I had asked in Parliament yesterday as to whether the Ministry of Transport will be approving the proposal by Malaysia Airports Holdings Bhd (MAHB) to increase the passenger service charges (PSC) for KLIA2, especially in light of the 98.6% drop in after tax profits by MAHB in the latest financial quarter ending September 2014.
MAHB has attributed the losses largely to the higher depreciation charges for the RM4 billion KLIA2 as well as the increased interest expenses to fund the construction of the low-cost airport.
While the Minister, Dato’ Seri Liow Tiong Lai did not reply my question in Parliament, he later told reporters that there is no proposal received on airport tax hike. The Minister said the reports on such a proposal were “pure speculation”. This has been reported widely in all mainstream newspapers today.
Dato’ Seri Liow may be new to is job, having taken over the portfolio less than 5 months ago, but surely he should not be tardy in providing answers to reporters without perhaps first verifying the facts with his Ministry officials.
I has already been reported widely in the media since the beginning of the year that MAHB has submitted proposals for tax hikes to the Ministry of Transport and is just awaiting for the latter’s approval.
In a report by The Malaysian Reserve on 25 April, MAHB Chief Financial Officer, Faizal Mansor said “we have proposed an increase of RM3 to RM35 from the current RM32 for international passengers and RM6 to RM7 for domestic passengers at the LCCT.”
The above was the proposal was made early this year, and we understand that MAHB has even revised the tax hike proposal further for the KLIA2 charges to be equivalent to that of KLIA, that is currently RM9 and RM65 for domestic and international passengers respectively. This information was also confirmed by the MAHB management to the Public Accounts Committee in the presence of the Secretary-General of Transport Ministry, Dato’ Long See Wool on the 30 September 2014.
Hence we ask that Dato’ Seri Liow be more “on-the-ball” with his role as the Transport Minister and reply to me question in Parliament – whether the Ministry will consider and approve the fee hike proposals by MAHB to increase the PSC rates at KLIA2 for domestic and international passengers by 50% and more than 100% respectively.
I had issued a statement yesterday that MAHB had been forced to go on a borrowing-spree, RM3.1 billion in 2010 and RM2.5 billion in 2013 to fund the cost overruns in the construction of KLIA2 which hit RM4 billion from an initial budget of only RM1.7 billion. Without the proposed fee hike, MAHB will be hard-pressed to repay its debt obligations starting from 2023. Hence the Government will be under pressure to bail out the operators by approving the hikes.
What is more worrying is the statement by Faizal Mansor in the same report that “if the government does not approve the new charges … the additional charges from the actual ones will be “subsidized” by the Government”.
Hence we call upon Dato’ Seri Liow to answer as to whether the Transport Ministry will be forced to subsidize the airport operator even if it decides not to approve the airport tax hikes by MAHB. If so, it would mean that regardless of the decision by the Ministry, the rakyat is already forced to bail out the mismanagement and incompetence of MAHB in the RM4 billion KLIA2 scandal, regardless of having to pay for higher tax rates directly or indirectly via government “subsidy” to the operator.