Press Statement

by Lim Guan Eng

(Petaling Jaya, Thursday): DAP considers it a grave injustice for Malaysians if Cabinet approves the increase the toll rate by 10% next year when PLUS has already recorded a profit of RM 3.7 billion by 2006 even though its concession period expires only in 2038. PLUS Chairman Tan Sri Mohd Sheriff Mohd Kassim announced that PLUS is seeking approval from the government of a 10% increase in toll rate in 2008, which it is entitled to under the toll concession agreement once every three years. 

The government should reject such a proposed increase and review the concession agreement based on national interest on whether PLUS or 26 million Malaysians have benefited more. Based on financial results, it is clear that PLUS has benefited more. 

1.    PLUS Expressway Bhd posted a net profit of RM1.1 billion for the year ended Dec 31, 2006 (FY06) up 4% from the RM1.06 billion a year ago on higher toll collections. The strong dividend growth of 39 per cent as against 9 per cent for 2005 far exceeded the target Key Performance Indicator (KPI) for a minimum dividend growth of 12 per cent for 2006. 

2.    PLUS spent only RM 6 billion to complete the North-South Highway as almost half of was built by the government at a cost of RM 3 billion. In other words PLUS got half of the highway for free. 

3.    PLUS enjoyed a 5-year tax exemption on profits which expired in December 2006 where it made not contribution at all to the nation’s funds and enjoyed its profits free of tax. 

4.    PLUS has already collected RM 15.9 billion since it operated the North-South Highway in 1988, recording a profit of RM 3.7 billion against the construction cost of RM 5.94 billion and RM 6.27 billion in maintenance cost. This does not include the billions of ringgit in compensation paid by the government to PLUS and far exceeding its total construction and maintenance cost of RM 12.21 billion (see below). 

5.    Loan guarantees given by the federal government allowing PLUS to enjoy low favourable interest rates. 

With such benefits and support from Malaysians allowing PLUS to enjoy billion ringgit profits yearly, PLUS should contribute back to the national interest by waiving the 10% toll increase. If PLUS refuses, then the government should reject the proposed increase bearing in mind that PLUS can expect to enjoy tens of billions of ringgit in future profits until the concession period ends in 2038. 

Despite such favourable treatment, Works Minister Datuk S.Samy Vellu announced that the government still  paid RM 38.5 billion in compensation to the toll highway companies. This RM 38.5 billion, which does not include the toll collected from the public, exceeds the construction cost of the highways. Naturally many poses the important question why the government can not build the highways on its own when it is cheaper to do so. 

The government must realize the negative impact of the 10% toll hike on inflation and price of goods. Already the price of flour of risen together with other materials. As transportation is a key component in pricing, this would further add to the financial burden of lower-income groups. 

There is no justification for the government to allow the 10% toll increase when PLUS has already made so much money. National interest requires the government to put the interests of 25 million Malaysians ahead of one single company. Further rejecting the toll hike is not much of a loss or sacrifice to PLUS, which has already benefited so much in terms of compensation, low interest rates, loan guarantees and even the government helping to build half the highway at no cost. 

What is 10% toll hike when PLUS has already made RM 3.7 billion in profits and is expected to make tens of billions of ringgit more? This will be test of resolve for Prime Minister Datuk Seri Abdullah Badawi whether he is concerned about the plight of tens of millions of ordinary Malaysians who will be the hardest hit by the toll hike or more concerned about padding the profits of a one big company.