jp'lEPnr>TS DESKIl t-]1s E E RESTRICTED | ONE WEEK This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report moy not be published nor may it be quoted as representing their views. INTERNATCIONAL BANK FOR REC'ONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION MALAYSIA'S DEVELOPMENT PROSPECTS AND PLANS (In four volumes) VOLUIME III TRANSPORTATION SECTOR MALAYSIA. February 10, 1966 Far East Department CURRENCY EQUIVALENTS Cu:rrency Unit Malayan dollar 1 Malayan dollar U.S. $0. 327 1 'u'. aS- - - M3. U 6 M$ 1 million = U.S. $327,000 PREFATORY NOTE This report .as prepared by M. Pqlein- nnd hasdri 1nrge1v on a draft. prepared - on an earlier mission in May 1965 - by A. j. Carrnichael (nf' +the Bonle) and W lughs (Consltant). mbal v.rr I -an WI f, --IT r.r + 1^ + 1,a + ~Y'nc n",+ n+4 -fir a nnA-firnf ,.- . v ' ~- . . OLt _ .. -. . .. ..., - - - - _ --- _ v ,, the State8AA2 ),C!r - 1 cs^ I ur .an r oadO .L Uki. I . A uV V1 i [ , 7 J I 1 L JV ' UIJIS O IGU UU (1 " , X S 1 SI. L dlU v L u - S -. By the end of 1965, it is estimated that total length of non-urban roads exceeded 9,200 riles. 12. The greatest part of the Mialayan road network les along the west coast where most agricultural, mining and rubber plantation activities have de- velcped. The remainder serves the central part of the country and the IasOt coast, where the highest population density is in Northern Kelantan. 13. Major trunk roads comprise the following three main arteries: Route I, from Johore Bahru in the South to Kangar in the North, along the west coast, viEL Kuala Lumpur; Route II, from Port Swettenham on the west coast to Kuantan on the east coast; Route III, running along the east coast from Pekan, near Kuantan, north to Kota Bahru, and now prolonged by the new section Pekan- Mersing, completed in 1964. Most other roads are of a feeder or rural development type, with lower standards. 14. A breakdown of non-urban roads by type of surfacing is shown below: Malavan Road Svstem, 1963 (Miles) TvDe of Road Federal Roads State Roads Concrete surface 11 15 Bituminous metalled surface 2,372 3,217 Waterhounrd mPt,11Pi surface 2 1lhi Hard surface - bitumen sealed 81 671 Hard surface - ħrhterincd 32 952 Earth surface 59 437 Total 2,557 5,436 15. A remarkable proportion of the total mileage is paved. By the ,A ,d% 1oAr ;-+ 4--...+ AX1_ Rn I n-i _ v.n-. m- %_-- VJJ fi X.J /. VJ Wa) U.VIOSJ V KIICL V@ V-sa Vi V V I_,S V/Vp 'S) *k'aA Wħ * 'S| LII. -CJ..'- will have a bituminous surface. Though gradual improvement was noticeable I 01~n 4-'- _A-,.1 - -i -- .,~.4 ,-,_4 - ;__., -; 14-V. I 4 -4- ,.. , planing at a.hl syarsut,mw threoui grea ealn h oflack or in planning at all. Aks a result, there is a great deal of bl-ack top in th rn rlc1 16. The resr-nsibility for the planning of Federnl roads +techrnie'n111 lies with the Minister of Transport in consultation with the IMinister of W.1orks, Posts and T'ellecomMn- nn+c-tnons, ncl th-e IMini ster of R.ral n-Velo&p)ent. In fact, however, it appears to be the P'ublic Works Department that consults ,.r+1~+ nn 4 n c4- ., ~ T'vnr cn . - , I, -- -t'.' - rr. -, ,n-4 - - '-r, ,nr4- + -n. ,. -in c . ,.J, around. Perhaps this arises because the funds for roads and bridges are -included i.n- th.e ecstt-ir,ates of th 4 rublic-, 4-T.--1 Tv30rk partmet4 -w=4c" carlesou ~L.U t~~.U L4I i1 ~~ I.L1IdAi~) .L. LIi UV- IuU..LLħL, w. VVhJiflQ LJjd L IlII U VYiJJA..LI %d I ħ-LUQ .JUU all works, Federal. and State. Broad investment plans are drawn up by the TI-o ol- i D-1 ---~n TT... .1. I r - eLV fl2 I* A ----I . r.....L.....- -~ .L 0.. 1L-.ħL r- l..2......n WU-iofLL ħarCUIUg UI.u Cu Urfti r -L.e iln.dster's Dr)parUinertU; fo.r UUUII rFedueiai and State roads. However, the major task of initiating road building prujectis Eund approving State projects practically Lies with the Public Works Department. Notwithstanding the technical responsibility of the M-iinistry of Transport for planning highways, this body takes little active part in the process. 