Uncommon Business Sense CONTENTS Newsletter & Insights Congestion Charge: Pain or Gain? (Part 1) Government developments in public transportation and elevating ridership - congestion charge as an option www.prudenzconsulting.com June 2013 Uncommon Business Sense | June 2013 A Reflection or Anticipation Why I chose what I have chosen Rising To The Challenge Mapping the path to success
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Uncommon Business Sense
CONTENTS
Newsletter & Insights
Congestion Charge: Pain or Gain? (Part 1)
Government developments in public transportation and elevating ridership
- congestion charge as an option
www.prudenzconsulting.com
Jun
e 2
013
Uncommon Business Sense | June 2013
A Reflection or Anticipation
Why I chose what I have chosen
Rising To The Challenge
Mapping the path to success
www.prudenzconsulting.com
Dear Reader,
Uncommon Business Sense | June 2013
Welcome to the first edition of Prudenz Consulting newsletter and insights,
Uncommon Business Sense. Most business organisations utilise newsletters to
educate and update readers on current matters; sliding in promotional contents to
increasing brand awareness. Ask yourself this, how much time would you spend
reading a newsletter? We’re here to make you spend just a little more time with
us.
When you hold this issue of “Uncommon Business Sense”, the aftershocks of
Malaysia’s 13th General Election are still visible; with business owners,
entrepreneurs, executives, managers, and everyone in the corporate world facing
the need to adapt, change, and be decisive in their actions and decisions to
continuously progress and excel.
Our first article – ‘Congestion Charge: Pain or Gain?’ (Part 1) – explains the
concept of congestion charging in Malaysia where congestion remains a long
standing issue. Congestion charging was first brought to the limelight, back in
2007 and resurfaced in 2010; both times the proposal fell through due to the
overwhelming negative response. We set out to connect the dots between the
relevancy of congestion charge to ongoing public transportation developments, in
particular, the Mass Rapid Transit (MRT).
‘Rising To The Challenge - Mapping the Path to Success’ was featured in SME &
Entrepreneurship Magazine, Feb 2013 issue.Izreen Ismail & Syadid Zaharan, an
Correct the header
“ ”
Prudenz Consulting uncovers the driving factors behind students’ preference amidst the many opportunities
which exist to extract better value from universities and colleges.
Please do not hesitate to get in touch with us at [email protected], if you have any comments or
questions.
Enjoy the read!
entrepreneurial couple, aspiring to establish the Crumb Cravings brand in the local food & beverage scene. In an
interview these entrepreneurs share with us the importance in continuously developing and improvising their
products and services to suit current market’s expectations, no matter how hostile the environment is. Some of
the aspects they discuss include focusing on market positioning, market segmentation and committing to
entrepreneurship.
Dato’ Azmi Mohd Ali
Partner, Prudenz Consulting
Kueh Joe Haur
Partner, Prudenz Consulting
www.prudenzconsulting.com
or Gain ?
Congestion
Charge: Pain
> Congestion charge:
It worked really well for London.
The rise of global car population has inevitably presented a major yet
familiar dilemma across the world, traffic congestion. Emission, vehicle
wear, fuel wastage, stress, and time, are some of traffic congestion’s
negative effects and they have cause major problems, even in financial
losses that results in billions of pounds lost per year for many major
cities today. “The Congestion Charge means we have a consistency of
traffic flow and a reliability that we know where the traffic’s going to be,
and that’s important. It means we can get there on time and that’s worth
£10 every day”, said an enthusiastic managing director of an office
supplies firm that is located within central London, the heart of the city’s
Congestion Charge operations. Congestion charge was seen as a
radical step years ago in London, but has won over doubters with its
effectiveness, and as evasive are many tax payers to new schemes, the
Congestion Charge scheme might find its way to work in Kuala Lumpur,
the beating heart of Malaysia’s urban landscape. The implementation of
congestion charge was a provision in the Public Land Transportation Act
2010 that was proposed three years ago but the scheme would not be
enforced until sufficient strength has been injected into the city’s
infrastructure and its public transportation system.
Congestion charge gaining traction – Singapore,
first in the world
Rigorous tinkering and analysis led strategists to formulate a scheme
with means to benefit economical ends, and hence, the Congestion
Charge was conceived. Under this scheme, surcharges are imposed
upon drivers during peak periods with the key purposes of reducing
congestion. The underlying principle is that road users should be forced
to pay for their road usage in proportion to the negative effects that this
usage creates. The value lies in predicating constant awareness among
road users of their usage impact, thus, reducing unnecessary driving.
