Monday, June 09, 2008

Malaysiakini Analysis - Learn from Singapore, Hong Kong, Brazil

I have been somehow directly involved from the planning stage for certain new developments in Dubai since 2000. With the previous and current roles, I am excited (or the right word is honoured) to be exposed on urban planning and its complexities as well challenges.
UAE still has ample of oil not to worry about being net importer soon like Malaysia. However, most developments that I am involved with do take into accounts of the future demand and requirements on transportations to cater for the growing population and energy usage.
It is not perfect but provision for new modes of transportation are there. Some like monorail and tram are already implemented by Dubai's Road & Transport Authority (RTA).
This analysis from Malaysakini on learning from Singapore, Hong Kong and Brazil does sound logical.
But will those leaders ever learn?
Irrespective who is going to be or stay as government, the government needs to, starting today, to be up-front with Malaysians about the challenges we have to face.

Gov't has fallen asleep at the wheel
Foong Wai Fong Jun 9, 08 4:39pm

Malaysia is a lucky country, we are very well-endowed with natural resources. From tin to oil, this nation has lived with abundance for over 50 years. As such, most Malaysians never have to worry about scarcity; both at the government level and at the individual level, and as a result, wastage has become one of the characteristics of our lifestyle.


Residential and commercial enclaves in Malaysian cities and townships are built far apart. With political connections, approvals can be granted to develop a new settlement and a new road. Connectivity and efficiency were not in the planning considerations - after all, up till recently, private cars were the dominant mode of transport; it can take you anywhere and anytime you wish to go.

So today the dominant mode of transport of this nation of 27 million people is the private car. The first major goal of a young Malaysian who has just turned 18 is to get a driver’s licence, and later purchase a car.

The public transportation system was neglected and no serious attempts have been made to build an efficient, well-linked state-of-the-art public transportation system. In part, this is due to the fact that we have to make sure the sales of Proton is kept robust.

In addition, many of the public transport concessionaires were probably more interested to make purchases of a new fleet of vehicles than to work them efficiently. The deputy minister of finance revealed that the number of Malaysians using the public transportation system has dropped from 20-25% in 2004 to 16% today. In an era of cheap oil, this would probably be celebrated as a major sign of progress.

traffic jamsThe nation also allows the private sector to build hundreds of kilometers of tolled highways. All these are to facilitate more cars, and therefore more oil consumption. Many of these highways are turning into ‘parking lots’ as traffic congestion becomes the norm rather than the exception.

Hence more cars and more highways did not make us more efficient - it did not shorten the time we take to get from point A to point B.

Not surprisingly, last week’s fuel hike has sent the nation into a fit of anger and uncertainty. The population is caught totally unprepared.

Shocked by the new reality, many are driven to protest against the government. Many questions were asked.

Why the sharp price hike? Why the huge jump in one move? Was the issue about Malaysians being addicted on subsidy? Or was it about Petronas, the national oil company that makes billions while the rakyat have no clue what happened to those funds in the last 30 years? Were Malaysians targeting their anger at a government long accused of gross mismanagement, wasteful spending; unprofessional handling of policy execution and corruption?

The answer is all of the above. Malaysians have had it too good for too long; we are one of those few countries in the world with the largest fuel subsidy.

We have palm oil, the green gold that is selling for over RM3,000 per ton, after that silvery stuff called tin were depleted from the ground. We have plenty of oil, and only recently we found out that these thick black stuff could run out in 20 years’ time. So now this blessed land is told that oil will be costly and one day when our own reserves run out, we may not even get supply even if we have money. For the first time, this country has to deal with doing the same, or even more, with less.

Why the government is at fault

This is not the best time to add more salt to the wound. But Malaysians must get change their mindset - the good times of cheap oil has ended. Oil is a finite resource, and the world will probably have enough oil to sustain the present rate of use for some 30-40 years; mind you, this calculation was made before India and China came on the scene.

Cambridge Energy Research Associates (CERA) revealed that the cost of developing new oil fields has risen to over 110% and that the capital costs for refineries and petrochemical plants have risen by 76% since 2000. While supply is tight, the new middle-class from the emerging markets joined the rich world to have an automobile-centred lifestyle.

Oil depletion, the rise of fuel-hungry emerging markets and global warming are not new issues. They have hogged the headlines extensively in the last decade. Can we fault the government for our present woes? You bet.

