscriminate
cutting of trees and hills which depletes catchment areas as well as accelerate surface
runoffs and flash floods. There is wastage of treated potable water through leakages
due to poor maintenance of reservoirs and pipelines, thefts of water, as well as
wasteful usage such as washing cars with running water.
Water supply disruptions cause financial losses to industries
that depend on water in their work processes as well as hardship and inconvenience
to the public.
The following are recommended:
- Planned systematic water rationing for short-term solution
to present water crisis.
- All development projects that involve land clearing be planned
on a systematic basis, taking into consideration the environmental impact on a broader
basis, not just confined to the area where the development will take place.
- Emphasis should be given to the protection of catchment areas
and conservation of water sources for long-term sustainability.
- More stringent controls on discharge of effluents and pollution.
- While new treatment plants may need to be built to cope with
urban population growth, measures should also be taken to prevent leakage of water
through better maintenance and installing new and better quality pipelines. Punchak
Niaga should repair the piping system to reduce leakage and non-revenue water.
- To prevent theft of water, particularly by squatters, metered
standpipes be provided to these areas and all illegal pipe lines be disconnected.
- Consumers should be educated on the importance of water and
the depletion of water resources, to instil greater responsibility in the usage of
water. By curbing wasteful demand, there will be less water shortage.
- The provision of a separate water distribution and reticulation
network for industrial and general-purpose usage. Even though the initial capital
outlay will be high, the long-term savings in terms of water treatment plants and
loss of water will be substantial.
- Review water charges to discourage wastage based on higher
tariffs for greater consumption.
- The water pipelines should be cleaned and repaired to prevent
leakage and reduce water loss.
Indah Water Konsortium (IWK) has taken over more sewerage treatment
plants than the originally estimated 1,800 plants. The extent of refurbishment and
maintenance needed has also been underestimated. With rising costs, IWK faces problem
with revenue collection because its customer database is not up-to-date and many
customers refuse to pay their rates. IWK also claims that it is unable to commence
with the planning and design of new treatment plants because of the unavailability
of land. It is also unable to desludge and refurbish existing treatment plants due
to the lack of sludge disposal sites.
On the other hand, customers feel that the tariffs charged
are high and are an additional cost for them to bear. They perceived that the price
of a public utility has increased following the transfer of the service from the
Government to the private sector.
The following measures are recommended:-
- IWK should increase its operational efficiency and productivity.
- IWK should provide services at reasonable rates to encourage
customers to use its services.
- Local Authorities need to give a rebate on sewerage costs
to consumers from assessment rates once IWK takes over the services. Customers do
not want to pay twice for the same service.
Peak demand for electricity is expected to increase by 10 per
cent per annum during the latter half of the Seventh Plan period. Power Generation
capacity in 1998 is expected to total around 13,600 Megawatts (MW), while peak demand
is forecast to be approximately 9,200 MW. As a result, the reserve margin will register
a comfortable 47 per cent in 1998. i.e. the generation capacity is more than adequate
to meet domestic demand.
The main problems lie with the transmission and distribution
networks which, as yet, are unable to guarantee continuous electricity supply to
the consumers. Interruptions due to trippings caused by factors such as lightning,
incorrect operations, relay failures and inadequate maintenance have caused delays
and downtime in transmission, with a total of 25 Giga Watt hour (GWh) of energy lost.
Many transformers are also operating beyond firm capacities leading to inefficiencies
in the system.
The distribution sector determines the quality of service to
consumers. Supply disruptions have been caused by factors such as overloading that
causes fuses to blow, excavation that damage underground cables and poor workmanship
of materials and equipment. To improve the quality and security of supply, the Supervisory
Control & Data Acquisition System/Data Automation (SCADA/DA) programme needs
to be installed in the distribution network in stages from 1998 - 2004 costing more
than RM550 million. However, TNB faces budget constraints. TNB proposes to execute
the project in phases, with the first phase (1998-2002) covering the areas of Putrajaya,
the Federal Territory, Selangor, Johor, Penang and Perak. The second phase (2002-2004)
is to cover all state capitals in Peninsular Malaysia.
The following measures are recommended:
- Upgrade and increase the number of substations and carry out
overall systems development.
- Institute faster measures for inspection and rectification
to minimise the occurrences overhead line trippings. In addition, undertake proper
and regular maintenance of equipment.
- TNB should review the effectiveness of a scaled-down SCADA
programme and the financing aspects of the system.
- Expedite the formation of a company to distribute electricity.
- All entities in the country should keep a maintenance manual
to ensure proper and regular maintenance is carried out.
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