17. The initiative for most new State roads comes from the Dstrict Officer whto confers with the ihstrict and State Rngineers. However, this does not always fcllow a set pattern and as often as not new road programs are proposed by ttLe Chief Mlinister rather than the State Engineer. Each State builds roads with its own funds. If the highway is approved by the Public Works Department, the State is reimbursed by a Federal grant, though it remains responsible for maintenance cluring the first two years. If the highway is not approved, the States must bear the cost from their own revenues, althoughL this happens in only 10% of the cases. To qualify for reimbursement, rural road construction raust meet certain prescribed standards. Since rural roads may be feeder roads connecting main highways as well as roads serving villages and carrying little traffic other than pedestrians and bicycles, desire to meet Federal standards to ensure reimbursement often leads to the construction of roads with much higher standards than needed and at a much higher cost than appropriate. A similar rigidity arises from a provision in the Constitution, allowing for a grant of M$4,500 -per mile for the maintenance of State roads. Since maintenance costs vary widely, the grant is frequently inadequate and may lead to either excessive or insufficient maintenance of the facilities.. 18. Limited funds are also made available to the Rural Industrial Authority for construction of unclassified minor rural roads and to the Federal Land Development Authority for roads within its land settlement schemes. 19. It is highly regrettable that there should be little or no p:Lan- nina in the nropier sense of thpe worri ann1 that. littlep Pcermrnrim. 2pnraisa:I should talce place, whether on a benefit-cost basis or by other means. There i .Z alo no at.+.emnp-. t rnk nrojecs hby enronomic -worth. ThP amniint. .nfNnt. in the past, or the likelihood of finances being available are the main yard- sticks by which schemes are measured. There is high pressure in Parliament toward the satisfaction of local demands, and little rational economic argunm.enta+tion prepared to succesfulr oppose +hens cl rnis. (c) Railways 20. The Ma.layan Railway originated as a group of State Railways which were later unified. It now operates 1,028 miles of meter-gauge, mostly single track. The main line, 488 miles long, runs along the west coast from Singapore to Prai near Penang. From Bukit Mertajam, near Prai, the line extends to the Thai border at Padang Besar and connects with the State Rail- way of Thailand. Short branch lines serve the railway-operated ports at Port Dickson, Teluk Anson and Port Wel(i. The east coast line branches off at Gemas, extends for 327 miles through central Pahang and Kelantan, and terminates near Kota Bahru. From Pasir Mas, south of Tumpat, a branch line also connects with the State Railway of Thailand at Sungei Golok. 21. The Mala;yan Railway Administration is wholly owned by the Govern- ment of Malaysia, and comes within the purview of the Minister of Trans-port, so that Railway financial estimates must be approved by the Minister, the annual accounts laid before Parliament and the accounts subjected to the scrutiny of the Auditor-General. The management of the railway devolves upon the General Manager, who is appointed by the Yang-di-Pertuan Agong on the recommendation of the railway Service Commission. 22. The Manager is advised by a Railway Board, which consists of the Manager, who is the chairman, five Government representatives and not less than five other persons. The Manager must consult the Board on the follow- ing matters: (a) any substantial alteration in tariffs or charges; (b) draft estimates of revenue and expenditure, including caDital exnenditure! (c) extraordinnry ePxenditures of anv suTms for special or emergency works; (d) substantial changes in the organization of the railway and the staff establishment; (e) schemes relative to the Pynnnsqon and development of the railway; (f) any policy of cons-truction of new works before its (g) major questions of policy in comnection with the working or management of the railway. 23. The General Manager mus-t not act in opposition to the opinion of the Boa.rd V.uithout tf+hen authori.,ty of t1he .1MUnister of TL ransport. Y.oreov er, - ---- +t Minister has the power to direct the Manager on any matter, and while the ralra is a - -4-al entit _-,owe tose,b sue' and enter int-o contr-actOs, it is controlled much like other government departments. The Port Swettenham Board ad-vises the General Mt arnges- oU si.,milar rmatters relating to the admUAinis- tration and operation of the port. '-'4 l1it rziħħ.w ay ICLdId.rtei1t_L1 L JWo xE- LI*11LL :U -L I 1 ħL uzi Iħ Jv-teUUUi uu upJ_vd. bu as an autonomous corporation. Railway staff have always maintained that they are clvil servants and should enjoy the same righlts, privileges anid advantages as others in the public service. The Railway Service Commission iS independent and the ralLway management iS not representea in its membership. Apart from recommending the appointment of the General Manager, the Commission, since 1957, nas the responsibility for recruitment, appointment, promotion and discipline of railway personnel. Such matters were previously of management concern only and covered by the Railway Ordinance of 1948. 