Relook agreements, don’t abolish tolls

The Council of Eminent Persons says it is “not wise to totally abolish tolls now”. I agree with this observation. In fact, I think it is not wise to abolish tolls at all.

The culprit is not tolls per se; it is unfair tolls arising from lopsided and unfair concession agreements which benefit the concessionaires at the expense of the people. When toll agreements are unfair, concessionaires naturally indulge in extravagance and profiteering.

When businesspeople or their companies holding infrastructure/public utility concessions become too rich too quickly, it is an indication that they are making too much money from government concessions.

When the government provides “risk-free” business by guaranteeing profit and revenue, it is only fair that returns on investment are capped at certain pre-determined levels. Anything extra should be reverted to the government. At least this is what I learned of most US public utility companies. The government controls not only the profit but also the cost of public utilities, just to make sure it doesn’t indulge in extravagances like buying itself executive jets.

In Malaysia, we not only have tolled roads, but power generation (IPPs), sewage, potable water, vehicle inspection, road safety enforcement, electricity, telecommunication and even foreign worker recruitment services which are privatised.

The key is for the new government to go through all these agreements to look for inherent weaknesses and elements of profiteering.

If concession agreements are lopsided, there is little leeway for the government to abolish or reduce the rates. These toll concessionaires and other privatised entities have become too “valuable” and “expensive” to be taken over.

In addition to privatised entities, I believe PFI and PPP projects also have similar elements of taking advantage of the government. The government may be paying too much, not just on the cost of the project but also on the financing aspects. It is time to review and revise many of these agreements too.

I believe Malaysians are reasonable people. We are prepared to pay for convenience and better services, but not to the extent that it becomes burdensome.

The government should begin renegotiations with all PFI, PPP, privatised entities and concessionaires. If we are willing to ask for goodwill from China, surely we can “coerce” goodwill from many of our businesses which have benefited enormously in the past.

TK Chua is an FMT reader.

The views expressed are those of the author and do not necessarily reflect those of FMT.