Instead of increasing supply to build more roads, the scheme aimed at
regulating and redistributing demand, where equilibrium price is charged
rather than building more roads, which offers a short-term solution. Thus
far, there are five cities in the world that have implemented the
Congestion Pricing - Singapore, London, San Diego, Stockholm, and
Milan – where Singapore and London were two of the first to introduce
electronic urban congestion charging schemes, though London officials
decidedly adopted a different underlying technology despite the obvious
success seen in Singapore.
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Congestion charge was seen
as a radical step has won over
doubters with its effectivenes
Singapore, London, San Diego,
Stockholm and Milan are the five cities
to implement Congestion Pricing
Congestion charge <
www.prudenzconsulting.com
Singapore, London, San Diego,
Stockholm and Milan are the five cities
to implement Congestion Pricing
Pioneering adopters, Singapore introduced the Area
Licensing Scheme that charged drivers entering the Central
Business District that was labeled as the “Restricted Zone.”
The system soon changed to ERP (Electronic Road Pricing)
in 1998 using CashCard instead of the previous paper
license.
SINGAPORE
1975
Although not technically following a congestion charge model,
San Diego implemented Toll booths for the use of High-
occupancy vehicle lanes for low or single occupancy vehicles
in the Interstate 15 by allowing vehicles to avoid gridlock by
using an express lane that runs parallel to the original
highway.
SAN DIEGO
1996
Initially started in Durhanm in 2002 before being expanded
to London, the Congestion Charge uses the Automatic
Number Plate Recognition System (ANPR) where cameras
at entrances and exits around the zone will read the
vehicle’s number plate. The Transport for London (TF)
governs the ANPR system.
LONDON
2003
The Stockholm congestion tax are levied on vehicles
entering and exiting central Stockholm, Sweden. After a trial
run in 2006, the charge was implemented using the ANPR
system, where the number plates recorded will then be sent
a bill to the owners at the end of each month.
STOCKHOLM
2006
Initially started as an Ecopass system in 2008 to reduce
traffic pollution, the system was shelved to make way for
Area C, which is a congestion charge based on the same
designated traffic restricted zone as the Ecopass. The Area
C uses the ANPR technology, using video cameras to
monitor traffic in over 43 gates.
MILAN
2012
5 countries adopted congestion pricing
> Congestion charge:
Source: thisbigcity.net
www.prudenzconsulting.com
Timeline of spad’s activity
Electronic Road Pricing (“ERP”) replaced ALS
in 1998 and Singapore led the way in electronic
road toll collecting system for congestion
pricing
photo by National Geographic
Walking down memory lane:
Singapore vs. London
The most prominent player of Congestion Charging
Schemes would be Singapore, implementing the
scheme way back in 1975 with its introduction of
Area Licensing Scheme (ALS) which has come a
long way through leaps and bounds to establish
Singapore as the perennial powerhouse in
regulating traffic congestion.
The ALS started with drivers displaying daily or
monthly windshield licenses when they entered the
2.0 square miles central Restricted Zone (RZ)
during morning peak hours and the ALS had a
workforce of 150 staffs to staff the ticket booths for
all 34 gantries that surrounded the RZ. Heavy fines
were also imposed to discourage violators. The
impact was immediate as the flow of cars into RZ
fell suddenly by 73% and by early 1980s, 69% of
morning peak time travellers chose public transport
compared to 33% in 1976.
Despite large growths in RZ employment (up to
34% by 1983) and overall car population (up to
72% by 1988), the observed increase in traffic
entering the RZ was just at 24%. Meanwhile,
revenues continued to skyrocket as the ALS
produced about S$6.2 million profit every year.
After travelling extensively through the learning
curve, in September 1998, Singapore upgraded the
ALS into Electronic Road Pricing (ERP) system,
which is completely automatic and allows vehicles
passing the control gantries at normal speeds.
London’s long awaited Congestion Charging was
introduced into central London in February 2003.
By February 2007, the original central London
congestion charging zone that covers about 8.0
square miles was extended westwards in almost
double the size, creating a single enlarged
congestion charging zone.
