The Economics of Trains

Getting on a train in Maluri station with my friends after Friday school, was the first memory I can think of. I was about 13 years old, getting into the groove of hanging out with friends and we were just so hungry for adventure, exploring this city of Kuala Lumpur. Back then, the train ride cost me RM1.40 which is still a lot considering nasi lemak was only RM0.80.

Transportation in Malaysia had always been a matter of intense debate. Is it affordable? Is it accessible? Is it easy to use? Most importantly, does it actually help Malaysians?

Why do Malaysians take trains versus driving?

The main consideration for many Malaysians is the trade-off between money and time. Driving of course, takes less time, but it requires you to have a car or motorbike in the first place. That requires a big investment upfront and not everyone can afford that. Other than that, you would need to spend money on petrol and yearly maintenance for your vehicle. Traffic jams, oh they are the worst during rush hours.

Let's say you board the train to work and it takes 20 minutes to get to your destination station. You don't have to be in the driver's seat, there are no jams, and you are assured the train will get there in time because why won’t they??Now, that’s a less stressful way to get to your destination. In 2019, about 671,885 passengers board the trains in Klang Valley every day.

However not all Malaysians do it and we have to dig a little bit deeper into the economics that influence how we make decisions on transportation.

Most Malaysians Travel to Get to the Train Stations … Not Exactly Convenient for Most

If you take only 5 to 10 minutes to walk to a train station, consider yourself lucky. Most, if not a majority of Malaysians need to take either the bus or drive instead to reach the train stations. Let’s admit it, if you need to take a bus to a train station, what’s the point? You might as well take the bus all the way to the stop that you need to get to. If you are driving, you would need to consider the cost of parking and the added travel time too.

Let’s face it, renting/owning a place near a train station is just so much more expensive. The B40 household income group can’t afford to live that near to train stations as many of the M40 and T20 will be “crowding out” the areas around train stations. Many developers are also aware of this and normally sell properties that are more expensive to higher-end clienteles. Economics make sense here. Higher demand for train services inevitably leads to higher prices of land around train stations. Developers will need to fork out more money to buy land from the city councils or other landowners, and sell more expensive properties to cover their costs.

There are feeder buses that transport people to the train stations, and they are important to the communities and people who need them. However, relying so much on feeder buses to transport people to train stations reveals a bigger, more fundamental problem.

It’s Not Like We Don’t Have Enough Trains or Train Stations.

"Klang Valley doesn’t have enough trains!" "There’s none near my house or Taman!" are the thoughts most Malaysians will have when discussing about public transportation. However, let me just state some numbers for context here.

In 2019, according to data from the Ministry of Transport, there were around 745,811 average vehicles on the road on a given day in Klang Valley (Kuala Lumpur + Selangor). From the same dataset also, there are about 671,885 passengers boarding the trains every single day. To me, this looks like about an equal situation between driving and taking the train. Of course, you can argue that cars and buses carry much more passengers, and that the 745k understates how many people actually travel around in Klang Valley. But the reality is that quite a number of people in Klang Valley actually used trains then. What is the REAL problem then?

Malaysia Just Encourages Malaysians … to Drive?

It's a fact that driving is expensive. From needing to buy a car that is expensive to paying for fuel and maintenance, driving is just plain expensive for most of us. However, we are incentivised to drive. We are so dependent on having fuel subsidies that cuts the cost of fuel by about 20% to 50% depending on how high global crude oil prices are. Malaysia actually ranks in the?top 10 for the cheapest petrol prices in 2022, registering about US$0.47 cents per liter compared to the world average of US$1.36 per liter. The government is inevitably encouraging Malaysians to drive with the fuel subsidy. I won't argue whether we should maintain or remove the fuel subsidy, but rather present the idea that for public transportation to be successful in Malaysia, we can’t have conflicting policies that also encourage people to drive.

On another note, Malaysia also has explicit policies to encourage people to own cars. Malaysia actually ranks 2nd for the highest cars per person in Southeast Asia, second to only Brunei. We have the national car maker of Proton and Perodua. Car importers such as Toyota, Honda, Nissan, BMW, Mercedes, and Peugeot are also big players in Malaysia’s market.

Emphasis is Shifting Towards Public Transportation, But Is the Implementation Going to be Effective?

The economics surrounding train transportation is sound in Malaysia’s context … at least in theory. Giving Malaysians the option to travel by train have opened up opportunities for them, as they can now look for jobs in areas that were deemed too far or inaccessible. For a breadwinner who can’t afford a car or motorbike, they now have the option to travel by train to another area to look for a higher-paying job that could improve the family’s livelihood. Public transportation opens up choices for people who can’t afford it.

The key now would be implementation for the shift towards public transportation. We have started this process with the introduction of large train projects in the early 2010s, and it continues until today. However, multiple criticisms on the location of train stations and routes are valid. Having to pay for parking at train stations is just another burden on Malaysians. They can just drive to office and pay for the parking there instead. Waking up 6am in the morning to take a bus that leads to the train station, is just not sustainable for many Malaysians.

Lookout for the next article where I'll look into the nitty gritties on the economics of investing in train projects in Malaysia and whether they are being done effectively.