Bringing Selangor’s Waste Management Services to New Heights

Tuan Haji Ramli Mohd Tahir, Managing Director, KDEB Waste Management

Managing waste and maintaining cleanliness of public spaces, including landmarks and tourist attractions, are often overlooked and taken for granted. Those who are involved in such services are unsung heroes and deserve respect because they enhance society’s quality of life. As a tribute to such professionals, Gaya Travel Magazine catches up with the Managing Director of KDEB Waste Management, Tuan Haji Ramli Mohd Tahir, to understand more about waste management in Selangor and how his company keeps the state clean.

Approachable, charismatic, far-sighted, and financially astute, Tuan Haji Ramli Mohd Tahir joined the Selangor state government-linked investment company Kumpulan Darul Ehsan Berhad (KDEB) back in 2006 as Corporate Planning Manager. He has been the chief of KDEB Waste Management Sdn Bhd (KDEBWM) since 2014.

Under Tuan Haji Ramli’s leadership, KDEBWM makes its mark as the top-of-mind company when it comes to managing waste in Selangor. It is even voted by Frost & Sullivan as the best smart waste management company in Malaysia for three consecutive years: 2018, 2019 and 2020.

Managing waste for Selangor

KDEB first involved in the waste management business since 2008 when it held 21% stake in Alam Flora Sdn Bhd, the concessionaire for waste collecting and public cleansing. “When we put out a proposal to acquire the stake in 2008, we had the long-term vision of involving directly in the collection and cleansing business for the whole of Selangor,” reveals Tuan Haji Ramli. KDEB was the second largest shareholder in Alam Flora until 2013 when it sold its stake to the conglomerate DRB-HICOM and decided to do waste collection and public cleansing on its own.

After Alam Flora Sdn Bhd exited the business is Selangor, the state government gave the mandate to all 12 local councils within the state to manage their own waste according to their own capacity and style. “When you have 12 different budgets, procedures and key performance indicators (KPIs), the service standards vary from one local council to another. Shah Alam or Petaling Jaya for instance can collect large amount of funds through quit rent assessment, taxes, compounds and advertising, while smaller local councils like Sabak Bernam, Hulu Selangor, Kuala Langat and Kuala Selangor collect far less, thus have limited funds for waste management,” he recalls. There was obvious difference between councils that have larger financial capacity and those with limited financial capacity because they need to pay the contractors who render the services. The difference in the level of income between one local council to another created discrepancies in service standards.

Due to the glaring financial gap among the councils, Selangor state government realised it would be better for the services to be standardised as recommended by KDEB, which proposed to take over waste management for the entire state back in 2016 by pooling money into one big fund for investment and cross subsidisation. KDEB guaranteed to offer the same service level to all parts of Selangor irrespective of their locations, whether Hulu Selangor in the north east, Sabak Bernam and Kuala Selangor in north west, Kajang and Ampang Jaya in south east, Sepang and Kuala Langat in south west, Gombak and Hulu Langat in the east, or Petaling Jaya, Shah Alam, Subang Jaya, and Klang in the centre. Subsequently, KDEBWM was formed to run the state’s waste collection and public cleansing business.

Selangor, being the most developed state in Malaysia and contributing 23% to the national GDP, has 6.3 million population, including one million foreign workers employed in the ports, airports, industrial and commercial areas within its borders. Selangor’s population and development level commensurate with the amount of waste it generates, which is approximately 7,000 tonnes of domestic waste and 3,000 tonnes of bulky and cleansing waste per day. Considering Malaysia produces 36,000 tonnes of waste per day, 28% of waste is contributed by Selangor alone.

There are two types of costs involved when managing waste in Selangor: collection and public cleansing, which is KDEBWM’s business; and disposal. KDEBWM collects domestic waste (for example kitchen waste from shops and houses), and conducts public cleansing like cutting grass, road-sweeping, cleaning drains, and collecting bulky waste (old furniture, for example). On the other hand, disposal – which is not done by KDEBWM – is managed by Selangor State Development Corporation’s Worldwide Holding Berhad through its landfills in Jeram and Tanjung Dua Belas, including Berjaya Landfills in Bukit Tagar, Hulu Selangor.

Selangor state government’s budget for 2020 is MYR2.3 billion. Almost 25% to 30% of that amount (around MYR460 million) is allocated for waste collection and public cleansing, which is KDEBWM’s income. By adding another MYR100 million for disposal service, the cost becomes substantial.

Tuan Haji Ramli considers waste management business as recession proof because it is in demand every day throughout the year. KDEBWM’s trucks are deployed even during weekends to pick garbage from commercial areas, thereby increasing the tonnage of collected waste as recorded by the landfills in Jeram and Tanjung Dua Belas. “Whether we talk about domestic, private, commercial, or industrial, all of them produce waste 365 days in a year that needs to be cleared. If you manage to clean up the street, residential areas, villages, and downtown, nobody complains when trash is collected, grass is cut, and drains are cleaned according to schedule,” he observes.

