Thursday, December 14, 2006

For Whom The Tolls Toll
Probably My Least Popular Posting

As reported in Reuters:
Malaysia will announce on Thursday a sharp rise in road toll rates to help trim state subsidies, in a move that could spark a public outcry and raise inflation. Tolls will go up by as much as 60 percent and will affect users of five highways in and around the capital, Kuala Lumpur. The new rates take effect on Jan. 1. A spokesman for the Works Minister confirmed that an announcement would be made at a news conference at 3.15 p.m. (0715 GMT) on Thursday. He declined to give details. Under toll concession agreements that critics say favour operators, the government has to reimburse operators if traffic volumes and revenues fall short of pre-agreed projections. Works Minister S. Samy Vellu said recently the government would have to fork out 2 billion ringgit (US$565 million) in compensation to five highway operators if toll rates were not revised. The operators include listed firms Gamuda Bhd and Lingkaran Trans Kota Holdings Bhd. Litrak operates the 40 km Damansara-Puchong highway, where the toll is to rise 60 percent, to 1.60 ringgit from 1 ringgit now. The real toll is 2.10 ringgit, so the government is still subsidising 50 sen for each user. Residents along the densely populated stretch had protested strongly against an initial proposal to levy a toll of 1.50 ringgit, forcing the government to fix it at 1 ringgit. Some 418,000 vehicles used the highway daily on average, reflecting a 14.5 percent compounded annual growth rate for the past seven years, rating firm RAM said in a review of Litrak. Government officials told the briefing that one reason for the shortfall in toll collection was due to motorists switching to alternative non-toll roads, the source said. The toll hikes, however, will not apply to Malaysia's biggest toll-road firm, Projek Lebuhraya Utara-Selatan (PLUS), a PLUS spokeswoman said. PLUS' rate increase is fixed at 10 percent every three years and the next increase is not due until January 2008. Malaysia's annual inflation was 3.1 percent in October year-on-year, down from a 7-year-high of 4.8 percent in March.

My Lima Sen:
a) Its a good move, I know the Bandar Utama and Taman Tun residents will yell and scream, but hey, you can afford it.
b) Why are we jumping up and down on something which has been written in contract to the companies?
c) There is only so much a country can do to subsidise infrastructure, would you mind paying even higher taxes?
d) Of course if you harp on the enormous wastage in bribery, inefficiency and misallocation of resources... that is a completely seperate issue. Toll roads would not be built if there was no toll. You think this is your grandfather's road aaahhh?
e) You use, you pay, if not then the rest of the nation is shouldering the toll for you, including the pakciks and grandfathers back in Ulu Langat or Kuala Lipis.
f) WE CANNOT KEEP SUBSIDISING the economy or even pockets of the economy. Be it in petrol prices or otherwise. That would create an inefficient allocation of cost and resources. Of course we cannot withdraw all subsidies all at once, we have to do it gradually. Live with it.
g) If we can withstand a 33 sen increase at the petrol pump, this is nothing.
h) While this may sould like a propaganda piece from the government, somebody must always see things from a bigger perspective.
i) No point saying how much money we make from oil and gas, or lose to corruption, or misallocation of resources - say that during a seperate platform. Just on toll roads alone, voice your dissatisfaction based on toll roads issue alone.
j) Its good for the toll companies as their cash flow is more assured instead of up in limbo.
k) In the long run, the government is just preparing the nation to live with the "real cost of living", and for companies to "operate on real cost of production". Its kinda neat if you think about it.... about time man!!

pssstt ... don't I sound like KJ??!!... lol... if only he was talking sense, if only...


it ain't half hot mom said...

Brother......... you are right. This is your least popular post. You must be losing it. We have to mix everything cos it is all connected. Govt can do better if & do away with toll roads if corruption is reduced by 1%. You heard right 1%.

Salvatore_Dali said...


if we connect everything, then everything also can blame corruption ... you fight with yr wife, if only the govt reduce corruption by 1% and spend more on social relationship lecture programs , then my wife and I won't fight ... i know its not fair, but we need to seperate issues to have better arguments within an issue.

doraiddd said...