25. Good management practice dictates that authority and responsibility should be co-extensive and a situaition where railway management cannot, by constitutional law, manage its employees, while being held accountable for their actions and financial perfor-mance is extremely unsatisfactory. There is little doubt that this situation of divided power and responsibility has led to many, if not most, of the staff troubles of the railway in the last few years. The situation is unparalleled in Malaya: the Central Electricity Board has freedom to manage and the responsibility for being commercially viable; the Civil Service proper has no power to manage but then it does not have to wmake ends meet". The railway has had to do the best it can with a hybrid form of administration. Because the situation arises from constitutional provisions, little can be done without legislative changes. 26. Railway traffic development has been seriously affected by increasing comDetition arising mainlv from road transnort. Yet. the Railwav continues to play a significant role in the transport field. It is estimated that it handles 17% to 2CW of' total goods traffic,_ anrd lUn tn 2*% of the movemenft of certain important bulk commodities. The Railway also retains an important proportion. of bulk e-or+c th.rough Penang and Port q,.jn++inT-, (about L< in 1962) and a smaller proportion of import traffic through the same ports (15%). Th-e fo- llov, n - tab]e SO'o a b'reakdown of. freight tuaffic for t year /1959 through 1964 (except for 1963, for which detailed figures are not avai]able). Malayan Railway Net Ton-miles Transported (Million) Commodity 1959 1960 1961 1962 1964 Iron ore 80 119 1h8 106 47 Tin and t.n ore 7 11 11 11 12 Other minerals 6 9 11 11 12 nubboer and. latex 48o 45 44 4 5 4U Timber and. logs 17 22 17 24 39 Food 30 32 35 31 43 Rice and padi 24 38 39 43 31 Petroleum products 19 27 27 2o 63 Building materials (incl. cement) 37 54 55 61 71 Others 70 75 77 72 74 Total goods traffic 338 432 464 432 442 Total excluding iron ore 258 313 316 326 393 -.7- 27. Iron ore traffic, accounting for 24% of total freight between 1959 and 1964, had been increasing rapidily until 1962 when sharp declines in vDl- ume occurred. Further reduction in the volume of iron ore transported by the Railway can be expected in the coming period as iron ore production de- clines due to the exhaustion of known resources. The recent deterioration in iron ore shipment,scan be seen from the following data: Iron Ore Traffic and Revenue 1961 1962 1963 1964 Revenue (M$ MilLion) 8.49 5.98 3.53 2.63 Tonnage (Tons OOs) 1.737 1.325 891 833 Average Haul (Miles) 85.3 80.1 65.2 56.1 Revenue Per Ton (M$) L.89 L.51 3.96 3.15 Excluding iron orp. traffic has been exm anding steadily stimulated by re- duced rates offered by the Railway in an effort to capture, as well as main- tainj a larger share of the expannding market. Follnwilng the introduction of reduced rates, average revenue per net ton-mile declined from M˘9.5 in 195Q tco M˘.7.5 irn O196, a1+1,nii-11 +Ing t redecline in +otal revenueq w essra- tic partly as a result of an increase in average haul distance. The shift toward longer hnul distance reflects the gong imr-+ fro no'l mnetition on the Railway and will be discussed in greater detail in connection with transport coordination. OR l-,. -.*) _1 ._-_t ho.. 4 I n tnerrr +rsec7o- 28 * The role played by the raiJJ'y in Gll F A . tation has tended to become more and more limited to long--distance travel. A record oL passenger traffic for the years 1n9597 tL.ou 1.96-4 iLs givCen bUellow: MaLayan Railway Passenger trffic Average Passenger Passenger Passenger Passenger Revenue per xrii.es Journeys Journeys Revenue Passenger Mlles Year (million) (000) (miles) (M$ million) (MO) 1955 367 7,687 48 16.7 4.6 1956 373 7,509 5° 19.7 5.3 1957 388 7,643 51 20.5 5.3 1958 3c65 7, 1 3 5 51 19.5 5.3 1959 370 7,314 51 19.6 5.3 1960 380 7,7743 49 20.1 5.3 1961 379 7,532 50 19.9 5.3 1962 370 7,230 51 19.7 5.3 1963 323 5,336 60 18.2 5.6 1964 3)45 6,047 57 18.7 5.4 29. Traffic has been dwindling part:icularly since 1962. It is worth recalling that the Rlailway was paralyzed by a strike in December 1962-January 1963. It is remarkable, however, that passenger-miles have declined much less sharply than passenger-journeys (8.2% and 19.7% respectively between 196L and 1964), indicating that losses were concen-trated in the short-haul traffic. -8- 30. Railway efficiency has shown definite improvement up to 1961, as will be seen in annexed Table 2, but on the basis of available information has deteriorated since. Much of the increase in operating efficiency during the period covered in Table 2 is due to the purchase of 26 mainline diesel locomotives in 1957.. Table 3 in the Annex provides a comparison with the Burmese and Thai meter-gauge and the Nigerian standard-gauge railways. Ix- cept for net tons per train and miles per day per locomotive in traffic wrhich should be increased, the Malayan Railway compares favorably. 31. )perating revenues and expenditures for the years 1959 to 1963 and provisional figures for 1964 are given in Table 4. There were annual oper- ating surpluses until 1961, subsequently there have been increasing deficits. 32. After taking into account the results of operation of ferry ser- vices, collection and delivery services and minor ports, together with the rents from and upkeep of properties, there has been a surplus, before in-- terest payments, for all years up to the end of 1963, with a provisional deficit in 1L964; after taking into account interest payments, there was a net deficit of M$738.000 in 1963, and a provisional deficit of M$3,582,0)0 for 1964. 33. Government has made available capital funds each year and, due to a time lag between receiving funds and using them for capital expenditure. large sums have accumulated to the Railway's credit and appear in the baL- ance sheets as deposits with the Accountanlt eneral, treasurv bills, and deposits with the Chartered Bank. Interest earned on these deposits helps considrab1-yr +to offV UE; v J4V 4 I V - i cu' VC and trucks respectively, these indications suggest a very uneven distri-- bUt.io n.L of -L.L.Lfi gruwth 1h1.LoUL-1IUUt' U1the syste1m1 wlchli Ls VterLy .Lkely, g.ven the regional disparities in economic activity. If they were correct, and if the trend;s cont-inued, they would imply t>hat traffic volur,mes would trUlple and double on Routes II and III respectively over a five-year period. M - -L _ _ L- d- - __ ., I I - _ - t g - - 1 __ I - _ - I---k.L L t -LJ ħilullgli iħu brafIic counts are availaDle ior Route I, there is no uuuuu uiiau traffic is growing similarly or even faster on this main highway which runs across the most developed part of the country. Tnerefore, it appears lL.kely that the burden of traffic growth will mostly be felt on the main trunk highways. However these considerations are not decisive, and a detailed economic appraisal of each specific project is necessary so that the results of the various Investment proposals can be compared on a uniform basis throughout the sector. 56. Regardinp the nature of the improvements to be made, the program includes three items, although it is not shown which proportion of the allo- cation should go to each of these items: general improvement of standards of the trunk network; construction of an alternative route with a more suitable alignment between Kuala Lumpur and Karak on Route II; and a co:a- struction of by-passes and throughways in the Federal Capital area. 57. There is constant pressure from operators to obtain permission to use larger vehicles on existing highways. Although this would weaken the Railway competitive position, as noted previously in the discussion of prob- lems faced by the Railway from road competition, there is no point in op- posing these requests indefinitely. At present, the maximum permissible weight of vehicles is 4 tons per axle, but it is intended to allow 5 tons in the very near future where road conditions permit. Limited approval of vehicles up to 8 tons is now Dossible. Furthermore. vehicle width is now limited to 7 ft. 6 ins., but when 16-ton vehicles are permitted, there will undoubtedly be pressures in favor of increasing the width to 8 feet. Traf- fic growth factors and pending changes in vehicle size and weight restric- tions point to the necessity for continued widening and strengthening of the major trunk routes. The effect of these improvements should be studied in relation to economy of oneration as well as safety. 58. Accordling to the informnation navailahle, minimuim standards for' improvemerLts on Route I would include a surtace width of 24 feet on a 26- foot base nn.d a strength of R tons per single axle. Third lanes on steep gradients for slow-moving vehicles are also recommended. However, there is -19- little point in providing extra lanes and cycle tracks if driver and riders do riot use them because of lack of police enforcement. 