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A triple win solution if the government buys over the 5 Klang Valley highways by paying back the construction cost of RM 4,125 million.

 


Press Statement

by Lim Guan Eng


 

(Petaling Jaya, Friday): DAP condemns the 20%-60% toll rates hike as no different from “highway robbery in broad daylight that sells out” the rights of motorists, consumers and ordinary Malaysians to big corporations, especially when the construction cost does not appear to justify the toll rates to be paid as follows:-

  • RM 1.42 billion Lebuhraya Damansara-Puchong (LDP) with a concession period of 1996-2030, its toll rate rise from RM1 to RM1.60, an increase of 60 percent.

  • RM 1.3 billion Kesas Highway with a concession period of 1993-2024, the toll rate increased from RM1.50 to RM2.20, a 46.7-percent hike.

  • RM 336 million Cheras-Kajang Highway's with a concession period of 1995-2026, the toll rate increased by 30 cents - a hike of between 42.9 and 50 percent.

  • RM 568 million Kuala Lumpur-Karak Highway's Gombak with a concession period of 1994-2032, its toll rate increased between 20 and 25 percent; and

  • RM 501 million Guthrie Corridor Expressway with a concession period of 2000-2035, its toll rate went up from RM1 to RM1.40 - a 40-percent increase.

Would not it be more economical if the government just buys over the five highways by paying the concessionaires in full for the total construction cost of RM 4,125 million?

DAP suggests a triple win solution for the nightmare of frequent toll hikes in the Klang Valley if the government buys over the 5 highways concessionaires by paying back the construction cost of RM 4,125 million. Such a move will not only save the government billions in subsidies, avoid losses to the toll operators but reduce the burden of consumers from facing unreasonable toll hikes.

Works Minister Datuk Samy Vellu claimed that a higher toll hike would have been imposed from January 1, if the government had not paid RM2,589 million in compensation to concessionaires. Samy also said the government had already compensated a total of RM2,275 million to the operators of four of the five highways, not including Guthrie Corridor which is a new highway, comprised as follows:-

  • Compensation of RM 1,197 million for the Kuala Lumpur-Karak Highway;
  • Compensation of RM 479.7 million for the Lebuhraya Damansaray-Puchong Highway;
  • Compensation of RM 371.8 million for the Kesas Highway; and
  • Compensation of RM 226 million for the Cheras-Kajang Highway.

In other words the government would have paid a total of RM 4,864 million to hold down toll hikes before the next toll increment in 2011-2013 for the five highways.

As it is likely that the government will pay out more compensation in 5-6 years time in 2011-2013, it is more economically feasible to buy out the toll concessionaires instead of having to spend RM2,589 million and billions more when the next increment is due. The government even defends such compensation as necessary to save the highway operators from going bankrupt.

Economic and financial common sense dictates that the government just buys over the highways at cost, which would not only save the highway operators from going bankrupt, save the government billions more in subsidies and ensure a reasonable toll rate for all motorists as well as good service that is accountable. However, does BN leaders’ like Samy Vellu possess such economic and financial common sense?

The government can not avoid responsibility for the toll hikes since leaders like Samy and the Prime Minister’s Department agreed to such sweet compensation terms to toll operators. In a normal business environment, toll operators will have to bear the risks of losses. But the Malaysia Boleh spirit allows toll operators to pass on the risk of losses to the public with healthy compensation from the government and enjoy the profits themselves.

Why should the public bear their losses when they are unable to participate in sharing out the profits? One need not be a genius or Bill Gates to become rich from this type of risk-free, profits-guaranteed business. Clearly, the BN government has given more priority to profits of big businessmen than the interests of 27 million ordinary Malaysians.

New year gift for toll operators by approving toll hikes of 20% to 60% on 5 major highways in the Klang Valley but not allowing any pay rise is an act of highway robbery displaying both crony capitalism and socio-economic injustice at its worst

DAP describes the government’s New Year’s gift to toll operators approving toll rates increases of 20% to 60% on 5 major highways in the Klang Valley but not allowing any pay rise is an act of highway robbery by BN displaying both crony capitalism and socio-economic injustice by BN at its worst. Clearly the companies that continue to reap huge profits are allowed to enjoy huge toll rate increases whilst wage-earners, including civil servants, find it difficult to make ends meet.

Is there any rationale for such toll hikes when the highway companies are reaping huge profits and the directors of these companies awarded handsome remuneration? Crony capitalism exists when businessmen use their close relationships with leaders of the state to gain government contracts or favours instead of being determined by a free market, rule of law, merit and open competition. Clearly this is an early New Year gift for the toll operators and a New Year nightmare for consumers.

Crony capitalism creates great income inequalities to the extent that the rapid progress and economic successes are not shared equally but only enjoyed by a small group of political cronies who use their political connections to do well in business. The United Nations Human Development Report consistently list Malaysians as suffering the worst income inequality between the rich and poor in South-East Asia is ignored. The Ninth Malaysian Plan (9MP) shows the share of income of the bottom 40% of the population declined from 14.5% in 1990 to 13.5% in 2004 whilst the share of the top 20% of the population increased from 50% in 1990 to 51.2% in 2004.

Social injustices result when the country’s wealth is monopolized by the few and government policy dominated by the sole purpose to enrich these cronies. That is why toll companies can get toll rate increases as high as 60% when the government is saying no to to pay rises to civil servants or workers or refusing to hawkers and small businessmen increasing their prices following the increases in the price of fuel, electricity, water, quit rent and assessment.

Such “profits are mine, losses are yours” mentality towards privatization must stop. Once again the BN government has failed to keep its promise to look after the well-being, share their hardships and alleviate their financial burdens.

(15/12/2006)


* Lim Guan Eng,  Secretary-General of DAP

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