The RM50 billion question on the toll highway

I picked this up this morning from Bloomberg.

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Malaysia Group May Sell Bonds for $15.6 Billion Highways Bid

A group of Malaysian businessmen said they would sell bonds to help finance a potential 50 billion- ringgit ($15.6 billion) bid to take over all the country’s toll- road operators.
The consortium, Asas Serba Sdn., said it’s awaiting government approval before making offers for 23 highway companies, including Kuala Lumpur-listed PLUS Expressways Bhd. and Lingkaran Trans Kota Holdings Bhd. Consent is needed because the government awards highway concessions.

Asas Serba is a privately owned special purpose vehicle with four shareholders, led by Chairman Syed Amin Aljeffri, president of the Kuala Lumpur Malay Chamber of Commerce. The others are Syed Budriz Putra, Wan Kamaruddin Ali and Ibrahim Bidin.

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Apparently this is not new. I guess I missed this as I am not a Utusan Malaysia regular.


Tol: Berikan kami peluang


''Teras utama cadangan pengambilan alih konsesi tol ini adalah mengurangkan beban kerajaan dan rakyat,'' dakwa beliau.

Ketua Pegawai Eksekutif Asas Serba, Ibrahim Bidin berkata, dalam cadangan tersebut, syarikat telah mengemukakan penurunan kadar tol sebanyak 20 peratus daripada kadar semasa sehingga kontrak konsesi tamat pada 2038.

Cadangan yang dikemukakan itu didakwa mampu memberi penjimatan subsidi kepada kerajaan sebanyak RM114 bilion.

Ketika ditanya tidakkah cadangan itu menyebabkan keuntungan yang diperoleh mengambil masa lebih lama, Syed Amin berkata, keuntungan boleh diperoleh dengan pertumbuhan trafik.
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I suppose the deal sounds reasonable until I cross reference with one of my previous post on the Alternative 2010 Budget by the DAP Economic Bureau chaps.

BA memperuntukkan RM25,000,000,000 untuk tujuan mengambil alih semua lebuhraya bertol termasuk lingkaran lebuhraya PLUS

That is half of the price proposed by Asas Serba. Being shrewd business people, surely the deal makers need to make more than RM50 billion from toll payers to generate healthy return to run the toll highway, pay dividends and income tax and leaves enough to have a good life for themselves and their loved ones.

If there is an open tender to this, should the payer, i.e rakyat jelata, be entitled to hear what both side have to say? Should we be entitle to know how a professional accountant propose to run a highway in a more efficient and effective manner that would improve the rakyat's position?

It would be fun to have a national referendum to this little nugget.

Mr. Syed Amin has a formidable CV in accountancy and corporate practice so I would gather that there would be some interesting story behind the numbers and since this is of national interest hence we tax payers and toll bearers must be kept informed and our opinion respected.

If I put my Bart Simpson hat on, I would have this to say:

1) given the drop in crude oil prices, retraction of GST and higher traffic fines and splurging here there and everywhere up to Hulu Selangor, is the BN administration facing cash crunch?

2) remember Leeds United circa 2003-2004 who borrowed so much and gambled on their future continuous on-field successes to generate sufficient revenue to pay off the huge debts? In the end, everything went, Alan Smith and the gold fish included.

The toll highway is one such future stream of guaranteed income. One can build up a business and have 2 choices: 1) continue to operate it and get its routine income, pain and pleasure 2) sell it to someone at a price equivalent to a number of years of future income hence having an immediate bundle of cash immediately for whatever purpose he or she so desire.....

3) with the sudden injection of RM50 billion should Najib administration agree to the bid, how does his administration propose to spend the funds?

Which ever way you look at it, we toll payers are at the bottom of the food chain. What options do we have?

1) stick with present, pay toll and compensation for profit to the rent seekers/leeches who are guaranteed come sunshine, rain, snow or alien invasion.

2) We buy RM40 billion worth of bonds (80% of the RM50 billion outlay), continue to pay toll some more to the people we lend money to gain rights to collect toll from us, and get a discount from them in the form of bond dividends. Perhaps we need to understand what does what is the definition of "pertumbuhan trafik" means in their books and if there is any caveat to that.

They also mentioned about restructuring the routes to save cost in the Utusan report. Sounds interesting on paper but without further elaboration, we really can't tell if it really works.

tidak menolak kemungkinan lanjutan konsesi boleh dijadikan pilihan, sekiranya syarikat itu berupaya mengekalkan kadar tol yang rendah

- perhaps this tell us something?

3) or what DAP suggested - cut our losses, unfair contract is still a valid contract, pay the once off alimony and start a new leaf or let the Unfair Public Commission as proposed in the budget take its course PROVIDED we Malaysians vote them in (or in this era of copy and paste....)

In this way, the voters can hold the PR side against this promise