The driver of the nation, the government, has fallen asleep at the wheels. The government had failed to sound the alarm nor has it prepared the people to adjust to the new realities of the world. Here are the reasons why the government policies have misguided Malaysians into believing that we could have a lifestyle built on cheap oil.

1. Each young Malaysian buy a Proton as soon as they can afford it. The finance companies dish out hundreds of millions to finance them, just to support the national car company.

2. In order to support Proton, there is no reason to really build an efficient public transport system. Indeed, everybody should have a car, a Proton preferred.

3. When Malaysians started to do well; they change to higher capacity cars. Few keep their cars for more than five years because there is a culture for the latest and flashiest. Hence the competition to have more APs, import licences for cars. The government is a happy player in this game as it collects millions in import taxes for cars.

How about green cars? What green cars? Carbon emission? What carbon emission? Only tree-hugging greenies talk about such vehicles. We have no crisis.

4. Then they started to construct hundreds of kilometers of highways; from North to South, East to West. With the toll roads; the cars become so congested; don’t complain, they say traffic jams are signs that Kuala Lumpur has become a world-class city.

5. Then they build housing and commercial zones far apart from each other. It is normal to travel an hour to work, and back. Malaysians have accepted it as a norm.

6. The buses don’t work, they are unreliable, and few care if they are on time. Then there is the scary news that the drivers are often on drugs and the risk of fatal accidents is high.

7. The government talks about building a public transportation system - talk, talk, and more talk. When asked why it takes so long, they tell you, this is easier said than done.

Thus, on June 4, the government finally announced that it was no longer tenable to keep supporting the oil subsidy, which has ballooned to over one-third of its operating budget; amounting to some RM56 billion in 2008, more than the allocation for development expenditure of RM40 billion.

If we don’t raise the prices today; the national budget will increase its deficit from 3% to 6% - the highest in Asia.

Learn from Singapore, Hong Kong, Brazil

The pressure from high oil prices simply tells us that our car-centric lifestyle is simply not sustainable anymore. So if you have an infrastructure built around the private car, you would be ill-equipped to live in the world of expensive oil, not to mention 50 years later in the post-oil world.

The issue we have to face is really about adjusting or developing a new infrastructure for a less-oil dependent lifestyle. Subsidies are supposedly to be used only temporary to help develop a new sector or to provide a safety net for a particular sector in distress. If our lives were not so car-centric, we would have no problem with that.

An International Monetary Fund study of five emerging economies found that the richest 20% of households received on average 42% of the total fuel subsidies, the bottom 20% of households received less than 10%. So if we have a good system for all, subsidies should not be the central issue.

petrol price hike before increase panic consumers 040608 01It is clear that in Malaysia, the worst affected lower and middle-income group must be provided with an efficient, accessible public transport system, which would enable them to go on with their lives; and the government diverts the whopping RM50 billion spent on blanket fuel subsidy to better education, healthcare, infrastructure and investment to help the citizens raise their income.

The government needs to, starting today, to be up-front with Malaysians about the challenges we have to face.

Urban planning and housing development should take all these into consideration - that feasibility studies on public transportation must be done before a new housing development project be approved. People will be willingly to change their lifestyle, especially if it is a more pleasant one, if the accompanying infrastructure is available and working.

There are ample models we can learnt from - in Asia alone, Singapore and Hong Kong’s network of subways, buses and feeder buses are among the best in the world. I don’t own a car in my 10 years in Shanghai; I traveled by subway and considered the car to be a burden. But before we can get to the railways and subways, all we need is to work on the connectivity and proper management of our buses.

If Curitiba in Brazil can become a world model in utilising rapid bus network as a preferred transport for the people, surely Malaysian can take a page from their experience. The government can, and must, lead in demonstrating that it could garner the right expertise and political will to make this happen quickly.

We have very little influence over oil prices in the international market. But the domestic environment which we live in is within our control.

In the long run, Malaysians will have to adjust to a less oil-dependent world, and this can only happen if the necessary infrastructure is in place to make it happen. We have less than a decade to make this change. We have already lost a lot of time. We must begin today.

FOONG WAI FONG is co-founder of Pahlawan Volunteers, an advocacy and volunteer group who played an important role in the Nipah virus crisis and the Visit Malaysia Cybercampaign of 1997. She is also the director of Megatrends Asia, and best-selling author for ‘Megatrends Asia’ (with John Naisbitt), ‘The New Asian Way’, ‘We have to talk, Mr Prime Minister’, and ‘Culture is Good Business’. Join Pahlawan at here.