This article first appeared in The Edge Financial Daily on April 25, 2017
KUALA LUMPUR: Loss-making Keretapi Tanah Melayu Bhd (KTMB) is expected to name a new president and chief executive officer (CEO) next week to replace Datuk Sarbini Tijan, whose contract is expiring at the end of this month, according to people familiar with the matter.
“A board meeting was called [last Thursday] and three names were submitted for consideration by the prime minister, who is also the minister of finance, as the controlling shareholder of KTMB. An announcement is expected to be made on May 2,” one of the people told The Edge Financial Daily.
Another source, who confirmed the board meeting, said Sarbini’s contract is highly unlikely to be renewed.
“New blood must be brought into the company; that is the view conveyed by the finance ministry to the KTMB board,” said the source, who asked not to be named.
One name bandied about for the two-year contract is Mohd Rani Hisham Samsudin (pic), former CEO of KL Airport Services Sdn Bhd, which is now known as Pos Aviation Sdn Bhd.
Sarbini, when contacted, declined to comment on the speculation that his contract would not be renewed, saying that the matter is “in the hands of Allah”.
“I am now under special leave. I have not been told whether my contract is going to be renewed or not, but what is important is that KTMB must be transformed to ensure operational efficiency and financial sustainability via a change of business model. This is vital if KTMB wants to leap forward,” Sarbini told The Edge Financial Daily.
“I don’t have a problem with KTMB’s board. They are all supportive,” he said, but went on to stress the need for people with relevant expertise to be brought in to run the country’s main rail operator.
“I feel that in order to kick-start [the] KTMB-wide transformation process, it has to begin with a top-down approach, beginning with the board, right down to the janitor,” he said, suggesting that the company emulates efficiently run railway companies in Japan, in which the majority of board members are experts in transport and logistics businesses.
When asked about what he would do if his contract is not renewed, Sarbini said: “I don’t know. It’s too early to tell.”
KTMB chairman Datuk Nawawi Ahmad declined to comment on the matter when approached last week, saying that an announcement will be made “when the time is right”.
“We had a board meeting last week. We deliberated on many things. Just wait for our announcement,” he told The Edge Financial Daily.
When contacted, Railwaymen Union of Malaysia (RUM) president Abdul Razak Md Hassan also declined to confirm or comment on the matter of an incoming KTMB chief.
“I am not the right person to tell you that. But I can tell you that whoever the new guy is, RUM wants him or her to resolve the never-ending structural issues in KTMB. We want a leader who is aggressive and proactive, and can turn the ailing company around,” he said, noting that KTMB is currently bleeding with accumulated losses of more than RM2.6 billion.
Data from KTMB’s website showed that the company’s net loss for the financial year ended Dec 31, 2015 widened to RM226.25 million from RM43.48 million a year earlier, despite a 3.4% rise in revenue to RM515.8 million from RM498.9 million.
Sarbini alleged that KTMB is “technically bankrupt” and an urgent transformation is needed to turn the company around.
“By my calculation, KTMB is supposed to make a net profit this year. But if it continues to [be] run the way it is, then God knows when it can turn a profit,” he said, noting that staff expenses made up the bulk of KTMB’s operating cost which dragged down its earnings.
“Staff cost is about 80%, which means that for every ringgit the company makes, 80 sen goes to the staff. This is abhorrent, and this cost must be brought down to an optimal level of around 20% to 30%,” he added.