Press Statement

by Lim Guan Eng

(Petaling Jaya, Tuesday): Works Minister Datuk S. Samy Vellu must prove that he is telling the truth that it would cost the government RM 500 billion to buy over all highway companies when Plus Expressways Bhd's(PLUS) concession assets amount to only RM 8.8 billion in 2005. DAP can not understand how Samy arrived at this RM 500 billion to buy over all the highway companies when the construction cost of PLUS, the largest concessionaire which operates the North-South Highway, is only RM 8.8. billion.

The Star reported on 10 February 2007 that ,

"As at end 2005, Plus Expressways Bhd had RM8.8bil in concession assets. This mostly comprised expenditure (including interest charges) to build and upgrade the expressways and represented almost 99% of its non-current assets."

PLUS only spent RM 8.8 billion to complete the North-South Highway due to two reasons. One, a portion of it was already built and completed by the government and simply handed over to PLUS. Two, PLUS was completed in the 90s' when construction cost and materials was much cheaper and had not risen many times as now. Clearly PLUS has benefited greatly from such preferential contracts.

If PLUS has only capitalized its construction and upgrading costs at RM 8.8 billion, where did Samy arrive at his RM 500 billion? Or is Samy again playing David Copperfield in magically plucking figures out of thin air? Samy should therefore show concrete proof that it would cost the government RM 500 billion to buy all the highways.

Samy had attacked me personally yesterday for suggesting that the government buys over the highways. Such personal attacks is a desperate attempt by him to distract attention from my point that it is economically logical and makes financial sense to do so when the compensation paid by the government already exceeds the construction cost.

On September 22 last year in Parliament, Datuk Samy revealed that the government had RM38.5 billion in compensation to the 20 highway concession companies. The first toll collection began at the Shapadu highway in Klang in 1984 followed by the North-South Expressway in 1988.Of the total RM38.5 billion, the government paid RM1.76 billion in cash while the remainder was in tax exemption and extending the concession period.

Clearly the RM 38.5 billion in compensation to the 20 highway companies does not include the toll collected from motorists using the highways. Hiding behind the Official Secrets Act(OSA) can not cover up the fact that the RM 38.5 billion compensation paid by the government alone is enough to pay for the construction cost without including the tens of billions ringgit more collected from motorists.

Prime Minister Datuk Seri Abdullah Ahmad Badawi has disappointed Malaysians by failing to fulfill his promise to 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. Again the RM 4,864 million in compensation 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. Privatisation should result in efficiency gains as well as reduction of costs to government. However this has not happened in the privatization of our highways where the costs to the government continues to escalate until it exceeds the construction costs.

Worse these highway companies are guaranteed profits and protected against risks of losses. For profits only to be privatized but losses socialized is not privatization but piratisation as the government and people do not save costs but bear higher and higher costs that benefits only the few individual companies.