59. Minimum standards to be attained on Routes II and III are speci- fied by the E.P.U. as a width of 22 feet on a 24-foot base and a strength of 6 tons per axle. These standards seem too high for Route III, where traffic can be accommodated at lesser cost. In relation with the continued development of Pah;ang, it is recommended that Route II be strengthened to 8 tons Der axle between Bentong (Ketari) and Karak. The Jengka Triangle scheme is a major factor in this suggestion, as well as the in*- creasing logging anld agricultura activ ties in Pahang, Already the F.]..D.A. scheme at Bilut VaLley is increasing traffic appreciably on this road and the Klan Valley scheme ir-ll put+ even fnther str<-'n n it. 60. A prelimi^Lnary study of road alternati-es to a 14-odd-mniles tor- tuous section of Route II, between Kuala Lumpur'and Bentong, 1/ indicates that the route which would return the greatest 4enefits would be south of the existing Setapak-Karak highway, commencing f't Klang Gates and thence to Kadrak. it - u .-v-mħ" cuA-oħ co-uħu Lh rnt U 1Iħts road to thec existing one at about the Iron Bridge for traffic to and from Bentong. There wo-uld be considerable savings in time as ociated with appreciable reduction in operating costs. Computations baled on available data ind-i- ~~~~~~ .LI~~~~~~~~~~~~~~~~~~~~~. IC cate t1at the internal rate of return on the iivestmrverit should exceeu ,) /. However, detailed topographical and engineerink surveys are needed in order to better assess construction costs. The ass4r tions on developmiLenlt of traffic and its cormposition shoulcd also be reyiewed in the light of a more accurate origin-destination survey and a further assessment of the trans- port needs of the areas served by the road. The standards of the road should be consistent with those adopted on tht other sections of Route II. If the survey confirms the preliminary findings, this project should receive high priority. New Federal Roads 61. The Plan proposes an expenditure of some M$32 million during 1966-70 on engineering and construction work of the Northern East-West Highway con- necting Kota Bahru and Butterworthl via Grik. Completion of the project is expected to take place during the Second Malaysia Plan, 1971-75, at an es- timated total cost of M$73 million. The purpose of the road would be to link Kota Bahru, the principal population center on the north-east coast, with the nearest commercial center and deep water port on the west coast, i.e., Penang. Although a preliminary economic feasibility study prepared by E.P.U. in June 1965 concludes that the rate of return on the investment would approximate 9% on a 37-year service life of the proposed highway, the prospects for improving the development potential of the country by uncder- taking this project have not been adequaLtely evaluated. It is recommended, therefore, that further economic investigations be carried out before any further expenditures are incurred. New Development Roads 62. The Plan calls for an exoendil;ure of M$45 million for new delrelop- ment roads to provide access to development projects. These include F.L.D.A., 1/ Develo)ed in unipublished papers by W. Hughes. -20- irrigation and privately sponsored land development projects as well as industrial projects. It is stated in the Plan that the allocation to each State is based "on the rural population of the state, land alienated for agriculture, total land area, the number of motor vehicles and the mileage of existing rural roads". These criteria do not include the most relevant one, namely the avEailability of projects likely to yield satisfactory economic returns and promote development. However, allocation is much lower than for 1961-65. Other RoadS 63. The total of State requests for Federal grants for rural road>; amount to M$63 miLLion. Previous experience has shown that such rural roads are often built for political purposes and some have contributed little or nothing to economic development. The cut in expenditures (M$204 millioin were spent under the last Plan) is a sound measure, provided the remaining allocation is granted for useful projects. It would be desirable that even in the case of rural roads some logical method of allocation should be de- veloped. Rules of thumb which could be derived from more sophisticated methods of evaluation of economic benefits and, adapted for minor projects, might have to suffice. The screening of these projects might adeauately be the responsibility of the new Highway Planning Unit. 64. The M$23 million allocation for Municipal roads include M$11 million for Routes I and IT bhv-nsses and throuihways within the Federal Capital area, following upon the recommendations of a municipal transport survey comnleted in I963 The rquestion rmains nopen rThP1.hPr imnrovements of this kind have the developmental effects which would confer them a priori tv. ITn summrary, it should be noted that;r no economnc appraisal of pro- jects can be expected to be undertaken and yield reliable results in the abseoe f~ a road irvrr en +ra.4ffic surve,s. I t is ez'eced tht th -…...,..