Kuala Lumpur traffic on a typical working day.
Currently, road congestion costs Malaysians at least 1% of annual GDP, according to Frederico Gil Sander, currently the World Bank’s Senior Country Economist for Malaysia.
In order to reduce the number of cars on the road, as well as to encourage the use of – and to pay for – public transportation infrastructure, he outlined several measures which have been implemented in other countries, including environmental-related and fuel taxes, as well as road pricing.
“According to an IMF paper, the appropriate tax on gasoline (petrol) to take into account all of the externalities should be around RM2.20 per litre. I know that figure will be very difficult for the government to implement politically, but in theory, that would actually have a fiscal impact of almost RM19 billion,” Gil Sander (pic) highlighted.
He also suggested other options such as ancillary services like advertising on buses and trains, as well as transit-oriented design, which allows the government to benefit from the development of property around public transportation corridors.
Gil Sander said this during the recent official launch of the latest issue in the World Bank’s bi-annual Malaysia Economic Monitor series, which provides an analytical perspective on the policy challenges facing Malaysia as it grows into a high-income economy, and also represents an effort to reach out to a broad audience, including policymakers, private sector leaders, market participants, civil society, and academia.
Aside from the primary issue of transforming urban transport, the June 2015 Malaysia Economic Monitor also picked out the GST and realising the economic potential of women as highlights.
Officiating the launch was Senator Dato’ Sri Abdul Wahid Omar, Minister in the Prime Minister’s Department, following opening remarks from Constantine Chikosi, World Bank Portfolio and Operations Manager of Southeast Asia, who commended Malaysia on implementing two challenging yet important reforms; the introduction of the Goods and Services Tax (GST) and the removal of fuel subsidies. He also commended Malaysia on policies that increased the labour participation of women from 36% in 2009 to 54%.
During his speech, Dato’ Sri Abdul Wahid (pic) said that the World Bank has done well to document Malaysia’s – and its society’s – economic progress, and he hoped that the team would continue to do its good work. He also noted that the economy grew 5.6% in Q1 2015, which bode well for the government’s goal of 4.5%-5.5% GDP growth for the year.
“In order to lay the foundation for long-term economic growth in light of our vision of becoming a developed nation by 2020, which involves increased mobility and faster transportation modes, Malaysia has to embark on reforming the planning and implementation of transport infrastructure development.”
Following the launch, there was a panel discussion moderated by Tan Sri Ramon Navaratnam, Corporate Advisor to the Sunway Group. The panellists included Luis Blancas, Senior Transport Specialist at the World Bank, Datuk ‘Allaudin Hj. Anuar, Deputy Director-General (Sectoral) of the Economic Planning Unit, Dr. Prodyut Dutt, Chief Development Officer of the Land Public Transport Commission (SPAD), and Gil Sander.
Responding to a question from the floor, Blancas emphasised that while there were no ‘model’ cities in the world which had perfect urban transportation networks, there were nonetheless cities from which Malaysia could pick up best practices from and adapt to the local conditions.
“What we’re saying is give it a try, and over time, you will perfect the model. So the most important thing is to get started.” he continued, referring to the World Bank’s recommendation of setting up a (or providing the necessary powers to an existing) metropolitan-level lead agency, which will coordinate all other agencies involved in urban transportation and come up with a single transportation model encompassing both public and private transportation.
“It is more important to start with a solution and perfect it over time,” added Blancas.
The full report can be downloaded from the World Bank’s website.