Public Transport Pass

I support this (excerpt):

Time to introduce a RM100 public transportation pass in the Klang Valley

In October 2017, I had written about the lack of an increase in the ridership of the LRT, MRT and KTM Komuter despite the billions of Ringgit of investment poured into new projects.[1] The recently released Quarter 3 2017 rail statistics[2] by the Ministry of Transportation confirmed my fears that the LRT and MRT ridership spike in July and August 2017 due to the half-price fares were only temporary....

...The drop in the daily ridership on the LRT and MRT clearly shows that passengers are price sensitive. This is why it is necessary to introduce an affordable monthly public transportation pass to allow passengers to have unlimited rides on the LRT, MRT, Monorail and Rapid KL buses as a way to increase public transportation usage. Rapid used to have an RM150 monthly travel pass for the LRT but this was eliminated as part of the LRT fare hike in Dec 2015.

Pakatan Harapan has proposed in our alternative budget to introduce a RM100 unlimited travel monthly public transportation pass. I am confident that with the introduction of this pass, public transportation usage especially on the LRT, MRT and Rapid buses will increase significantly, perhaps even beyond the daily ridership figures set in August 2017 when the LRT and MRT fares were reduced by 50%.

Public transport almost never makes money, but there are large positive externalies to increasing utilisation. From reduced congestion to lower environmental costs, not to mention spreading the large upfront cost of building transport networks across more users, there are good arguments for maximising the use of available capacity. There's also the incentive trade-off between using cars as opposed to public transport - because of the lower convenience, public transport has to be priced lower to compete effectively. Lower or flat prices might also increase revenue, depending on the shape of the demand curve. So this makes sense, and is at least worth some study.

The Pros And Cons Of Privitisation

In the latest issue of the IMF’s Finance and Development magazine, John Quiggan (author of Zombie Economics) takes through the arguments for and against privitisation (excerpt):

To Sell or Not

...Although the push for privatization took different forms in different parts of the world, it was part of a broader movement aimed at reducing the role of government in the economy and at increasing reliance on markets and prices. In particular, the movement toward privatization reflected the presumed superiority of financial markets over governments in allocating capital...

DAP Alternative Budget

I did a quick flip through of DAP's effort at presenting their version of what Malaysia's spending priorities should be in the next fiscal year - obviously not doing much justice to the evident amount of work put in. Once you get past the political polemics, there is a lot to like. In no particular order of importance (or relevance!), my comments on what struck me the most:

1. I like many of the proposals regarding education, especially keeping PPSMI, as well as decoupling university payscales from civil service pay grades.

2. Ditto healthcare.

3. While there is no doubt public transport is in a mess, I'm not sure adding another layer of bureaucracy by creating transport authorities at municipal, state and federal level is a great idea.

4. On the other hand, will all political parties work together to bring back local council elections? Please!? This won't just have the effect of promoting accountability and reduce opportunity for corruption at the local level, it should also serve as a good training ground for young politicians.

5. Getting back to transport, I have reservations about the proposal to nationalise toll roads. I won't argue with the financial aspects, but I am concerned about efficiency - the toll concessionaires have an incentive to provide a quality product and service. I seriously don't think JKR will do as well, either in maintenance nor in keeping future costs down.

6. Tying state grants to a formula is a good idea - but basing it mainly on a per capita formula is not. We want to promote regional development (particularly in the East coast and Sabah and Sarawak), and while there is a transfer mechanism, I don't think it goes far enough.

7. The proposed revisions of the poverty line income calculations are great, and comments about income inequality (as measured by the Gini coefficient) are very apt. But I would rather see more detailed studies in this area, mainly because to me, inequality is and would be less of an issue if the lower income groups have sufficient income for a decent quality of life, and also if income growth keeps pace with the economy (implying that inequality in incomes is not reflecting inequality in economic opportunities). If both these conditions are met, then I don't see relative inequality as an economic as opposed to a political problem.

Unfortunately, the way the Gini coefficient is calculated tends to overlook this, as it really basically only compares the highest income brackets against the lowest. You don't get a sense of how the middle-classes really stand in relation, and from a political point of view (and I'm departing from my economics focus here), that's where the crucial votes and vote leaders really lie.

8. One critique I have is the characterisation of the BN government as being grossly fiscally irresponsible. I don't necessarily see that at all. While it's true that oil revenues have underwritten an increasing portion of government expenditure, looking back at the historical data provides some perspective. First the fiscal balance as a ratio to nominal GDP (annual data up to 2008):



Note that apart from a short period in the mid-1990s, the government has always run a deficit. The deficits run this past decade are just par for the course. Second, while the absolute value of the national debt has increased, its ratio to nominal GDP began falling when Pak Lah took over:



There will of course be a substantial increase this year and next (both relative and absolute) due to the stimulus packages, but very few will argue against the political if not economic necessity of that. What isn't shown in the data is that over the past few years, the Treasury has basically gotten rid of almost all our foreign borrowings. Here's Malaysia's net foreign asset position (public+private) up to 2007 (ratio to nominal GDP):



That means the government only has to worry about domestic uptake of government securities issuance - and no that doesn't necessarily mean there is a risk of crowding out (FI reserve balances with BNM):



There's so much excess liquidity sloshing around that banks might actually be glad to put their money in something both highly rated and earning some interest. Even at the rate the government is borrowing this year, I don't see any risk of crowding out of private investment until at least 2011 at the earliest, and the likelihood of that is pretty small.