S$6.2million profit every year produced by ALS continued to
skyrocket as the ALS produced about S$6.2
million profit every year
Source: National University of Singapore
The charging zone is enforced by over 1100 cameras,
including 275 fixed detection points around the
perimeter and 10 van-mounted mobile units. Within
the first year, the number of vehicles entering the
charging zone had fallen by 18% as traffic delays also
fell to 25%. In particular, the usage of bus service had
increased by 40%. By 2008, traffic entering the
extension zone during charging hours was down by
14% while traffic circulating inside the extension zone
reduced by 10%. The initial setup cost was about
£161.7 million while yearly revenue rakes in at £250
million per year, but due to high operating costs, the
annual net income is only at about £89 million.
Congestion charge <
Source: NUS, MIT
Source
Capital Cost: S$ 197M
Annual Operating Cost: S$ 16M
Annual Revenue: S$ 80M
Operations
$6.2
30
Maintenance
35
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Capital Cost: £ 161.7M
Annual Operating Cost: £ 161M
Annual Revenue: £250M
ERP system
Dedicated short-range
communications (DSRC)
Technology
Payment made though CashCard
inserted in the Invehicle Unit (IU)
Automatic Number Plate
Recognition (ANPR) System
Administered by Transport for
London (TFL)
Payment made via Internet or
kiosks as per monthly account
80 gantries
ERP
Operations
30
Maintenance
35
1,100 cameras Equal headcounts in Singapore and London
within the charging zones
Check figures
Source: Harry Commin, Imperial College London
Source: SIEMENS, UK
> Congestion charge:
www.prudenzconsulting.com
Traffic in Kuala Lumpur
“What can be done about it?” The wavering undertones of monologues within the
administrative government to decisively implement
the Congestion Charge in KL has been prolonged
too long that the waiting process has been tiresome
and dispiriting, however one thing is for sure, the
eternal duress of road users in Kuala Lumpur must
be answered.
Despite its population of 1.627 million people, the
population growth in the city of Kuala Lumpur
continues to grow to about 2% per year until 2015,
while some other outer areas are expected to grow
8% per year. Kuala Lumpur is 100% urbanized,
where 24% of jobs are located in the central
business district while 53% of jobs are located in
the inner areas of the city.
That’s not all, as of March 2013, the overall vehicle
population in KL increased by 42% with number of
cars alone amounted to a staggering 3 million, 80%
of which used within the urban areas, leaving only
20% of other vehicle users resorting to public
transportation. This leads to the improbable
conclusion that Congestion Charge is the least
feasible solution in KL given the KL-ites tendency to
disregard public transportation. 85991
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Kelantan
Kedah
Melaka
Negeri Sembilan
Pahang
Sabah
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Perak
Penang
Selangor
Johor
WPKL
VEHICLE POPULATION IN MALAYSIA AS
OF 31ST DECEMBER, 2012
Rail Line General Rail
Category
- Route
Length
No. of
Stations
Peak Hour
Headway
Current Daily
Ridership
KTMB Komuter Suburban Rail 157 km 50 15 mins 95,000
Kelana Jaya (Putra)
LRT1 Urban Rail/Metro 29 km 24 3 mins 160,000
Ampang (Star) LRT2 Urban Rail/Metro 27 km 25 3-6 mins 141,000
Monorail Urban Rail/Metro 8.6 km 11 5 mins 57, 500
KLIA Suburban Rail/
Airport Express 57 km 5 15 mins 11, 000
Total 278.6 km 115 464, 500
Source: Department of Statistics, Malaysia
Source: SPAD - Daily Ridership on Rail Services as of 2011 shows current daily ridership of 464, 500 people travelling over 115 stations and over 278.6 km of route.
Congestion charge <
Future projection - Weighted Highway & PT Times to Central
KL
Present situation - Weighted Highway & PT Times to Central
KL
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But for one to say that public transportation is the
sole cause of KL’s congestion should reassess their
premature judgements, as little research should
shed light that we have many companies in the
industry offering variety of transport modes from
buses, rails, and taxis.
The rail system alone has the Star and Putra LRT
rails, KTM Commuter, KL Monorail, and KLIA
Express. Indeed, the real problem lies in the
planning of public transportation, with the
overcrowding, tardiness, and even overcharging of
taxi fares has left many frustrated and
contemplating that only through the purchase of a
vehicle could solve their commuting woes.
