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Are Our Highways For Sale Or Not?‬
Malaysia Perspective | 01 October 2010
By:

By: Xia Guowen

Rumours are rife that there is another bid to acquire all of the tolled highways in Malaysia. This news is surprising, not because of the bid prices of between RM45 to 50 billion, but that the Government seems to still harbour intentions to sell the highways.‬

In May last year, the first offer to buy the entire tolled highway system came ostentatiously from a little-known company – Asas Serba. The news shocked the entire nation, because its acquisition proposal included what all highway users have been dreaming of — that toll charges will not increase anymore.

Asas Serba offered RM50 billion and promised that if the bid is successful, it would immediately slash toll fees by 20 percent. In addition, by 2038, the Government would have saved RM114 billion in compensations.

This offer looked absolutely irresistible: on one hand, the Government can disentangle itself from the humiliation of compensating the toll operators every time their request to raise toll fees is refused; on the other hand, highway users will no longer need to curse and swear every time toll charges are raised, especially when they are stuck on those stretches of highway which stay congested despite paying for the use of them.

However, the effective operation of the domestic highway system will affect the people’s well-being, our economic lifeline, and even our national development. Therefore, the offer cannot be view simply as ‘a business proposition’.

If the Government still believes that it is possible for the highways to be privately owned, it must first consider whether the company is able to operate the entire domestic highway system effectively, which includes the basics like traffic management, road maintenance, lane widening, and even opening new routes.

Simply put, the crux of the consideration is the company’s abilities, especially financing the RM50 billion price tag and operation capability after taking over the highways.

Asas Serba disclosed that it has secured funding from financial institutions, as tolled highway is a sure-fire money-making business. The company will also raise funds through the sale of bonds (7% annual returns with dividends of between 2.5 to 5%).

The reasoning and logic is preposterous, for it is as ridiculous as saying that I want to buy China Construction Bank, the world’s most profitable bank, and financial institutions will therefore flock to provide financing for me, even though I am a nobody.

Any companies interested in acquiring the highways are free to make promises about cutting toll charges or perpetually not raising them. However, if crucial thoroughfares such as the North-South Highway become pock-marked, or when roadside assistance teams dally in clearing up after traffic accidents, let alone improvements or enhancements to existing equipment, what use do we have of such a highway system even if it is free?

I was very pleased that the Government had unambiguously expressed its decision that the toll operators are not for sale. However, when news broke that tycoon Syed Mokhtar is also keen to acquire the highways and some progress has been made, I was taken aback, because this means the government is still willing to reconsider.

Apparently, Syed Mokhtar had submitted his preliminary offers to the Economic Planning Unit this July past, and his offer price was RM45 billion with a commitment to reduce toll fees by 10%. In addition, he estimated that his offer would save the Government at least RM100 billion in compensations by 2038.

As for how Syed Mokhtar would fund his offer, it is not clear at present. Nevertheless, I maintain that the points of consideration are still the same — financial prowess and operational capabilities.

What is certain for now is that both Asas Serba and Syed Mokhtar have seen the profitability in the domestic highway business. However, how are they going to honour their promise to maintain the current toll rates while staying profitable? How would they run the highway system once they take over from the current operators?

Asas Serba is not a charitable organisation, and Syed Mokhtar is certainly not a philanthropist. No businessmen are willing to run a money-losing business, so the only one who can run the highway system in a not-for-profit mode is the government.

Therefore, the entity that should acquire the highways should be the Government and not a private company.


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