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The RM383 Billion Cash Cows – The Hidden Reasons Government Refuses To Abolish Toll Collections



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Feb 26 2019
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Under tremendous pressure from the people, especially after the humiliating defeat in the Cameron Highlands by-election, and the coming Semenyih by-election which does not look too promising, the Mahathir administration has finally agreed to re-look into one of the dozens of promises made during last May general election – abolishment of highway tolls.

 

Yesterday (Feb 25), Prime Minister Mahathir Mohamad announced that his government is taking the initiative to fulfil its election promise to abolish toll collection – in stages – with the introduction of the “congestion charge”, to encourage people to use highways during non-peak hours. Of course, people have gotten angry because the government has insulted their intelligence.

 

People wanted tolls, existed for as long as one can remember, to be abolished or cancelled entirely, not to be replaced with another gimmick tax regime called “congestion charge”. Apparently, the new Pakatan Harapan government has begun talks with Gamuda Bhd to negotiate the acquisition of four highway concessions – LDP, SPRINT, KESAS and SMART Tunnel.

PR Manifesto - Abolish Tolls

Upon successful takeover of the expressways – Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (KESAS) and SMART Tunnel – Mahathir said the existing toll would be abolished, but commuters will pay a “congestion charge” equivalent to the existing toll for six hours of “peak” period a day.

 

At “normal” or non-peak hours, commuters will enjoy 30% discounted rates as compared to existing toll rates, while it will be “free” for all during the “off-peak” period between 11pm and 5am. Naturally, the opposition, especially ex-PM Najib Razak, happily grabbed the golden opportunity and mocked that the only ones that would benefit from the off-peak charges are ghosts, drunkards, and sex workers.

 

However, Mahathir argued against the criticism of the odd-hour charges – “To cancel all the rates becomes too expensive. We need to buy the tolled road. When you buy, you need to raise money and service the loans that we raise. So we try to reduce the money we have to pay for acquiring highways that will go stage by stage and step by step.”

Mahathir Mohamad - Lecturing

To be fair, Mahathir was not the first person who promised free tolls for all and sundry. The 93-year-old man had consistently said it’s not possible to have highways without the collection of toll, even after he was made the country’s 7th Prime Minister. In fact, he was against the toll-free highways pledge in the Pakatan Harapan election manifesto, but played along thinking the coalition could not win.

 

Anwar Ibrahim, previously de-facto opposition leader and currently PM-in-waiting, was the guy who screamed at the top of his lungs about free highways for everyone during past election campaigns. But to be fair to him, highways without toll collections can actually be done – if the national coffers have RM383.3 billion of loose change to spare.

 

Yes, according to a 2010 study, the overall costs to take over all highways in the country are RM383.3 billion. In other words, had the crooked Najib Razak not burden the country with excessive borrowings, not to mention constant stealing and plundering, so much so that the external debts hit RM1 trillion mark, the people could indeed enjoy toll-free expressways today.

Malaysia Government Gross Debt 1990-2017 Q1 - Finance Minister Performance

Last December, Finance Minister Lim Guan Eng disclosed that the government would have to pay RM972.75 million in compensation to 21 highway concessionaires for them not to raise toll this year (2019). In other words, due to lopsided business deals, corruption, cronyism and policies, taxpayers’ money are being sucked to pay the highways’ tycoons and elites.

 

That was why Mahathir warned yesterday that even if commuters are not charged tolls, the government will still have to pay for it using taxpayers’ money. Concessionaires have loans to service and other bills to settle, they would argue. This means the concessionaires and the banks need to make profits first. Like it or not, the ordinary people, even if they don’t use the highways, are the losers.

 

Certain ethnicity may not like the truth, but the root cause of the toll-abolishing issue is “ketuanan Melayu”, the ideology of Malay supremacy espoused by the United Malays National Organization (UMNO), the party that had dominated the country’s politics for more than six decades, before they stunningly lost power on May 9th, 2018.

Najib Razak - Deliver Speech - UMNO Assembly 2017

The New Economic Policy (NEP), giving ethnic Malays and Bumiputera (son of the soil) preferential treatment in all spheres of public life, such as 30% controlling stake of all corporate equity, reserved senior positions in the civil service, special quota in universities, 5% to 15% discount for Malay home buyers, and whatnot appears to have come back haunting Mahathir administration.

 

The NEP, designed to uplift the Malays, but soon became a means for UMNO to cement political support and an enrichment program for a selected few, is also responsible for the issue of abolishing highways toll today. Certain cronies and elites, even members of the royal house, were awarded contracts – without tender – to build expressways and given the privilege to milk the people in the form of toll collections.

 

Take for example the RM2.2 billion 50-km Kinrara-Damansara Expressway (Kidex) project, which was awarded to Emrail Sdn Bhd and Zabima Engineering Sdn Bhd – both without any highway construction experience. It was a gift from the Najib regime to then-Chief Justice Zaki Azmi and UMNO lawyer Hafarizam Harun for their roles in snatching back the Perak state using illegal and despicable methods.

Hishammuddin Hussein - Keris Waving and Kissing

Another example – Haris Onn Hussein, the brother of former Defence Minister Hishammuddin Hussein, possesses a 20.16% stake in Ekovest, a company awarded the contract to build the Setiawangsa-Pantai Expressway (SPE) at a cost of RM3.738 billion with a concession period with the Government for 53½ years. That’s a cash cow the Hussein family can milk for half a century.