The principal concept of Congestion Charge is to
limit supply and to regulate demand, hence,
building more roads or buying more cars would not
solve the traffic woes in KL, but, reinforcing her
public transportation system, which ably
complements the Congestion Charge principle is
the first way to go. As an added ingredient to mix,
the My Rapid Transit (MRT), a proposed 3-line
mass rapid transit system in the Greater KL (part of
Klang Valley Region), is being built to integrate the
existing rail networks that could alleviate the severe
traffic congestion in the Greater KL metropolitan
area.
The first line is expected to be completed in 2016,
where the MRT is expected to travel from Sungai
Buloh (terminus) to Kajang (terminus) passing
through Kelana Jaya, Ampang, and Bukit Bintang
Lines. The completion of the MRT’s first line is the
first step in reassessing the implementation of
Congestion Charge in KL, especially with the
greater access to public transportation that could
immediately relieve the traffic congestion in areas
around and within KL.
2007 Former KL mayor Datuk Abdul Hakim Borhan
(2006 – 2008) was the first to express the
benefit of congestion charge in KL
Source: Halcrow Transport Analysis Toolkit; Analysis on benefits of MRT
current
Forecast
PRIVATE TIMES TO CENTRAL KL
Rise in usage with the combined network of MRT,
LRT, KTM and Bus Rapid Transit (BRT) is
expected to help push public transport usage
17% 50%
> Congestion charge:
www.prudenzconsulting.com
Congestion Charge as an enabler to greater
public transport usage
As of now, there are many barriers to implement
the Congestion Charge scheme in Kuala Lumpur.
Administrative and costs barriers, societal
acceptance, and particularly the insufficiency of the
city’s infrastructure and public transportation
system are just a few of the stumbling blocks that
would deter the implementation of the Congestion
Charge in Kuala Lumpur.
But the MRT project offers a beacon of hope
among those travellers who are time and again
caught in the ludicrous traffic conditions in KL,
where upon its completion; the MRT can
complement the Congestion Charging scheme,
hence, providing more flexibility and access to the
heart of KL for travellers without much stress of the
traffic conditions.
Forecasted daily ridership upon completion of MRT
by 2020 is seen to increase ridership in rail services
through reduced waiting time, improved reliability,
and faster journey through establishing extended
routes and number of stations. The additional
capacity provided will be equivalent to 48,000 cars
(or 12 lanes of traffic flow) during the peak hour by
2020 due to MRT1, MRT2, and MRT3 services.
Malaysia also has the technology and the support
system in place to administer, operate, and support
the Congestion Charge scheme, as the current
administrative government is continuing to assess
the feasibility of implementing the Congestion
Charge scheme as means to establish KL city as
the marquee attraction centre of Malaysia, which
would be free of congestion, pollution, and
commuting woes.
Source: SPAD
2,397,500
464,500
Daily ridership
Forecast Daily Ridership Upon
Completion of MRT (2020)
Congestion charge <
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RISING TO THE CHALLENGE:
Mapping the Path to Success
[ Feature ]
SME & Entrepreneurship Magazine is Southeast Asia's best selling business magazine.
Dedicated to business owners and entrepreneurs, SME Magazine, features current news
and in-depth analysis, and practical articles and features in everyday language.
Rising to the Challenge: Mapping the Path to Success <
www.prudenzconsulting.com
Entrepreneurship and SME are recognised as
drivers for achieving economic growth and
expansion; hence the creation of job opportunities.
The fundamental need of a strategy - to evaluate,
re-evaluate, and implement strategies - remains the
key driver in any market where the different types
of services and products are almost impossible to
distinguish respectively.
Defining your firm’s competitiveness in the given
industry, and most importantly winning the good
fight by setting a clear direction and implementing
high impact changes have proven to be imperative
for all successful entrepreneurs.
The Food and Beverage industry has witnessed a
significant influx of independent brands over the
years. Crumb Cravings, a husband and wife styled
homemade bakers, is one such company. Founded
by Izreen Ismail in 2007 after taking over her
mother’s clientele, she took her passion for cooking
and baking as a trade, supported ably by her
husband, Syadid Zaharan, who manages the
operational aspects of the business.
The dynamic duo shared with Prudenz Consulting
their most important strategies, as entrepreneurs,
which they developed and are developing in order
to sustain and succeed in their line of business.