~~ -.. e~.un -d d - .j.. 4 ~ Aj) . ~ LcL .It M$1.4 million allocated to the Highway Planning Unit will be adequate to provide for thn- necessary suvey equip,. t d-- s-4-f ..-- Al u nilh the Unit is meant to deal primarily with maintenance and improvement, it seems hihyAeSir-abl- too inc~ludAe some s+aff w,ith &-L economr4c bcgods as to enable it to perform economic analyses. Railways 66. The Plan recommends the expen(Liture of M$20 million over the next flVe years for ral..lway Ut:VeLOjJlIi,men. Lnis iS a smral-l air1tuu1, comJrIed ,vJzuit the M$51 million allocation under the previous Plan and with the M$255, 5 mll1io1 tagEt fuo, r-uoad. For the duration of the Plan perlUd anlu LUf- Wit foreseeable future, the pattern of traffic will require greater emphas-Ls on roads than on rail trarnsport. However, there seems to be a considerable imbalance between the expenditure allocation in the two sectors, particu- larly in view of the urgency of reorganizing the Railway. In view of the fact that the railway will continue for many years to play an important role in the transportation system of the country, the small allocation should be regarded as an interim measure until the results of the survey of 1mng- term transport needs will be completed and provide a basis for the formu- lation of a long-term railway development program. The results of the survey are expected to be available early in this Plan period. In the -21- interim periodj the all oI rti on for railway development can be used for contingency items such as, for instance, acceleration of the process of drieselizationi subnect to the recommendatitons of the f-onsult-qnts. 67. Need1ess to say, most of t-he new investments in the Railway would be ineffective unless they are accompanied by measures to increase railway .LL. VcS.A'v.SI UJL £LAa5JLLv JA CL%JU j W.J- flItLJ J. US L. VS .. ~L. 'AS. UuL.$.Uj- -W lLfJ W operational efficiency. Steps in -this direction are announced in the Plan whch specifle that- 4 the4 Railwa will- - be rerzdas^ rd-ed. enterprise in 1966 so as to "provide the railway management with the au- ulhoit aI s Well I UasL the LIIIICUnLCL, tL L) ICLJ i y-to-da..y afLfars as a commercial enterprise". 68. The Railway program contemplated in the Plan may be summarized as f0llows.e Malaya: Composition of the Railway Development Progruai 1966-70 Purpose Amo$-lt (M$ miLLion) Diesel locomotives and rolling stock 8 Completion of Prai/Butterworth extension Right of way improvements and signalling 4 Other projects such as commercial sidings, yards and station 3 TOTAL 20 Indications are that 150 logging wagons might be needed to cope with the increasing log traffic at an estimated cost of M$2.3 million. The Railway management is of the opinion that these wagons could be fully amortized within the life of the expected logging traffic of ten to fifteen years. However, further investigation of the value of this traffic is necessary before proceeding with the investment in view of the fact that average revenue per ton-mile of timber is only M˘4.8, as compared with the overall average of M˘8.0. Another tranche of M$4.5 million is meant to cover the purchase of other rolling stock. The need for tank cars, w1hich constitute the bulk of the expenditure, is apparent, but other reqjuirements, including additional rolling stock being financed out of renewal funds and omitted in the Plan, may proVe! not to be entirely necessary given future freight traf- fic prospects, particularly if average wagons are replaced by stock of im- proved design and greater carrying capacity. 