Another Highway Monopoly?

By Syed Akbar Ali

Folks I have quite a few things to say this week. Bear with me. I will have more religious topics too. I hope my religious topics will be carefully read and will start some good discussion. It is not likely that you are going to read my points of view on religion anywhere else within our borders.

Right now I have some thoughts on the proposal by someone to take over all the toll roads in the country. The company is called Asas Serba Sdn Bhd (reminds me of teh herba).

Asas Serba is identified with Syed Amin Al Jeffri of Kuala Lumpur Malay Chamber of Commerce fame. Market talk is Halim Saad and Tun Daim Zainuddin are somewhere in the shadows behind this.

Asas Serba Sdn Bhd is pushing a proposal to the Government to take over all the toll concessionaire companies in the country. 22 toll hiways with the jewel being PLUS Expressways Bhd, which is in the UEM Group Bhd stable.

They say they will bring down toll rates by 20% and maintain that rate level for the remaining concession period (up to 2038 – 28 years from now). We are talking about our grandchildren paying for our actions.

Folks if Asas Serba can cut toll by 20% and keep it fixed for the next 28 years, why cant the Government do the same? That is the question.

Via Khazanah Nasional Bhd, the Government has a 63.87% stake in PLUS. This stake is said to be worth RM10.5bil at current prices. Another 22% is held by the Employees Provident Fund and PNB/Amanah Saham. So the Government controls 84% of PLUS.

There are many ways to do this. I think what is confusing everything is cronyism and party politics rather than good economic sense or even common sense about how the public is going to vote at the next General Elections. (Silap-silap kena tendang nanti).

Lets look at PLUS first. The Government can take PLUS private. Then impose a very low toll rate with no further increments (say five sen per kilometre subject to a minimum toll of RM3.00). So the 380 km from Kuala Lumpur to Penang will cost about RM19.00. The toll collection can be used to pay for maintaining the PLUS Hiway at its present level of service AND better – as time passes.

How can the Government get back the RM10.5 billion for taking over PLUS at todays market prices? Well first of all its a left pocket, right pocket situation. To take PLUS private, the Government will buy 84% of the shares from Khazanah and EPF both of which belong to the Government anyway. Duit masuk kocek Kerajaan juga.

Just raise a special tax – I say a special fuel tax for a fixed period of time and to collect just enough to pay off the RM10.5 billion to buy all the PLUS shares.

In the 80s, President Reagan raised a one time fuel tax of 5 US cents per gallon to pay for repairs to the US Federal Hiways – which were in very bad shape then. It was a fixed program with a fixed target. After all the repairs were done, they removed the US 5 cent per gallon tax.

Likewise say we collect a special tax of 5 sen for every liter of fuel (petrol, diesel etc) and a special RM10.00 increment on all Road Tax (cars, motorcycles etc) to pay for the RM10.5 Billion purchase price of PLUS. Once the RM10.5 Billion is collected, we can discontinue the special fuel tax and the Road Tax hike.

If there are six million registered vehicles in Malaysia, that will be an extra RM60.0 million a year from Road Tax alone.

The CIA factbook says that our economy consumes 547,000 barrels of oil per day. A barrel of petroleum (US) converts to about 158 litres. So 547,000 barrels of oil = 86.4 million litres a day. A 5 sen per litre tax will generate RM4.32 million a day. Thats about RM1.6 billion a year. Plus the special Road Tax, we can collect almost RM1.7 billion a year. The Government would have recovered the RM10.5 billion in just over six years.

There will be growth in car ownership and growth in the economy. The Government can pay off the RM10.5 Billion in less than six years.

So if we throw in all the other toll hiways as one big package deal, maybe we can look at a 10 year period. This is just one ‘back of the envelope’ calculation – quite painless. There are many other ways to skin this cat.

I have some other concerns with the Asas Serba proposal. It creates yet another monopoly in our country – until 2038. I think we just passed some kind of anti monopoly law. But this will only create another monopoly. Monopolies and oligopolies seem to be the order of the day. All toll highway operations in the country will be under Asas Serba for 28 years. Thats pawning our grandkids future folks. I dont think we want to do that.

Can they guarantee the service and maintenance standards? And of course we want improvements over time. For example the Tapah and Bidor Rest areas (north and south bound) are world class, five star now. Syabas PLUS. Yet it can be still improved. Can Asas Serba do that? Or will the potholes start appearing after a year? Or they will charge RM1.00 to use the toilet?

