Transportation Pricing

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1 Critically Analysis of “ Malaysian Transport Strategies, Measures and Policies “ Report By Jeffery D. Ensor The Report Analysis Among the available modes of transport in many large cities around the world, the private car has been interested more. There are undoubted advantages in using the private car rather than the other modes of transportation. Freedom, Privacy and comfort are some of the reasons for owning a private car by people. Furthermore, availability of a private car, i.e. whenever you require to wherever you desire to go, has made the private car more popular than the public transport. From the psychological perspective, it is undeniable that a car can symbolize the user’s power, success and wealth. That is why the demand for private cars has been growing recently. Kuala Lumpur Metropolitan Area as the capital of Malaysia has not been exception of private car ownership increase trend. According to Road Transport Department of Malaysia[1,2], the total registration of motor car has been elevated dramatically during the years 2006 - 2011 (Figure 1 and 2).

Transcript of Transportation Pricing

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Critically Analysis of “ Malaysian Transport

Strategies, Measures andPolicies “ Report By Jeffery

D. Ensor

The Report Analysis

Among the available modes of transport in many large cities

around the world, the private car has been interested more.

There are undoubted advantages in using the private car rather

than the other modes of transportation. Freedom, Privacy and

comfort are some of the reasons for owning a private car by

people. Furthermore, availability of a private car, i.e.

whenever you require to wherever you desire to go, has made

the private car more popular than the public transport. From

the psychological perspective, it is undeniable that a car can

symbolize the user’s power, success and wealth. That is why

the demand for private cars has been growing recently.

Kuala Lumpur Metropolitan Area as the capital of Malaysia has

not been exception of private car ownership increase trend.

According to Road Transport Department of Malaysia[1,2], the

total registration of motor car has been elevated dramatically

during the years 2006 - 2011 (Figure 1 and 2).

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Figure 1: Cumulative Total Car Registration in Malaysia from 2005 to 2011

Figure 2: New Registered Motor Vehicles By Type And State, Malaysia, Fourth Quarter, 2011

Malaysia’s rapid economic growth plan has affected on KLMA in

various dimensions which causes more people being attracted to

this urban area, resulting in its population growth. In

addition to population growth in KLMA, there are other factors

mentioned in the Report such as GDP growth, rising average

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income, increased working age group and urbanization which has

promoted the travel demand and spread traffic over a wide

area.

Although private vehicles have improved the mobility needs of

many people in KLMA, it seems reasonable to worry about the

single occupancy vehicle growth. A critical challenge faced by

high rate of motorization effort in KLMA, such as other

cities, is traffic congestion. In many developed and

developing countries traffic congestion has been a serious

urban problem. Air pollution and environmental risks are also

other concerns in related to this booming motor vehicles

population.

The early solution most people think for mitigating the

congestion problem, is adding a new lane to the current

overloaded highways. Construction costs of new lanes are very

high and typically come from the fuel taxes. Since the

Malaysia Government policy is to keep fuel prices low, the

construction needs a large amount of funding. On the other

hand, the more spaces, the more drivers using the expanded

highways.

Traffic condition predictions and congestions might be partly

reduced by up-to-date information on the roads which allows

the drivers to plan for their less congested trip. Integrated

Transport Information Systems (ITIS) was launched by the City

Hall of Kuala Lumpur in March 2003 to provide public and real

time traffic information covering 243km2 of Kuala Lumpur and

surrounding areas[3]. ITIS provides the information such as

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area of traffic congestions, alternative routes and estimated

travelling time. However, this system has not been completely

successful in achieving its goals because of some limitations

including only online access to the information, a few

variable traffic condition signs and less public on-road

informing.

According to the Report, the need for Travel Demand Management

has implied Malaysia to bring the controlling on-road vehicles

number to its consideration. Many efforts have been

accomplished since early 1990s. Carpooling program, Parking

restriction and different charges, one-way roads, bus lanes

and so forth implemented which none of them has have a

positive long-term impact.

Transport pricing term which has been invented by economists

is now believed to be an effective way to reduce road

congestions. This term says that the price of using a road

should meet the cost of the road. This policy plays an

important role in many countries such as Germany, Italy,

Sweden, China, Singapore and so on. For KLMA, the road pricing

study has also commenced from year 1976 (Figure 3)[4]. The

major advantage of road pricing is elimination of wasteful and

excessive usage of current transit capacity.

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Figure 3: Road Pricing study recommendations

As described in the Report, prices typically are based on the

rule of marginal costs which implies that the marginal benefit

of a road usage is equal to marginal cost of the same road

usage. In the circumstances of congestion, the extra cost,

called externalities, in addition to internal costs will be

incurred due to environmental effects and total delays imposed

to other existing users.