Waste management is gazetted as part of essential services alongside water management and road maintenance, hence treated as a state government’s imperative. “If the state government fails to manage its waste, this could lead to public outcry, causing citizens to vote the government out. Just imagine if 7,000 tonnes of domestic waste are not collected throughout the state in one, two or three days – it spells disaster! If collections were to be missed, waste will rot and cause pollution like putrefaction and leachate,” stresses Tuan Haji Ramli.

Getting to the root of the problem

Waste management business requires new trucks because old ones were high in maintenance and repair costs. “We invested in 500 brand new compactors, also known as garbage trucks, to collect domestic waste like kitchen or food waste, and another 500 brand new open tipper or roll-on/roll-off (RoRo) to collect public cleansing waste like cut grass, garden waste, and bulky waste. It is mandatory for our operators to use these new trucks,” he elaborates. KDEBWM now has the largest fleet of trucks in Malaysia to deal with Selangor’s waste.

Another reason why none of the past concessionaires invested in new assets was because the concession lasted only one to two years, so he proposed for the state government to give KDEBWM a seven-year concession. “You can’t take a loan if you were given a concession or contract for a short period,” he asserts. In return, the company would borrow from the bank, buy new machines as assets, create new standard operating procedures (SOPs), form new KPIs, and implement what was proposed. The state agreed to the proposal due to the significant outlay required.

“I am thankful to the state government for lending us MYR48 million as a start to do the investment, but the money was not enough, so we borrowed MYR110 million from Bank Islam Malaysia Berhad, RHB MYR55 million and Malayan Banking Berhad MYR50 million, bringing the amount to more than MYR260 million. It was money well spent,” beams Tuan Haji Ramli.

Once green light was obtained, KDEBWM straightaway took the loan, did the investment, opened offices in each zone, identified the right number of staff to supervise the work, selected the best subcontractors as operators for each zone, and persuaded local councils to pass all waste management responsibilities to KDEBWM. By doing so, local councils could instead focus their energy on enforcement and cracking down illegal dumping. Ever since KDEBWM takes over the services for the whole state, the number of illegal dumping has reduced because the trucks are tracked from the command centre using closed-circuit cameras and tracking device. “Public should alert the authorities whenever they see illegal dumping taking place,” he advises.

Win-win business model

Selangor needs a vibrant economy that offers ample employment and entrepreneurship opportunities for its residents. To support this objective, after being appointed as the main contractor, KDEBWM chose the best 1,000 small and medium enterprises (SMEs) as subcontractors via open tender to collect waste and do public cleansing as stated in the contract. Each subcontractor received a brand-new compactor or roll-on/roll-off (RoRo), which belongs to the subcontractor after five years. KDEBWM’s monthly income of around MYR37 million is shared among these 1,000 subcontractors, whereby each of them employs an average of 30 staff, creating employment within the state.

Tuan Haji Ramli explains that if KDEBWM were to monopolyse the public cleansing and waste collection business by operating on its own without appointing subcontractors and instead bring in foreign manual labourers to do the work, the company would still thrive at the same cost, but the state would be worse off because it could not gain from the multiplier effect brought about by the creation of 1,000 local entrepreneurs and enterprises. Moreover, employing foreign labourers causes money to flow out from the state and country through remittances.

Operating prudently

According to Tuan Haji Ramli, KDEBWM’s KPI is not the topline (sales) or bottomline (profits) since the state government owns 100% of the company. “To us, our main KPI is to keep Selangor clean. We try our best to comply with the KPIs set by the local councils at the lowest cost possible, for instance collecting trash three times a week at residential areas and every day at commercial areas, cutting grass twice a month, and cleaning the commercial and protocol roads daily. Though different local councils in Selangor impose different tax rates on its residents, they will still get the same standard of service,” he pledges.

KDEBWM charges the average rate of MYR7 per household to collect waste 12 times per month in Selangor. “If you subscribe to Act 672 (Solid Waste and Public Cleansing Management Act 2007) signed between the federal government, the state government and the concessionaire, the set cost per household is higher than KDEBWM’s rate,” claims Tuan Haji Ramli.

By charging low rate, KDEBWM learns to manage its business carefully by keeping its overheads low through effective cost saving measures and not spending lavishly on offices and remuneration packages. With only 300 staff throughout Selangor, Tuan Haji Ramli runs a tight ship. Meanwhile, Selangor state government does not need to spend more than what is necessary and instead use larger portion of the budget on other critical areas like building and maintaining infrastructure, including extending help to the needy.

“It would not be appropriate for KDEBWM as a wholly state-owned company to charge local councils at premium rates because we all belong to Selangor. Of course, if we were allowed to minimally raise the rate, we would invest in more new assets such as water jetters and roadsweepers to boost operational capability,” continues Tuan Haji Ramli.

“We charge the same rate to the local councils as what was charged eight years ago. So just imagine what else KDEBWM could provide to the state if we were to charge higher rates. However, the company has no plan to do that since times are hard,” he assures.