I think you’d better keep your lima sen in your couture prestige floor trouser pocket this time ‘cos

a) just becos residents in BU and ttdi can “afford” it (which in itself is an unresearched generalization, at best) doesn’t make it a good move – Of cors we’ll then have to define what constitutes a ‘good’ move and for whom? What abt those residents in puchong, kinrara, kajang and cheras? Or even Kampung penchala that’s right smack between BU and ttdi?

b) Can you comprehensively state that the terms and conditions written in the toll contracts signed by the government on behalf of the rakyat and acting as its representative were negotiated fairly and in the best interest of the people? Are the wolves also the shepherds in this case?

c) Reducing the subsidies to infrastructure and moving the people towards market is one thing but the government’s actions must also be consistent. Have you heard anymore of the public transport improvement masterplan that the reduction in fuel subsidies were to go to? Are you saying toll operates in its own little vacuum and has no cause and effect on everything else that make up our mundane lives? Perhaps this time its really a case of leakages masquerading as reduced subsidies?

d) Its definitely not our grandfathers’ roads but I doubt my grandfather would grab my crotch with his right hand and empty my pockets with his left, while whispering that I’m still his favourite grandson?
The building of a toll road should be a completely commercial venture and not be confused with an infrastructure project. Why should the government guarantee the concessionaire his projected PROFIT in the first place? If the projections were not viable in the first place, DON’T BUILD. The govt’s guarantees make ALL toll roads VIABLE and PROFITABLE. If the govt cant convince the people to accept the toll, DON’T BUILD. And Why shld it be the govt’s duty to convince the public to accept the toll? It shld be the concessionaires’ job. If it also cant, then DON’T BUILD. Otherwise build and accept the BUSINESS RISKS and FINANCIAL consequences. Simply build here, build there, you think YOUR grandfather’s land-ah? You want my grandfather to sell you sand too?

e) I believe we’re already shouldering the toll for the likes of badawi, najib, samy and their ilk. You think THEY pay toll? Its really your money too, bro. Really the irony of ironies.

f) I agree that we cannot keep subsidizing the economy. That would lead to inefficient allocation of costs and SCARCE resources. However in the interim during the reduction, there must be safety nets to protect and prepare the underpriveleged for the free market. Are there alternatives inplace? Eg. The govt shld and must withdraw the petrol subsidy BUT then car taxes must also be completely deregulated. I for one will definitely not mind if my petrol costs 2.80/liter as long as my 599 wont cost me 2 mil. Cakap mesti serupa bikin, geddit?

g) I believe this toll hike will be the final straw that finally breaks the camel’s back. Perhaps its not the dollar costs involved in living from day to day that’s difficult for the people – they cope well with adversity - BUT what must be galling is the absolutely fine examples of sheer LUNATIC STUPIDITY from the govts decision making process that’s on a mega roadshow now. The users will have lots of time to think and reflect on this while they queue up to pay their increased toll.

h) Somebody shld teach Samy something abt propaganda. Please reread what he says again and it must surely rank up there with “change your lifestyle” and “work with me, not for me” – is KJ and his boys doin the copywriting for them? Its bad.

i) See my point (d) above

j) Care to explain how the cash flow of the toll companies can be in limbo? Have you even seen the volume of traffic? Show me a business that has guaranteed risk-free compensated PROFITS? Oops, you don’t have too, I found one – IPPs. Maybe if you can give Ani Arope a call, he’ll be able to tell you the sanctity of the signed contracts.

k) I have no problems whatsoever with the govt preparing us for the ‘real cost of living’ but companies, for example, the toll companies shld also learn abt ‘operating on real cost of production’ NOT COMPENSATION as a footnote in the PROFIT statement in their annual reports.

I really keen to see how the media would put the spin on this. And how and where can I apply for the job as CHIEF GOVERNMENT NEGOTIATOR? The bunch we’ve been using all this while truly suxs – and that’s sucking rotten dead dogs’ balls as well.

Merry Christmas and a “happy??” new year.

ps. I live and work in KLCC and until they put up toll booths along jln ampang / jln tun razak, Malaysia will still remain the lucky county for me, prices of ferraris excluded.

Salvatore_Dali said...


Great post, I must say.... have to agree to most of your counter points. Yes, we r dealing with a so-so government in terms of policies, masterplan and execution. Many things have not been well thought out.

I do agree that where in the world would a gov guarantee toll operators profit, and the same with IPPs ... but that's Malaysia. If they open up the bidding for toll roads and IPPs, no guarantees, then it will be a much better allocation of resources.

While I have a few friends in taman Tun and Bandar Utama, tolls per se should not be seen as a "safety net/social benefit" thingee. The slight on the people living there as they can afford it was in half jest.

So actually I do agree with most of your points, and my points basically sees the thing from the government's perspective. Somebody has to see it fm their perspective. While I will take my hammer out to tell you what is wrong with the government anytime anyday, being able to weigh the issues on both sides is a good thing.

Hey, we shuld meet up for lunch, I am also in the vicinity of KLCC.


Asset Class Returns In The USA

The brilliant snapshot of asset class returns compiled by Blackrock makes for interesting analysis. See if you can deduce any pointers from...