69. More emphasis should be laid oni further dieselization to replace overage steam power, reduce operating expenses and haul additional traffic if required. The mission thinks that there is a need for an early order for 20 main-line diesel locomotives in a(idition to the current order for 15. The p:Lanned allocation falls short of this recommendation, even taking into account about M$8 million available from Railway renewal re-- serves. Even this would still leave 11 stenm 1nomotivps over 30 vears old and 51 over 25 years old in 1970. It seems that the matter of -22- determining the optimum rate of replacement of steam locomotives should be thoroughly analysed. N4atVL. y he-.61 .&v.yr. in.1.,eSt,t in t+he RaMaT.1 ay should be n accompanied by steps to reorganize railway operation and administration. 70. Right-of-way improvements are needed above normal maintenance. Diffivcuies withl signalling are apparent and the Railway is undecided 'Nhich system it should adopt in view of the diversity of its operations. The ex- penditure sho-uld be contingent upon a study of commurnications by an exp-ert consultant. 71. In the present situation, three essential conclusions regardiiag the Railway seem in order: (a) There is no assessment of future traffic and needs which mig:At form the basis for a long-term railway investment program. This situation, hopefully, will be reviewed early in 1966-70; (b) There is an urgent neecd to reorganize the facility in order to improve its efficiency and allow it to respond successfully to the challenge of road ltransport; (c) Given the long-term needs of railway operation, higher expend.i- tures may be justified. Ports 72. 'The Plan provides for public expenditure of about M$81 million for ports out of which M$48 million are earmarked for the construction of three new berths at Butterworth. Since tonnage handled in Penang/Butterworth port facilities dropped from 4.2 million tons to 3.2 million tons between 1961 and 1964, due to the reduction in iron ore exmorts and to Indonesian confronitation the decision to invest appears to have been premature. The Plan indicates the intention to construct two adlitional herths at Port Swettenham. This is believed to be premature and may be regarded as a contingency expenditure stimulated by SJngapore's w_thdrawr1 from the Federation. The epmcUti o0l Of the project could usefully be postponed until the results of the survey of transportation neeTds are availahlhe. 73. Tf the northern east-west high.lway is given a low priority, af1ir appropriate studies, it is felt that the economic potential of Kelantan, T-re-ngg.anu . an.d easter. .h-g *ig6U+ be served by t1he construction _-f a new port, possibly in tbhe region of Kuantan (this was proposed in fact by the Iala,lyan Economic Con.nission i. their 1961 report). *Such a port would lso serve some of the needs of the Jengka Triangle Development and could even- tu-n-lly-.1 pro .'vide a basisJ. fo th.L le L.L"er development of. east'errn- andu IuIth1 IL Pahang. It is suggested that the feasibility of this alternative be in*- '-'a'--'' ..d I in ibll VLLLL,y IJ urar~jJLs t, UA~L. U~~L ħLI iliLd y. -ldd in She A,d; ofl 4. nport d.eveluopment in Mayja. p orts 7L. The sharp dnrop in the pl&.ined evpenditures on MNlayl . -rwan. ot (M,9 million as against M$59.6 in the 1961-65 Plan) reflects the completion of the new Kuaila T.iimnnwv. TnC4-,-+ O-nna1 A-4or. ThPe a l ,location w.4- 4'I for the .a..n part, ..~~..a.., ~~~aUJI1~~O.J. ~AirJp..a wr . 4.J1 C J U.LLI W.L.L.J. ..'j L~Ll..L cover the purchase of additional electronic equipment for Kuala Lumpur and testing equipmen.t for the D_pat ment of Civil Aviation. The rapid expansion of traffic (a doub-Ling over the four-year period 1960-64) seems to justify im m at V'.V~T~.ThCI+ P .-._ ^nd Xu 'a l 4 ,,4. ANNEX Table 1 TOTAL CARGO HANDLED AT ALL STATES OF IALAYA PORTS (thousand freight tons) A. TTnlnaded 1962 1963 19WI Rice 295 399 4 Sugar 186 171 1 Wh Flour 113 124 123 Milk (tirA 59 59 " .Beer, wine and spirits 19 19 22 JPe tv r o'. l ewr provdu ctsU (L1 bluIk) I2 ,75I 'A"A Triles 9 5 7 Iro anseel bars z.-' sleets 1931)923 Cement 127 129 131 .ho nexia parts 33 29f Motor vehicles 216 245 227 F ertilizers 183 i-L7( y J7 Copra 48 15 3 Tin ore 42 39 24 Coal 30 30 22 Other cargo 1,387 i,hh3 1,312 Total unloaded: 4,228 4,806 6,261 Table ]: (Cont,'d) TOTAL CAIGO HANDLED AT ALL STATES OF MALAYA PORTS (thousand freight tons) B. Loaded 1962 1963 196h R'ubber 601 629 613 Latex 128 131 157 Palm oil 88 86 88 Cocnrit. oil 28 26 10 Copra 37 51 10 T'in ndi tin nre 90 94 78 Iron ore 6,197 5,898 6,463 lmn- ente17 13 Scrap iron 13 18 49 Other cargo 238 556 1,779 Total loaded: 7,732 7,899 9,693 C. Total handled 11,960 12,705 15,954 Source: Statistical Bulletin of the States of Malaya Table 2 MALAYhLN RAILWAY ADMINISTRATION: ILPROVEMENT OF RAILWAY EFFICIENCY Change 1957 1958 1959 1960 1961 1962 1957-62 Train miles per route mile 4,864 4,762 4,798 5,329 5,606 5,123 + 5.3 Average number of locomotives in traffic 170 175 162 162 158 152 -10.6 in stock n.a. 206 187 190 188 188 Average mileage npr davy npr loeo- motive in traffic :L03.18 97.03 104.09 114.00 122.70 117.20 +13.6 Miles per day per vezhicle un-it -in traffic (goods) 29 26 31 37 39 35 +20.,7 (passenger) na na na 161 16h 162 V e SA. i.._ UU_l L a 'O t per train 26.40 26.28 30.75 30.95 29.73 30.21 +14.4 Net tons per -loaded::u vehic,le 5.2 545- 6.47 I 7.2 7.6 .6 + TsTe_L 'Ur-IL!'