However in the real world determining the exact transport

marginal costs as well as implementing an adjusted charging

system is very complicated, costly and maybe impossible. For

example valuation of noise, safety and CO2 emissions has not

yet been certainly identified. Therefore some urban cities try

to approximate the marginal costs.

Although Malaysian Government follows supporting of reduction

of charges to the customer, it would better to be considered

that the consequences of not implementing an effective policy

to reduce the congestion and its effects will definitely be

against the people.

The Report divides the marginal cost into fixed and variable

cost to examine the tools and measurement for road pricing.

Using the fixed cost (incurred by user independent of the

amount of travel) such as vehicle quota, vehicle ownership

taxes and insurance as a tool for road pricing is ineffective

in practice. It has approximately no effect on travel demand

because the cost is paid whether the driver uses the car or

not.

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On the contrary, variable costs (incurred depend on the amount

and the nature of travel) can be managed effectively so that

be converted to a travel managing tool. Some automobile

operating costs have been investigated in the Report.

Fuel Prices seem initially the best managing tool for lowering

energy demand, reducing hazardous emissions and enforcing

automobile manufacturer to bring the car more fuel-efficient.

However, it has also some disadvantages such as suffering poor

innocent people as well as less relation to congestion

factors. In addition, raising fuel price will absolutely

affect every aspect of everyone’s life, rising price from the

transportation to raw material and commodities. That is the

consequence of the fact that nearly every thing in the society

needs distribution and shipping which affected from the rising

fuel price.

Another variable cost measure is Parking Restraints. Providing

and managing parking spaces has a significant role in mobility

and efficient space usage. In unrestrained parking area, park

space do not creates demands for travel; however for

restrained parking areas, additional space facilitates

additional travel by private vehicle. There are many

instruments which can be utilized for these two dimensions of

control: Price and Supply. According to Price, Parking Price

increasing, Parking Rate Structure and Parking Tax are

examples of such instruments. Similarly, for controlling

Supply the instruments such as Removing Parking Space and

limiting Parking Growth may be useful. Parking Restraints

policy has some side effects. First, if it can not be

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supported by sufficient transports of other modes, it might be

reduce the accessibility. Second, if parking restraints is

implemented inconsistently, it can cause diversity in trips

rather than reducing them. Third, as the Report says, it will

increase the for-hire drivers which mask the reduction of

private cars. Despite these drawbacks, Parking restraints

measurement and strategy is very fascinating supplement travel

management tool in many developed and developing cities, but

needs to be affected consistently in a large area of on-street

and off-street parking spaces.

Among the current approaches to tackle traffic congestion in

KLMA, congestion pricing represents a sustainable and

practical policy which discourages drivers to overuse their

private cars during the peak hours, while motivating them to

utilize other modes of transport. Congestion pricing reduces

the delays and make possible the prediction of travelling

time. It also benefit to the government by improving QOS,

achieving additional revenue without increase in taxes or

capital expenditures and by decreasing the required time for

accident response. In related to public transportations,

congestion pricing improves its speed and reliability which

results in public transport demands while lessening the

maintenance and operation costs. A portion of the revenues

collected from the tolls in this system, can be consumed as

operation and management costs and the rest (as net revenue)

can be used for development and expansion of roads, highways,

traffic facilities and public transportations, for reducing

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other taxes and so on. Figure 4 demonstrates the benefits of

congestion pricing through a virtuous cycle[5].

Figure 4: Congestion Pricing Benefits

It is undeniable that the effectiveness level of congestion

pricing on alleviating the rush hour traffic jams and on

public transportation completely depends on the type of

pricing strategy is chosen.

Since the Network Pricing strategy requires high sophisticated

technological systems for tracking the cars within the

congested areas as well as people reaction challenges, it is

not suitable for KLMA congestion pricing scheme. However it

seems that Area-wide or cordon pricing can have a significant

role in congestion reduction. However, this kind of strategy

would not be successful without development of public

transportation infrastructure. Public transportation

enhancement is a fundamental factor for implementing area-wide

or cordon pricing system and must be deployed beforehand.

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HOV and HOT lanes are another strategy of congestion pricing.

HOV has more advantages over HOT lanes according to the

Report. But that is feasible where the road has enough space

in order to separate a special lane for special vehicles. Some

roads within the KLMA central division area have not

sufficient capacity or width for implementing these carpool

lanes; however for some expressways, if it enhances people-

moving capacity, the unseparated or separated HOV lanes can be

constructed.