If KDEBWM were allowed to hike up the rate, Tuan Haji Ramli is confident that the company can diversify its waste management business to encompass the construction of material recovery facility at each local council where recycling projects can be done, including initiatives like designing vehicles to specifically collect cooking oil, and building wasteto-energy plant that produces and sells electricity. “There is money to be made by converting waste into energy. It is more about investing back to the company and manning it correctly using latest technology and smart ways,” he foresees.

Striving for efficiency

KDEBWM’s main achievement lies in its ability to prove to the state government that it can run productively by focussing on service level, tonnage collected, and reduction of complaints. “We have achieved 50% cost savings, increased landfill tonnage, and decreased complaints. To us, it is important that the residents of Selangor are pleased to have their streets and surrounding environments become conducive for living,” states Tuan Haji Ramli.

“Ever since KDEBWM takes over the waste collection and cleansing job from the local councils, the tonnage at the landfill increased tremendously, meaning the company has been collecting more waste. Before we took over, the level was around 80%; under KDEBWM, the rate has increased to between 90% and 95% – the numbers speak for themselves,” he adds.

Eight years ago, when waste management was done by another concessionaire and local councils, the cost for waste collection and public cleansing in Selangor – without new investments in assets – was MYR420 million per year to serve 5.5 million population.

Today, KDEBWM covers more residences in Selangor due to larger inventory, especially after the existence of new townships that boost population number like Setia Alam, Alam Impian and Denai Alam. The current cost hovers around MYR440 to MYR450 million per year, not far from the value eight years ago; however, with that amount, KDEBWM also managed to invest in 1,000 units of new trucks worth over MYR260 million, proving that KDEBWM is remarkably efficient.

KDEBWM puts in place a satellite command centre to monitor and control its trucks so that they stick to the planned routes. In the past, there were instances when garbage trucks veer off course to engage in unacceptable activities such as illegal dumping because some businesses wanted to avoid paying for landfill services. The trucks are equipped with live closed-circuit camera for 24-hour monitoring. When KDEBWM receives complaint from the public, the command centre picks it up, identify the complainant’s location, and solve the problem.

In light of the COVID-19 pandemic, workers involved in collecting waste and cleansing wear personal protection equipment provided by the company to mitigate risk of infection, besides having their body temperatures checked daily before starting work. KDEBWM encourages them to constantly apply hand sanitiser and maintain higher level of hygiene. Each worker needs to be responsible in taking care of their health and not infect other people.

Changing the public’s mindset

In Malaysia, littering remains a problem. Though the state government manages waste efficiently, public must be held responsible for their own waste. For this to happen, education should begin at home: Malaysian children must be taught that the waste they produce is their own responsibility. They should not look at waste as something disgusting, especially after it is thrown into the bin, because that waste originates from their own selves.

“Malaysians want cleanliness only within their own territory. When we create waste, we want to dump it elsewhere, so we throw it in other people’s or public spaces. By right, if it is your waste, you should be responsible for it – why should you dispose it in other people’s territory?” chides Tuan Haji Ramli.

Malaysians have this attitude that other people should take care of their waste, hence they leave it at public areas. This also applies to the drains in commercial and residential neighbourhoods, which are often clogged with waste, causing drain water to overflow. Some businesses even try to cut cost and evade paying landfill services by dumping their residue illegally, discharging waste into drains and rivers. Waste needs to be disposed at specific places to prevent pollution.

Malaysians generally do not recycle too. “I am a strong believer in recycling, and unfortunately the recycling rate in Malaysia is too low. You shouldn’t simply dispose or send the waste directly to the landfill. Instead, you can extract items like batteries, rubber, and aluminium for processing. You could even recycle plastic, papers, high density polyethylene, and steel to recoup money. Citizens should segregate their waste at the source and do their part. We need to educate the public to recycle, reduce waste and reuse more,” urges Tuan Haji Ramli.

In fact, KDEBWM has built a small material recovery plant on Jalan Korporat in Meru, Klang to process items up to 20 tonnes per day. Before the trucks dump their collection at the landfill, these trucks drop off recycled items at the plant so that the landfill does not fill up quickly. If a similar plant can be set up at each local council to process items up to 50 tonnes per day, Selangor can save more land from becoming landfills. Otherwise, Selangor is compelled to allocate 100 to 150 acres of land every five to six years just for that purpose.

Looking ahead

In the future, KDEBWM intends to expand into disposal. “Hopefully, we can propose to the state government that there are alternative ways in dealing with the waste collected. There are more activities that can be done to increase the value of this business, reduce cost, establish new income streams, and implement new methodologies rather than resorting to landfills. We want the state government to give us the chance.

“We also want to clean Selangor better than what we are doing now, and continue working with the state government, especially since KDEBWM does not get a single sen from the federal government,” declares Tuan Haji Ramli. Based on KDEBWM’s outstanding track record, Gaya Travel Magazine has no reason to doubt the company’s ability to succeed in many years to come.