-r- per:n engine hour 718 677 1,009 1,155 1,195 1,134 +57.9 Net ton-miles per route mile 263 2i,5no43la92 328n,90ut 420,180 451,558 420,2 +59.5 Net ton-miles per train mile 105 96 137 152 159 158 +50.5 Net ton-miles per day per vehicle 113 95 139 182 208 183 +6i.9 Total Staff Employed 14,155 13,641 13,043 13,082 13,127 13,386 - 5.4 ANNEX T.able 4 MALAYAN RAILWAY ADMINISTRATION RAILWAY OPERATING RESULTS 1959 - 196 ('000 Malay dollars) Operating Revenue 1959 11960 1961 1962 1963 1964 (Provisional) GoodIs traffic 32,27C) 36,,588 37,188 34,435 30,661 33,170 Psssenger traffic 23,409 24i,130 24,017 23,706 21,833 22,566 Miscellaneous 04,; 1,I263 1 385 1,636 2 004 1,790 Total operating revenue 61 91 ' t.62 59 7775 5 7; 2zerating Expenses - - Maintenance of way & works 8,02() 8,391 8,950 8,406 8,7059 59,028 Maintenance of rolling stock 9,027I 9,229 9,561 9,697 9;,189 10,044 Locomotive operating 9,321 10,389 10,322 10,102 8,84r5 9;4L91 Traffic operating 11,301. 11,639 11,888 12,609 12,448 13,60C) General charges 3,343I 3,402 3,575 3j734 3,836 4L,17() Pensions & provident fuLnd 6 975 7 200 7 375 7 117 6 351. 6 19] hi > 7 < w 9~ T > - 51 7 - 4j >> ~~T: 3 ; Special expenditure 129 472 519 376 94 224 Provision for renewals 7,511 7215 7,351 7,82I 7,477 7,98' Total operating expenses 55,627 57,937 59)7i8 59,862 56 L 1 6C),733 Qperating surplus (deficit) 1,9 4.,044 28… (85) (2, ) (3,20I7) Other Activities Revenues: Fer:ry services 51-3 678 615 551 258, 287I Collection & Delivery services 878 1,059 1,144 1,172 1,1059 980) Minor ports 44 32 28 23 18 21 Rents 1,777 1,,786 1,92 2,021 2,108 2,16l Total 3,212 ,555 3 779_ 3 73,493 3 452 I'able 4 (Cont;d) MLAYAN FAILWAY ADMINISTRATION RAILIY OPERATING RESULTS 1959 - 1964 (1000 Malay dollars) l959 1960 1961 1962 1963 1964 (Provisional) Expenditures: Ferry services 558 773 620 663 392 224 Collection & delivery services 9h3 1,128 12L8 1.043 969 900 Minor ports 41. 34 33 *26 -26 30 Upkeep of property etc. 1 356 1,634 1,877 1,739 1 741 1,892 tX1 ,379 3,775 3 h7 3 3,3 b0; Provision for renewals 62 62 62 62 58 58 ToDtal 41 977 3,76-5-= 3 870- -= 3 --53-3 - 3-17rss 3 371- Net revenue (deficit) from olther activities 252 (76) (61) 234 307 348 Rai:Lway operating surplus (deficit) 1,095 4,044 2,822 (85) (2,451) (3,207) Intesres-t received 194 430 1,022 1,275 1,371 l,h50 Sundry revenues (expenses) 325 623 247 615 1,659 (527 Net reveanue before interest l 0 021 T 030 2,039 NT,936) Interest payable on loans 1 302 1 338 lj,365 1,421 1 624 1 6h6 Net Revenue (deficit) 3 .(3,E: 2 T77 7 2) Operating Ratio 93 6 100 1031 Times Interest 2arned 1,4 3.8 3.0 1.5 o.6 - ANNEX Table 5 RAILWAY GOODS TRAFFIC AND REVMUE 1954-64 A. TOTAL TPAFFIC Net Average receipt Average Year Tonnage Ton-Miles Revenue per Net Ton-Mile Haul ((oo,0oo) (000,000) ; million MO (tiles) 1954 2.123 231.9 29.4 12.69 109.2 1955 2.237 241.3 31.3 12.99 1C)7.9 1956 2.457 273.8 36.4 13.28 131.4 1957 2.370 271.0 35.7 13.17 114.4 1958 2.236 238.0 30.0 12.61 106.4 1959 2.891 338.1 32.3 9.54 1.6.9 1960 3.559 431.9 36.6 8.47 12!1.4 1961 3.789 464.2 37.2 8.01 122.5 1962 3.466 432.4 34.4 7.96 124.7 1963 3.035 378.0 30.7 8.11 12'4.5 1964 3.325 440.0 33.2 7.53 132.5 B. TRAFFIC EXCLIJDING IRON ORE 1954 2.047 223.9 28.8 12.88 109.2 1955 2.226 240.1 31.3 13.02 1(7.9 1956 2.272 2q)i.6 3N,0 13.73 11]2.1 1957 2.090 240.6 33.4 13.86 11]5.3 1958 1695 20ni0 271 13.hO 11]9.2 1959 1.885 258.1 27.1 10.49 136.9 1960 2=088 313.1 29.4 9.4§0 1)89.9 1961 2.052 316.0 28.7 9.08 154.0 1962 2.141 326.2 28.5 8.72 1 '52.3 1963 2.144 320.0 27.1 8.48 1149.2 1964 2.492 393.0 30.5 7-76 01,7.9 Source: "The Malayan Railway and Road/Rail Competition in the States of MVl --aI - U r, . E .v ^ PIann. UT. + 1 Oa). Railway Boiard Memorandum No. 16/65 "Financial Results Railway", (-1 ciA. '\ \J.7tJL4j. A , 9) 4ni D 1 O .......... J ..~~~~~~~~~~~~~...... 3 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~........ C) C' ~ ~ ~ ~ R o -. CC c (f~~~~~~~ ~~~~- C~~~8 ;~~~~~~~~~~~~~~ C'~~~~~~~~~~~~~~~~~r