This article first appeared in The Edge Financial Daily on November 15, 2017

PUTRAJAYA: Seeking to unlock the value of its property in the Klang Valley, Keretapi Tanah Melayu Bhd (KTMB) may venture into property development as early as next year. The state-owned rail operator said its land bank could generate projects worth some RM6 billion.

Its chief executive officer (CEO) Mohd Rani Hisham Samsudin said this is part of the state-owned rail operator’s initiatives to increase income from its non-fare segment.

“We are looking at various pockets of opportunities for the pieces of land neighbouring our stations, to unlock this value and subsequently improve contribution to our revenue from the non-fare segments,” Mohd Rani told a press conference after the launch of the 39th Asean Railways CEO’s Conference yesterday.

He said the venture into property development, on the concept of transit-oriented development and partnering with strategic developers, will not be immediate, as it is still subject to obtaining the relevant development orders from the local authorities and pending finalisation.

“However, if all goes well and subject to relevant approvals, we could kick off the property projects as early as next year,” said KTMB’s independent non-executive director Datuk Ahmad Zainuddin Jamaluddin at the press conference.

Mohd Rani said KTMB must be mindful of the type of development as each location has a distinct market.

“We can’t simply develop any projects as we like, as we need to be mindful of the market that each location can capture. Some stations are located at routes that pass through residential and township areas, while some stations are closer to industrial zones. Different stations serve different markets and that is where we have to be careful in the grand design of the development.”

As for the overall strategy to boost non-fare revenue, Mohd Rani said KTMB is studying various ways to improve earnings from the advertising segment.

“This is another way that we can boost non-fare revenue and I believe, we can capitalise on this method to ramp up earnings from non-core segments.”

Currently, Mohd Rani said KTMB’s fare revenue is generated by its two business segments: passenger and cargo.

“Within the Klang Valley, KTMB’s routes are competing with other operators such as Prasarana Malaysia Bhd, Mass Rapid Transit Corp Sdn Bhd and Express Rail Link Sdn Bhd. It is not easy to capture ridership within the Klang Valley.

“But for interstate and long distances, it is undeniable we are the market leader in this segment.There is also a lot of work to be done to further improve our ridership and cargo services,” he said, adding that growth in ridership tracks the country’s economic growth, hovering 4.5% to 6% annually.

By December, Mohd Rani said KTMB will be undertaking a double tracking project to expand its railway network from Gemas in Negeri Sembilan to Johor Baru, with the construction work spanning over four years.

“Once this is completed, all of KTMB’s railway network from north to south [of Peninsular Malaysia] will boast a double track.”

In the third quarter of 2018, Mohd Rani said KTMB is due to receive the first of 22 rolling stocks in the form of electric multiple units (EMUs) that it had ordered from CRRC Zhuzhou Locomotive Co, and manufactured at the latter’s plant in Batu Gajah, Perak.

In April, KTMB signed a €180 million contract with CRRC to buy 22 rolling stocks, of which 13 are four-car diesel multiple units and the remaining nine are six-car EMUs.

Themed “Rail Unites Asean”, the three-day Asean Railways CEO’s Conference is organised by KTMB in collaboration with the national railway operators from six other countries: State Railway of Thailand, PT Keretapi Indonesia, Cambodia’s ministry of public works and transport, Myanmar Railway, Lao Railway Authority, and Vietnam Railway.