"The inevitability of price rises should be transparent, justifiable and reasonable. None of these exist, leaving the most important stakeholders, the Rakyat, in a lurch"
The toll price hike issue mirrors a
very current issue facing Selangorians today – namely the dispute between
Syabas and the Selangor State Government over water tariffs. The impending toll
hike and the Syabas dispute are eerily similar in that they raise more
questions than answers, of which should be quite easily resolved.
Anyway, this article will explore 3
important questions surrounding the toll price hike:
1. Why the secrecy?
2. How much do the toll concessionaires profit?
3. Who benefits?
The problem with the toll price hike
goes beyond our Government's idiosyncrasies- It's also about the concessions
agreement and the company or companies that will be enjoying the increased
rates. There's too much uncertainty and a sore lack of transparency surrounding
the deals[2].
The same concern arose in the Syabas
dispute[3].
In that matter, the High Court in a landmark ruling freed the tri-partite water
concessions agreement between Syabas, the Selangor Federal Government and the
Federal Government on the basis that water was a basic right and that the
public had a legitimate expectation to know the process involved in the setting
of the tariffs. Unfortunately, the Court of Appeal, in a 2-1 split, overturned
the High Court’s ruling, holding that the agreement was bound by the Official
Secrets Act. What was curious about this decision was that the Selangor
Government and Syabas had waived the secrecy clause, with only the Federal
Government objecting to it.
In its report dated 17.12.2013, NST
quoted Minister in the PM's department, Datuk Seri Abdul Wahid Omar, as saying
that ‘future toll highway projects would have to be accompanied by studies on
how a potential toll rate hike would affect the people’.
The technocrat in the cabinet went on
to further state that ‘the study would also cover what toll fee the public was
willing to pay before the government awards future concessions’.
It’s great that the Government has
acknowledged the need to step up, however (and despite not wanting to be petty
about this), after more than 50 years of independence and probably with more
than a few hundred years of dishing out contracts to various businesses (ever
since the days of the Melaka Sultanate), how is it that this wasn’t done when
the current contracts were awarded?
This appears to be an admission that
the Government messed up and didn’t have the people’s interest in mind when the
contracts were dished out. The more important question then is: Whose interests
were in mind?
One name reported in the NST report
was Litrak Group CEO Sazally Saidi. There are definitely more people involved.
The secrecy surrounding the agreements
is worrisome. And this will continually make the Government look like it is
hiding things unless it decides to come up and be frank about the deals they
are making for and on behalf of the Rakyat.
Question
2: How much do the toll concessionaires profit?
Basic economics would tell you that it
is only fair for the toll concessionaires to be able to recoup their
investments and costs from the building of the highways, and even to make some
profit while at it. With inflation and increasing maintenance costs being a
constant fixture in any long-term contract, the highway concessions agreement
would have built-in clauses that enable the rates to be raised to correspond to
the increased costs and expenditure.
Unfortunately, the problem with this
is that members of the public are not made privy of these facts- or the extent
of it. According to an article published online recently, PLUS has been seeing
a 10% increase in profit every year since 2008 to 2010, with the amount being
paid in tax nowhere near the rise in profits. Apparently, since 1994 to 2004, average
traffic has been growing 7%[4].
In short, PLUS doesn’t need to do anything and they will still profit. And that’s
just PLUS. We do not know about the other toll concessionaires.
The greater concern here is that the
public isn’t at all aware of (i) how much was spent by the toll concessionaires
in building the highways; (ii) how much of that funding came from the
taxpayer’s coffers vs private banks; (iii) how much cost is incurred by the
toll concessionaires for road maintenance, safety equipment etc.; and of
course, (iv) how much profit are the
toll concessionaires making; and (v) how long these agreements are?
An interesting question could also be
“Are toll concessionaires making any profits?” (PLUS seems to be. But we can’t
jump to conclusions by saying that all of the others are).
Another interesting factor is that of
demand and supply. Clearly there is a great demand for good roads and clearly
there are more and more cars being sold and being driven on KL and Selangor
roads everyday (in less than 1 month, the Wilayah registration plate number has
gone from W xxxx D to W xxxx G – that’s around 40,000 cars!). Yet somehow, this
increase in demand hasn’t equated to a lower price. Is there a lower supply?
This is unlikely the case as we a nation proud of our many wonderful highways.
The
problem with the right-to-earn-profits argument is that public roads are
exactly that- public roads. A line has to be drawn somewhere between
enabling the toll concessionaires to earn a living and not taking advantage of the
taxpayers in the name of contractual rights (which more often than not seems to
be the situation- the Syabas deal again springs to mind).