Marking your presence
“We bring the café experience to our consumers’
homes”, explains Izreen. “At home, you can be
comfortable, be whoever you want to be, and enjoy
the meals that your standard lifestyle cafes can
provide.” The home bakery industry focuses more
on delicacies, but Crumb Cravings provides the
whole range of a lifestyle café’s du jour, along with
requests for customisation. “By customising our
foods to customers’ wants, we get to know our
customers and their passions, and by catering
exclusively to their demands, we make them feel
like a rock star”, added Izreen. By making
customers feel special, there is value given to
customers, which in return would increase their re-
patronage intentions.
Facts on SME
Entrepreneurship
Crumb cravings
…SMEs account for 90% of all
businesses
In the Asia Pacific Economic
Cooperation (APEC) region…
3 Types of SMEs
Micro Enterprise
Small Enterprise
Medium Enterprise
Source: SMEcorp annual report 2011/2012
> Rising to the Challenge: Mapping the Path to Success
www.prudenzconsulting.com
Mixing quality and experience
It is highly important that your
products have a rich cultured
background where customers
can relate to, as opposed to the
generic brands out there, so as
to allow entrepreneurs to
leverage the products’ qualities
to enhance the company’s
credibility and image. “There is
a bemusing need to localise
western food here, that to a
point it no longer becomes what
it is, but some sort of a fusion
blend that ends up tasting
weird. The lasagne that we
provide is rich in its sauce, with
mixed veggies, and most
importantly is pure authentic
Italian recipe. By staying true to
the origins, we provide what
many home bakers don’t,
authentic western taste for the
eastern taste buds”, says
Izreen. “When it comes to
cooking, there is only so much
you can do with the recipes, but
it all comes down to the
techniques that you have and
use.”
Engaging your customers
Globalisation has resulted in an
explosion of choices for all
products in the market today.
This has given rise to the
“grasshopper effect” where
customers are hopping from
one product to another at an
astoundingly high frequency.
Active interactions with your
customers help to build
connection with them and by
making those transparent
adjustments it would help to
make your customers feel
connected, hence, increasing
the perceived value of
customers towards your brand.
“My customers are my greatest
critics”, grinned Izreen before
adding that, “An open
communication with the
customers is important in
gauging how well you are doing.
I call them before proceeding
with their orders to study their
needs and always after
purchases, I inquire their
feedbacks. Most are good,
some are not, but that’s where
we learn about our strengths
and weaknesses, and strive to
make Crumb Cravings better
than it was yesterday.”
Managing costs
“Of course there are always
issues with your suppliers, but
they sell the raw materials that I
need, so if I have to, I prefer not
to be too fussy. Instead we
focus on manpower, utilities,
logistics, and other human costs
that we can save, because
these are costs that are within
our control”, observed Izreen.
There is no one-size-fits all
approach to managing costs,
most entrepreneurs do what
they must to reduce costs, but
in smaller businesses,
entrepreneurs must be brave
enough to sacrifice what is
considered redundant to
smoothen the inventory process
and in turn, improve profits.
Tapping into your customers’
emotion
“Building emotional ties with
customers help to reinforce a
strong brand identification that
in turn strengthens customers’
loyalty towards your brand.
Hence, new competitors would
find it hard to persuade
customers to switch because of
customer’s resistance and
preference to the brand that
they are emotionally connected
to.
Rising to the Challenge: Mapping the Path to Success <
www.prudenzconsulting.com
The entrepreneurial
dream
Juggling her duties as a mum and an
entrepreneur, Izreen handpicks her ingredients
whilst spending quality time with her son.
“ There is a bemusing need to localise
western food here, that to a point it no
longer becomes what it is, but some sort of
a fusion blend that ends up tasting weird
– Izreen Ismail
> Rising to the Challenge: Mapping the Path to Success
www.prudenzconsulting.com
“It’s not only the food, but it’s also the experience”,
quipped Izreen. “We put our heart and souls into
the food that we prepare, whether it’s for a function
or a party. This one time we had a customer who
fondly remembered her daughter’s birthday party
because of the food we served, and it’s great to
know that we were part of that memory. Customers
who would respond favourably would then
introduce their friends and families to us, and the
relationship grows inkto a more affectionate one,
because now you actually care for your customers
like they are part of your own family. It makes us
feel like we are doing something right”, she added.