Privatisation of KTM (Malaysian Railway)

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The Railwaymen's Union of Malaya (RUM)

The Malaysian railway has made a vital contribution to the nation’s development. Keretapi Tanah Melayu Berhad (KTM) – Malaysian Railway was in the public sector until 1992. Under a corporatisation scheme it moved into the private sector on 1 August 1992. From 14 August 1997, it moved to privatisation under the management of Marak Unggul, a consortium of the Renong Group, Diversified Resources Berhad, and Bolton Properties.

Privatisation was based on the assertion that the government could not efficiently perform its functions through public administration and the necessity to cut down expenditure by reducing bureaucracy in public services. However, there is no conclusive evidence that private enterprises are managed more efficiently than public services.

The Railwaymen’s Union of Malaya (RUM) believes railway privatisation could have serious consequences for the public. An increase in costs and the curtailment of public services such as the cancellation of so-called unprofitable routes in rural areas would be a disaster. RUM feels that the government has a social responsibility to provide essential public services such as communications and rail transportation.

Privatisation appears to focus on services that are currently profitable in the public sector. The state is deprived of revenue whilst the private sector exploits consumers by increasing the price of services. We are also aware that no single entrepreneur or company is prepared to take over services unless profit can be made out of the investment.

RUM believes that the overall effect of privatisation could be:

Reduced and poor quality services for consumers.
Increased costs and charges for consumers.
Increased costs for taxpayers.
Loss of jobs.
Weakened union bargaining capability.
Reduced motivation and morale in public services.
Corruption, favouritism and nepotism.
Emergence of private monopolies.

The Railwaymen’s Union of Malaya called on the government to prevent the Marak Unggul consortium from operating or managing rail transportation of the Malaysian Railway. The financial situation of the railway worsened and certain aspects of the management agreement between Malaysian Railway and the consortium were not made public. Following a request from the workers’ organisation the government did not extend the authority of the consortium. This development could prove that the private sector does not perform better than public administration.

The Railwaymen’s Union of Malaya is aware of its main goals of representing the interests of its members and acting in the interests of the general public. RUM believes that the government, in devising policies on economic restructuring, has a moral responsibility to take into consideration the economic and social interests of both workers and consumers.

Negotiations for the fifth collective agreement covering terms and conditions of employment began between RUM and representatives of the administration of Malaysian Railway. The union sought a ‘justice in grievance’ settlement as a fundamental requirement for cooperation based on faith and confidence. Negotiations concluded in October 2007 and implementation of the new agreement is expected, pending approval by the Malaysian ministry of finance.

This is the edited version of the report “Privatisation of rail transport of KTM (Malaysian Railway)” presented at the ITF Asia/Pacific Railway Workers’ Section, Jakarta, 10 – 11 December 2007.

Related documents:
ITF Rail Union Report Number 3: April 2008 (29kb PDF)

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