It was also reported that the
Government had forked out about RM400 million sometime in 2011 to enable the
toll fares to be maintained at the current level and that the hike was as such,
‘unavoidable’[5].
As this point the author is minded to
say ‘Why thank you oh benevolent Government for maintaining the rate over the
last 2 years at a meagre RM400 million’. But hold on a minute there. The
Government already used the taxpayers money and somehow they were able to
arrive at this beautifully round figure of RM400 million. How this amount was
arrived at and the methods of calculation used remain a mystery. Assuming the
RM400 million covered the period between January 2011 and December 2012, this
would come up to around RM16.66 million per month. Even if we were to be nice
and assume that the RM400 million covered the period between January 2011 and December
2013, that’s still RM11.11 million a month.
These aren’t small amount. And the
Government should realise that they own their citizens an explanation.
Question
3: How much does the top management earn?
It has been widely reported[6] that the Syabas CEO was earning more than RM5.1 million a year[7]. Despite this, there was a need to increase the water tariffs.
Now, it can be accepted that there may
be no correlation between the employment terms of the Syabas CEO and the
contractual rights of Syabas to an increase in water tariffs, but there is
something highly perverse about the entire thing.
You be the judge of whether this is
appropriate. The dispute on its merits is still on-going in court, and this
author shall refrain from commenting so as to not run foul of the sub judice
rule.
Returning to the issue at hand, in a
day and age where the gap between the rich and the poor widens, when Malaysia’s
top 10% make more than 38.4% of wealth (at a 22% ratio, it gives us one of the
biggest gaps in all of Southeast asia)[8]
or where the top 20% make more than 50% of the wealth[9]
and where income distribution inequality is still high[10],
there are clearly different worldviews being espoused when politicians talk
about the ‘need’ to remove subsidies or in this case, raise the price of toll
fares because clearly there’s a disillusion about the ability of Malaysians in
general to pay increased rates.
As one blogger quite nicely put it, if
the average household income of the Malays is RM4,457 as announced by our Prime
Minister, why is it so that many many Malays qualify for BR1M? Yes, this author
is aware that RM4,457 is the ‘average’ income and should be kinder in this
analysis, but the fact remains that disillusion prevails.
Big salaries for top management aren’t
wrong but when it comes to matters of public interest and taxpayer Ringgit, it
is only proper for there to be transparency and accountability.
Conclusion
This author pays about RM7.20 a day
for toll and with the adjusted rates this amount will go up to about RM10.20
per day (assuming the documents leaked online are true). In a month, that’s an
average of about RM300, or an increase of about RM90 a month. Assuming my
yearly salary increase is RM200 or RM2400 over 12 months and the increase in
monthly toll expenditure over the same period is RM1080, this means that within
a year, my increased salary only gives me an additional RM1320 benefit. This
doesn’t yet take into account the increased price of petrol, food, sugar (only
saying this because it appears to be a favourite commodity to highlight),
electricity, and water (among the many other things). This means not only does
my salary increase come to naught, it means absolutely nothing in relation to
my purchasing power, financial security, savings, and any thoughts I may have
had of saving enough money to get married (I kid. There’s always time and money
for that).
Lastly, of course one could use
non-toll roads but there are few of these in existence (especially when trying
to enter KL) and they tend to be in abysmal state or require intricate weaving
through guard-house manned neighbourhoods which are an utter inconvenience.
If there’s a hike, so be it, but
justify it first.
[1] http://www.nst.com.my/nation/general/toll-hike-between-50-sen-and-rm2-1.435117
[2] http://www.themalaymailonline.com/malaysia/article/guan-eng-toll-rate-hike-caused-by-putrajayas-lopsided-highway-deals
[3] http://www.thenutgraph.com/syabas-concession-agreements-why-so-secret/
[4] http://www.themalaysianinsider.com/sideviews/article/toll-rate-hike-an-unnecessary-burden-raja-ahmad-shahrir
[5] http://www.bernama.com.my/bernama/v7/newsindex.php?id=1001139
[6] http://www.thestar.com.my/News/Nation/2012/07/20/Sgor-MB-wants-Syabas-chairman-and-CEO-sacked.aspx
[7] http://www.themalaymailonline.com/malaysia/article/syabas-says-cant-pay-creditors-or-replace-pipes-despite-big-bonus-for-boss
[8] http://charleshector.blogspot.com/2006/05/malaysia-worst-income-disparity-in.html
[9] http://www.themalaysianinsider.com/sideviews/article/income-inequality-and-umnonomics-sakmongkol-ak47
[10] http://www.thestar.com.my/Business/Business-News/2013/08/03/Malaysias-income-distribution-inequality-still-high.aspx
No comments:
Post a Comment