Asas Serba’s proposal projects a requirement of RM50.0 Billion to take over the Hiways. They hope to raise RM45.0 Billion through bonds. Folks who has the money to subscribe to that kind of bonds? EPF lah brader. Thats our money again. Back to square one. If we are going to use taxpayer money and public savings to fund Asas Serba’s riches, what is the big deal?

What if something goes wrong? Will we have to bailout Asas Serba? Its so tiring and burns a big hole in our pockets. That is why the Chinese refuse to vote BN too. We are wasting billions of Ringgit. The Sime Darby debacle and the Khazanah debacles are just part of this wastage of funds. (More on Sime and Khazanah later). We are getting tired of bailouts. One more big bailout and BN loses the elections.

And then other conditions tak ada ke? I doubt Asas Serba will put down an RM50 Billion bet on the table (and which can potentially save the Government’s behind in the coming General Elections) without asking for some kind of “life insurance”. Mesti ada punya. You know to safedguard their cashflows and their RM50.0 billion. For example conditions like the Government cannot build a fast track rail link along the NS Corridor (or Asas Serba has a right of first refusal to participate).

Or no other competing hiways can be built throughout the concession period, without Asas Serba’s consent or participation etc. Things like that.

Then there are other considerations – non economic but political.

The Renong folks and their masters have already eaten their cake when the PLUS Hiway was built in the 80s. Do they get a second bite now? Its like “eat your cake and still have it with you.”

The logical question to ask is, if these guys can offer a 20% cut in toll now, is that because they are the ones who know just how much fat they have put in before? They are proposing a leaner scheme now because they know the fat in the business.

To me this is Jurassic Park all over again. In the movie Jurassic Park, the one guy says that it is wrong to recreate Jurassic Park. Why? Because it is going against nature. The T Rex had its shot at life. It lived for a while and then it lost out on life. Life moved on. New species moved on. T Rex did not. So to recreate the T Rex would be a gross anomaly. It would not survive.

But some people are itching to have the T Rex come back to life – if not real life at least in animation or through Hollywood. Recently Discovery Channel had a documentary called ‘Tyranosaurus Sex’ where they are guessing how these animals copulated. Whatever for?

But this is what is happening in our politics and in our economy too. We are trying to bring back to life ancient fossilised dinosaurs. Or prolong their life.

Hence we see our former former Finance Minister and our Highway men trying to make a comeback. I am sorry Tun T Rex and friends. You had your shot. Lets move on and let other folks come up in life. We dont want to see the same folks and the same schemes being hoisted upon the taxpayers again and again.

Take the cue from Tun Dr Mahathir. He retired ever so gracefully. Strange thing for dictators to do. So please also retire gracefully – like Tun Dr Mahathir has done.

Here is my wish list for the Jurassic Park. I really would like to see half the Cabinet or more retired. I dont know why the PM is postponing the long, long overdue Cabinet reshuffle. At least half of them must be retired. The Cabinet is like a Jurassic Park now.

Then folks like Samy Vellu must go, yesterday. So must Koh Tsu Koon and Taib Mahmud in Sarawak. I think the Menteri Besars also must be changed.

The same for our economic managers and economic players. Takkan orang lain tak tahu niaga. There are so many other talented and younger people. Let the newer generation come up in business too. Takkan the same old fossils even in the economy.

And there is a really old and decrepit Jurassic Park over in the Opposition side as well. Lim Kit Siang, Karpal Singh, Anwar Ibrahim, Nik Aziz, Hadi Awang, Wan Azizah, Syed Hussin Ali etc. If you measure all the wrinkles on their faces and add it up, it may likley be long enough to encircle the globe.

This is the Jurassic Park we have in Malaysia – on all sides. The Jurassic Park recreating the T Rex and giving it another shot in life. Full of fossils. And some rejuvenated T Rex trying to engage in “T Sex” now. Silap-silap nanti they can drop dead on the job. Too much of a strain.

I think the people are getting tired of all this. So we do not really need this Asas Serba offer to create yet another monopoly for 28 years. Why not the Government just repackage the whole Highway deal (its nothing more than financial engineering – any competent investment bank can handle it). If Asas Serba can do it for monopoly profit, why cant we do it now?

What man can do, so can we undo it.