A-G Report blames KTM’s distribution arm’s shortcomings on inexperienced board members

The report said the lack of expertise was shown in the areas of marketing strategies, shipping methods and revenue collection policies. ― Picture by Yusof Mat Isa
The report said the lack of expertise was shown in the areas of marketing strategies, shipping methods and revenue collection policies. ― Picture by Yusof Mat Isa

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KUALA LUMPUR, Aug 6 — There are no members with experience in the courier industry on the board of Keretapi Tanah Melayu Berhad’s (KTM) distribution arm, the Auditor-General’s first series of reports for 2017 revealed today.

Its audit on KTM Distribution Sdn Bhd (KTMD), which is a subsidiary of KTM Berhad, found that board members without backgrounds in the courier industry to provide expertise to the company’s core activities have indirectly affected the implementation and effectiveness of the distribution.

The report said the lack of expertise was shown in the areas of marketing strategies, shipping methods and revenue collection policies, suggesting there was room for improvement to increase KTMD’s main revenue and reduce the company’s annual losses.

The report further stated that KTMD did not meet the Green Book requirements that state that the Board of Directors shall be appointed on their expertise and experience in the areas related to the company’s business, and they must be independent.

“However, the audit review found that the KTMD board of directors comprised four non-independent status members, two government representatives, a politician and chief executive officer of KTM Berhad. This composition is not in line with best practices,” the report read.

The report highlighted the fall in revenue from their door-to-door services, which is their main source of income, that saw a decline in 2017 compared to 2016.

It said the income earned from credit customers from 2014 to 2017 decreased even as the number of customers rose.

It further highlighted no research was conducted on the effectiveness of the marketing methods used and KTMD had inadequate debtor’s arrears.

The final audit rounded up on December 31, 2017 showed there were 4,486 debtors that cost a loss of RM4,319,783 million.

The main objective of the KTMD establishment was originally related to real estate (land acquisition and building construction) and subsequently, converted to courier services to meet the commercial and social requirements of the country’s courier industry.

Their main activities are to carry out courier services — delivery of packages and documents, door-to-door, and motorcycle delivery from station to station.

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