KLMA Today:

Motorized road transportation is still the first preference of

movement in KLMA. Even now slower speeds and rising traffic

congestion bother people in the city. According to the

Transport Statistics Malaysia 2010 [2], the number of

passengers carried by LRT services in Kuala Lumpur has

remained approximately the same during the years 2006 and 2010

(Figure 5) in comparison to the increasing rate of registered

motor vehicle during these years (Figure 1) .

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Figure 5: Number of Passengers for LRT services (2006-2010)

Constructing more roads and highways can not catch up to the

rate of motorization in KLMA. Congestion leads to productivity

(man-hours) loss and pollutes the environment. If the

government are not able to manage this trend effectively, soon

KLMA will be converted to a huge parking space. Therefore, it

is suggested that a policy of Carrot-and-Stick must be

followed by the Malaysian Government, i.e although economic

growth entices travel demand as ‘carrot’ or motivator, there

is also a need for ‘stick’ or restraints to balance the

situation.

Area Congestion Pricing Scheme introduced in the Malaysia Land

Public Transport Act 2010 (Act 715) [6] for the first time. In

this law the Minister has prescribed to charge the drivers who

use the roads within the designated areas. To fulfil this

order, there are also some prerequisites mentioned in this law

such as specifying the roads in which the payment must be

collected, the persons who are authorized for collecting and

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retaining charges and the persons and classes of vehicles that

are exception from this law. But it is obvious that this

scheme will not be implemented effectively without enhancement

of public transportation.

Public transportation expansion has always been in the

consideration of Malaysian Government. According to the Star

news website [7], in 2011, 470 RapidKl buses were added to the

fleet which raised the total passengers by 4.04 million in

comparison to the previous year. Three more Bus Expressway

Transit (BET) inserted to help reduce travel time by utilizing

the alternatives routes with lighter traffic. Also 35 trains

initiate to LRT lines to raise the passenger transporting

capacity.

Unfortunately under the current circumstances, KLMA is seems

not to be very close to its goal in expansion of public

transport supply and demand, although Tenth Malaysia Plan

(2011-2015)[8] has considered the growth of public

transportation in order to reduce the private travel demand

and traffic congestion. Achieving target will require major

demand and supply efforts from KTM Komuter, LRT and buses.

Maybe the other kind of pubic mode should be come to the

attention such as BRT (Bus Rapid Transit).

A Similar Experience

The same issue has arisen in Tehran capital of IRAN, as the

most significant metropolitan city in Middle East area.

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Population growth, exceeded usage of private cars, low

capacity roadways, low price fuel and city sprawl are the main

causes of traffic congestion in Tehran. Congestion pricing

(cordon) has been established since 1979 to ease travel in

central area. This restricted zone is now controlled by ITS

systems. BRT line has been implemented in Tehran since 2004

which has about 104Km length and reaches to 300km in future.

Odd-even Licence plate restricted zone is another scheme which

introduced and implemented within a larger area in Tehran.

According to this plan, only licence plate cars with even

numbers are allowed to enter or transit across this specific

zone on even days of a week. The others are allowed on odd

days but this area is unrestricted on weekends. Expansion of

Subways, Cycle stations and lanes, Parking lots and multi-

floor parking, ITS systems development and so on are the major

programmes which have all been successfully employed to lessen

the side effects of traffic demand growth in this metropolis.

The above example is what I have experienced during my living

in Tehran, so when I compare these two cities I make believe

that solving the KLMA congestion challenge in the near future

will be not beyond access. It only requires well-trained

experts for financial, strategic and risk management planning

and so on to provide proper Traffic Management Scheme in a

timely and effective manner.

References:

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1. Road Transport Department Official Portal, http://portal.jpj.gov.my

2. “Transport Statistics Malaysia 2010”, Ministry of Transport Malaysia

3. Michael Yong, “Integrated Transport Information System (ITIS) for Kuala Lumpur: The

Clear Way To Go”, JURUTERA, October 2005

4. J. Mohamad, A. T. Kiggundu, “The rise of the Private car in Kuala Lumpur, Malaysia”,

IATSS Research Vol.31 No.1, 2007

5. “Transit and Congestion Pricing”, U.S. Department of Transportation, Federal

Highway Administration, April 2009

6. “Laws of Malaysia, Act 715, Land Public Transport Act 2010”

7. “The Star online”, http://thestar.com.my/news/story.asp?file=/2012/4/16/nation/1108915

6&sec=nation

8. “Tenth Malaysia Plan, 2011-2015”