East Coast Highway: Prime Minister Puts his Foot in his Mouth

The Prime Minister gave yet another convincing reason for tolled highways: to benefit concessionaires, not the people. The East Coast Highway cannot exist as a tolled highway, but the federal government wants it. Traffic projections do not justify it, the three shortlisted concessionaires have second thoughts, but the federal government wants it built. It has not explained why. The casual lackadaisical statements on the ECH, after PAS formed the state administration in Trengganu, confirms it. And the Prime Minister comes in with his "neat" solution: if the Trengganu state government does not want the high tolls because it burdens consumers, then it can subsidise it. "They ask for a toll which does not burden the people," he told reporters yesterday, "... if the toll is too low, it will be difficult for the concessionaire to get returns." That, in the Prime Minister's considered view, is more important than benefitting the people. But he contradicts himself by saying the government would spend RM830 million for the first 107 km. Why? His statement that the government had had to subsidise the construction of all highways defeats the purpose of privatising highways: uncontrolled construction costs loaded on to the concession companies ensured its debt-stricken status. Subsidies, in effect, does not reduce tolls, which remains high. What used to cost RM1 toll between Kuala Lumpur and Seremban is, ten years later, RM7. We are told it would have been higher without the subsidies. How and why?

But if the Prime Minister wants the East Coast Highway, the Trengganu and Kelantan state governments must insist on constructing the section of the ECH that goes through their states, decide on toll rates, be responsible for its maintenance, pay a five-percent royalty for the right, and make money out of it. I dare say the two states could build better and cheaper roads. No subsidies need be given, the states can reduce the tolls for those who use stretch within their own territory. There is no need to fripper away Trengganu petroleum royalties to subsidise the construction of what is not in their control. International highway builders would gladly a#sist on an internationally accepted profit margins of 15 per cent. In Bolehland, that margin can exceed one hundred per cent. The ripoffs inherent in Malaysia's privatisation of highways is an open secret. Otherwise, how could the concessionaire for the lucrative North-South Highway be in intractible debt? If Kelantan and Trengganu were to build this stretch of the ECH, it would provide a check on highway construction costs elsewhere. At present, the state has to alienate the land almost free, which the federal government then a#signs it to the concessionaire. The state then has no control over that land. Why should that be? Why should not the concessionaire buy the land? Or follow the Japanese practice of reducing the construction costs by the revalued cost of land it alienates to the concessionaire so that the tolls rates become easy on the pocket.

One can argue that in a federation, the states should not be burdened unduly for federal projects. This privatisation of the highways was unchallenged by all eleven states which National Front administrations, when they were ladled out to selected cronies of the administration. Now that worldview is challenged. The works minister, Dato' Seri S. Samy Vellu's outbursts, and now the Prime Minister's, means Bolehland privatisation cannot work in a state where the National Front is in the opposition. The Trengganu government said it is not against tolls, only that it did not want to impose tolls on its roads and bridges. It is prepared to accept reasonable tolls for federal highways. But the Prime Minister insists that concessionaires, not the users, should not lose money. Something is wrong in this view. The National Front planned its future on the basis that it would govern all eleven states in the peninsula and the centre in perpetuity. In two states it is in the opposition. The federal nervousness over the ECH reflects a fear in the federal government of seeing its pack of privatisation cards tumbling down. The works minister should be asked for a full statement in the House on privatised highways, the government's total liability, how much the concessionaires owe it, the tolls collected and the indebtedness of the concessionaires. It should also explain why the concessionaires did not call for tenders and insisted had their subisidiaries build it. At least, Malaysians could know how expensive privatisation has been for the government and its people.

M.G.G. Pillai
pillai@mgg.pc.my