 

Heck, even Gamuda, the concessionaire whose four highway concessions – LDP, SPRINT, KESAS and SMART Tunnel – being taken over by Mahathir government is partly belonged to the Sultanate of Perak. Raja Eleena Raja Azlan Shah, the daughter of the late Sultan Azlan Shah of Perak, is the single largest shareholder of Gamuda – via her 7.5% stake in Generasi Setia (M) Sdn Berhad.

 

Clearly, RM383.3 billion to buy all the highways is a daylight robbery to enrich only a dozen of Malay elites. The problem with these bloodsucking concessionaires was the frequent revisions of the agreement and terms by the government to continue milking people’s hard-earned money. There’s a reason why Mahathir, as did his predecessor Najib, wanted the status quo to remain.

LDP Expressway Highway - Toll Rate Signboard

Whoever controls the government essentially controls the cash cows. Not only the lucrative highway business is a cash cow, it is the ultimate goose that lays the golden eggs. EPF, ASB, KWAP and Amanahraya trustees are some of major shareholders of LITRAK, the highway concessionaire which operates LDP and SPRINT and owned by Gamuda Group.

 

The second largest toll highway company, PROLINTAS Bhd, is owned by PNB (Perbadanan Nasional Berhad) via various funds such as Amanah Saham Bumiputera (ASB) and Amanah Saham Wawasan (ASW). Even PLUS, the country’s largest highway concessionaire is now 51% owned by the government and 49% by EPF (Employees Provident Fund).

 

Another extremely lopsided project was the Maju Expressway (MEX), a 26km highway linking the city centre in Jalan Tun Razak to Putrajaya. The total project cost of MEX was RM1.32 billion, of which RM976.7 million was funded via government grants. Yet, despite Maju Holdings funding only 26% of the construction cost, crony Abu Sahid Mohamed was allowed to collect tolls for a period of 33 years ending Dec 6, 2037.

Malaysia Highway Concessionaires Logo

That’s right, government-linked companies, or G.L.C.s, tasked with representing and promoting bumiputera interests, are the primary shareholders of the so-called throat-cutting highway concessionaires, which happens to be the goose that lays the golden eggs. As of 2017, the GLCs  controlled over 68,000 companies – directly and indirectly – and about 42% of local stock market capitalisation.

 

If the new government is sincere and serious about helping the ordinary commuters, they can bring down the concessionaires to their knees with a snap of a finger. Mahathir can give the green light to review unfair and lopsided deals, demanding existing terms be reviewed. If the greedy, arrogant and stubborn concessionaires refuse, the government can always introduce special taxes.

 

Hey, if the government can punish gamblers, smokers and drinkers by imposing insanely high taxes on gaming, cigarettes and liquor companies, surely they don’t need a rocket scientist to teach highway concessionaires a lesson. But why should the government punish itself by taxing its own left pocket? In essence, GLCs which own highways, is one massive cartel controlling everything in the country.

Malaysia Highway Toll Collections - RM383 Billion Cash Cow

 

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Comments

Truthfully no government be it PH or Umno is willing to scrap the toll gate charges. It is too deeply entrenched into a very complex form of unscrupulous dealings which is basically corruption of the highest practises with legal standing. Same goes to the IPP contractor in supporting the power supply where it leads no where to benefit the rakyat but more to cronies in plundering and still being legitimate. It is up to rakyat now to apply the pressue to PH Government whom with all their filmsy excuses holds no weight at all in convincing the delay and no convictions to abolish the toll gate charges. The contractors of most major highway have already recouped their intial capital outlay and enjoying many years of uninterrupted insane profits at the expense of the rakyat who are burdened by the bane of cronism practises thru ketuanan policy since the inception of privatisation programn by the old fox. All the successors after him redefine the art further by perpetuating the ketuanan policy by devising it further in the guise of the malicious bangsa dan agama. This insidious programn has suck up the country resourceful wealth and strength at such an accelerated rate without giving a breather for the country and its people to shield themselves from such a major man made catastrophy all due to greed and no love for the country. It has bleed the country dry and defeat most of the patriotic Malaysian in their tenacity to put the country on the right track. The only way out is the radical hard methods approach by starting to nationalise every corporation providing utilities and amenities which was previously under direct government public utility board authority. To say simple excuses of not having full coffers to buy back from the concessionaries are just plain fooling the rakyat !!!!

Putrajaya should not pay for the toll contracts.

Let the toll companies go to court.

The court will find the toll contracts null and void. The gov’t can’t sign against itself.

The companies will have to return the tolls they collected.

No evidence they maintained the highways.

Do not understand why the rakyat not realize its their rakyat’s MONEY if the PH Government buys all the Toll Roads it’s the rakyat’s money. Why should the POOR RAKYAT pay for not only the rich Ferrari etc drivers as well as the foreign Motorist? The PH Government must think out of the box, to issue Toll Cards to qualified citizens earning less than RM15,000.00 per annum and have Income tax department to certify the application. This Threshold must be increased when the Government is able as soon as possible. THIS MUST EXCLUDE FOREIGN MOTORIST as they are not supporting or paying our taxes. The PH Government can then negotiate with the Toll Roads to discount these Cards as the Government will be their biggest customer!

The PH Government MUST ASSIST THE POOR RAKYAT. Do not buy back from the concessionaries as it will NOT assist the Rakyat but impose a bigger burden to our already weak economy.

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