Transport Ministry’s railway overseer faces potential RM24.5m loss from uncollected rent, A-G’s report says
KUALA LUMPUR, Oct 10 — The Auditor-General has reported a possible loss by the Ministry of Transport’s Railway Asset Corporation (RAC) amounting up to RM24.45 million due to uncollected property rent.
Its 2021 report on federal government agencies released today found that RM12.84 million worth of property rental income was not collected: with RM12.67 million not collected following rental offer letters, and the remaining RM170,474 not collected according to rental agreements.
“RAC also didn’t finalise the STS that had been received with the rental agreement, resulting in enforcement actions not being implemented,” said the report, using the Malay initials of returned rental offer letters.
“As a result, there is a risk of losing rental income totalling RM12.67 million that was not collected from 54 tenants.”
The RAC is a federal statutory body under the Ministry of Transport to develop the railway industry in Malaysia through the Railways Act 1991.
It was formed in 1992, at the same time when the Malayan Railway Administration (KTM) was corporatised to become Keretapi Tanah Melayu Berhad (KTMB).
Similarly, the report today also pointed to RM11.61 million of asset rental income that could not be claimed by a subsidiary of KTMB.
Hence, to overcome the issue, the audit officials further suggested RAC enforce the terms in the rental agreement against 12 tenants in arrears, mainly for 10 sole proprietorships carrying out commercial business.
“Ensure that 54 and other tenants who have returned the Rental Offer Letter are followed up with a rental agreement to ensure that the interests of RAC are preserved; and
“Ensure that the rental issue between RAC and company 174274-D and KTMB can be negotiated and resolved immediately in accordance with the provisions of Act 463,” the report said.
Act 463 was liaised under the Railway Act 1991 which stipulates that all railway assets and land formerly under the governance of KTM and the Federal Land Commissioner are vested in RAC, while the operation of railway services is managed by KTMB.
Despite witnessing the loss, RAC managed to collect the rental income of the railway property amounting to RM69.80 million in the years 2021 and 2022.
