The Prime Minister must be transparent and accountable in justifying why the government paid compensation of RM 4,864 million or RM 739 million more than the construction cost of RM 4,125 million for the 5 Klang Valley highways.

Speech at Rakyat Bantah Kenaikan Tol Forum

by Lim Guan Eng

(Kuala Lumpur, Wednesday): Prime Minister Datuk Seri Abdullah Ahmad Badawi must be transparent and accountable in justifying why the government paid compensation of RM 4,864 million or RM 739 million more than the construction cost of RM 4,125 million for the 5 Klang Valley highways. The RM 4,864 million paid does not include the toll collected directly from the public by the highway companies, which would be extra profits earned by them.

There is no economic rationale or financial sense for the government to refuse to buy over the highways when buying it over is cheaper and more cost-effective. Why let the 5 highway companies make RM 739 million mid-way through their concession period ending between 2024-2035? By allowing the 5 Klang Valley highway companies to impose a 20-60% toll rate hike on 1 January 2006 despite already getting back their investment cost, the government is “abetting” these companies to reap huge profits at public’s expense.

There is mounting public anger over the toll hikes seen as “highway robbery in broad daylight that sells out” the rights of motorists, consumers and ordinary Malaysians to big corporations, especially when the total construction cost of RM 4,125 million 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.

So widespread is the public anger that Deputy Prime Minister Datuk Seri Njaib Tun Razak has personally intervened together with Works Minister Datuk S. Samy Vellu to take “preventive publicity measures’ by directing all mainstream media to impose a media blackout of negative public reaction towards the toll hikes. Has Najib imposed a media blackout on the irresponsible toll hikes in the 5 Klang Valley highways merely to avoid explaining why they have paid compensation of RM 4,864 million when the construction cost is only RM 4,125 million?

DAP condemns the media blackout imposed by the government over the 20%-60% toll rates hike as an abuse of authoritarian powers to stifle and silent the voices of ordinary Malaysians but also seriously undermining press freedom that would only pose a grave threat to democracy in Malaysia. No Toll Collected When Government Compensation Exceeds Construction Cost. Samy had revealed that the government had to incur a cost of RM2,589 million in compensation to the five concessionaires to prevent toll hikes from rising much higher than the present 20-60% proposed to take effect from Jan 1, 2007. 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.

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? Paying RM 4,125 million will be RM 739 million less than the RM 4,864 million of compensation paid until the next review in toll rates between 2010 and 2012?

DAP regrets that the government has refused to consider DAP’s triple win solution for the nightmare of frequent toll hikes in the Klang Valley by buying over the 5 highways concessionaires. Such a move will not only save the government billions of ringgit in compensation, avoid losses to the toll operators but reduce the burden of consumers from facing unreasonable toll hikes. However clearly such a triple-win solution would deny huge profits to the highway concessionaires.

The government’s intent to allow highway companies to reap huge profits at public expense is the reason behind its refusal to adopt the economically rational step of buying over all highway projects. Samy said three months ago that the government had paid RM38.5 billion in compensation to all highway companies of which RM1.76 billion was in cash while the remainder was in tax exemptions.

There are 20 highway concession companies in the country built at a cost of less than the amount compensated. The first toll collection began at the Shapadu highway in Klang in 1984 followed by the North-South Expressway in 1988. The cost of constructing these highways would not exceed RM 38.5 billion and yet the government continues to compensate the toll operators and allow them to collect toll from the public.

Ordinary Malaysians, especially workers, will be the biggest loser from such piratisation of privatized projects. There is no point claiming that our toll rates are cheaper than Japan when wages in Japan are three times higher or even as compared to Thailand when cars are half the price and road tax cheaper. Nowhere in the world except Malaysia allows a private company to enjoy any profits earned but the losses are borne by the public.

DAP urges all Malaysians to fully support the effort by the anti-toll coalition. DAP proposes that no toll be collected when government compensation has exceeded the construction cost as it is morally unethical and politically irresponsible for the BN government to guarantee huge profits of private companies by bearing the burden of any losses incurred.