Malaysia’s ambitious drive to become an industrial powerhouse by 2020 is closely becoming a reality. Constant economic growth for the past five years with a remarkable growth rate of 7.1 percent in 2004 vis--vis 2003 have resulted in greater prosperity creating an abundance of opportunities in the services, manufacturing and educational sector. An increasing number of companies have stepped up their investments to tap in the growth of Malaysian market. The increased economic activities generated by local and foreign firms have boosted employment in Malaysia. Locals and migrant workers have flooded the labor market in major towns to capitalize on job opportunities created by the vibrant economy. As a result, Malaysia managed to contain its unemployment numbers below 5.0% since 1999 †the latest figure being an estimated 3.5 percent of total labor workforce in 2004. Strong job growth precipitates demand for high quality education. Companies opt for the best talents from a large educated workforce to become more competitive. The boom in education drives the building of new colleges in towns and cities. The number of students enrolled in the universities has increased more than double from 141,059 students in 1998 to 294,359 in 2004. Job prospects and educational opportunities have prompted large migration to major towns like Kuala Lumpur, Penang, Johor Bahru, Ipoh and Seremban causing population density in a particular area. A strong network of roads and public transportation is essential to mobilize these people to their points of interest. The most economical and the largest mode of public transport is the stage bus. However, the stage buses are also the most inefficient and unorganized form of public transportation in Malaysia. Despite the modern public transport system in Malaysia namely the trains, LRT (light rail transit) and monorails in Klang Valley, the stage bus is still in a precarious state. It is a fragmented industry where each state in Malaysia has a number of stage bus operators operating under the guidelines of the CVLB (Commercial Vehicle Licensing Board). Moreover, the stage bus industry is hampered by the lack of coordination among the many agencies that regulate the bus industry and the bus operators themselves. Most buses that serve the cities are inefficient while buses that ply smaller towns are usually in depleted conditions hampering efforts to woo more passengers. However, there is still going to be constant demand for bus services especially from people who cannot afford to purchase vehicles. The increasing population of the nation and the rise in migration due to job and educational prospects are factors that contribute to the small growth of the stage bus industry. In 2004, the stage bus industry in Peninsular Malaysia recorded an estimated RM 433 million in revenues with about 433 million passengers based on an RM 1 ticket fare. However, the average fare for the stage bus operation is about to increase from RM 1 to RM 1.20 beginning May 2005 as a result of a 20 percent hike in ticket fares. The fare was last revised in year 2000. This factor has accelerated the growth of revenues in the industry while the growth in the number of passengers remains modest over the course of the study. Despite various challenges in the stage bus industry, passenger and revenue growth are expected to post a CAGR (Compound Average Growth Rate) of 1.7 and 5.4 percent respectively from 2004 to 2009 as factors like increased migration and rising population in major cities bolster growth.
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