Article published in The Sun today, pg 6
–verb (used with object), -at⋅ed, -at⋅ing.
- to take possession of, esp. for public use by the right of eminent domain, thus divesting the title of the private owner: The government expropriated the land for a recreation area.
- to dispossess (a person) of ownership: The revolutionary government expropriated the landowners from their estates.
- to take (something) from another's possession for one's own use: He expropriated my ideas for his own article.
Lets lay out the facts and figures for LDP here.
1. Cost of expropriation
- Cost of Construction: RM1.327 billion
(inclusive of capitalised interest as published in Litrak's listing prospectus) - Interest to shareholder loans to Litrak @ 12% per annum, if any, net of interest and dividends already paid. Pending further investigation and number crunching, I'm going to assume negligible amount due for this item as all existing loans/bonds are taken from 3rd parties and not from shareholders.
- Approximately RM628 million as of 2008
- Annual payments of RM75 million (compensation for lowering the toll rate from RM2.10 to RM1.60)
- Contract runs to 2028, i.e., 20 more years of compensation to maintain lower toll rates. Assuming continued 'subsidy' of RM0.50 per annum and constant traffic volume, compensation will amount to RM1.5 billion over the next 20 years.
- Total compensation 'paid' by 2028 will be approximately RM2.2 billion
The Government cannot then say that they don't have the funds to expropriate the highway(s). If they have the money to pay the compensation, they certainly have more than enough money to pay for the expropriation.
What's more, the compensation rate may increase further after 2016 as the toll rate is scheduled to be increased to RM3.10 then. And after appropriation, the Government can either lower the toll rate substantially and its revenues be used to expand its public transportation infrastructure.
So, what say you, Barisan Nasional?
35 comments:
tony,
i hope this is not left pocket into right pocket change from BN pocket into PR pocket.
the rakyat is suffering. please think of the road users, thousands who need to use LDP every single day and pay money to use THE only road available.
Rakyat is stupid no more. Don't take the vote and support as license to takeover the 'robbery'.
Robin Hood is not welcomed in this country. We all know what Robin Hoods of this modern time can become. NEP was supposedly designed to 'rob' the rich to help the poor. Unfortunately, humans have a strange reaction to 'easy money' and this nation has reduced to nothing but a poor and corrupt one.
don't give craps like wanting to use the toll collection for other Rakyat's benefit. robbery is robbery.
Robin Hood is still a robber no matter what he uses the illegal money for.
koolgeek,
your comment is very funny. I'm wondering whether you interpret tony's idea wrongly or what.
Basically, what tony try to tell if i'm not mistaken is for government to buy the LDP and subsequently maintain the toll fee at the low end / reasonable amount.
At the same time, the profit gain from such reasonable fee could be used for improving of infrastructure which is fair enough.
regards,
PS
Dear YB,
Should a new federal government be formed in the next election, could the new government terminate these concessionaires? What other options are available to the new government if this is not possible.
Your comments please.
Thank you,
The Tipping Point
I'm not sure about koolgeek's maths here. Are you seeing something that Tony and quite a few others are seeing or quite something else? Please enlighten us......
I am all for buying over the highways. My stand is that it should not have been privatised in the first place.
And I would really like Tony to look at the machinations behind PLUS' takeover by the finance ministry. I am sure that has more interesting tidbits for us to pore over....
Habis la like this. Good business, then govt take back. Bad business, mati sendiri. Who want to invest here?
Well said & well done , YB Tony..!This was not a Privatisation,let alone to say a Business;May be reclassified it as a GAME (SureWin)"NationalFranchiseRobberization"(NFR=No-Friend-Rugi)It had no "risks" at all....because the GAME was fully POWERED by "UmnoGodoment" in every aspect in whatever means with No Timeframe....Every time,the "Robberaya" loses..it will appeal to be bailed out. Every time , the "Robberaya" want More, it will be compensated if not allowed..Do you think the "Robberaya" prefer to wait..in uncertainty situatuin todate..! The "UmnoGodoment intentionally throws the "Trump-Cards" to the Robberaya to play the GAME & make them become "Overnight Multi-Billionaire Entrepreneur "...!Do you think the Robberaya would let the Golden-Goose goes just like.....! Acquisition & Nationalisation again or Expropriation..under the "UmnoGodoment Power"...? Ha.ha..ha..!May be wait & see..Just Change It...in next G.E....!They will say they have no Money....unless pay by PR!The Power of Money or The power of Rakyat.....! Who....is going to be the WINNER...? God-Known.....
Tony,
I fully support your argument to expropriate LITRAK and other expressway concessionaire. But perhaps you should elaborate the idea further. You need to tell the public the whole package: buy back, yes. Then what follows? How is it going to work?
My idea is that the government could be and should be the owner of the highway asset, and privatise the operation to a company on a contract basis. Government will have control on toll pricing and get the profit or loss.
Another important point not mentioning by almost all politicians is that how by expropritating the expressway the larger plan of upgrading our public transport system can be realised. Tolled expressway is definitely a very very important piece in planning urban transport. If we want to achieve an affordable, efficient and sustainable urban transport in KL and in fact in anywhere in the world, I doubt we can afford to let the private concessionaire operating as it is right now.
The most important thing that will happen after buying over the highway is NOT lowering the toll charge. Rather, how can we fit that into a larger integrated public transport plan is crucial. What is the point of having everyone paying RM1 per toll in LDP (as opposed to RM1.60) but still stucked in traffic jam everyday. I would rather have the rich car drivers paying RM3 per toll, and the rest middle income group sitting comfortably in a bus paying RM2 per trip.
Make it happen. Public transport is the way forwards.
I am still affected by Chinese businessman's earlier comment and his getting personal with Tony.
Chinese businessman's idea of business friendly environment seems to be status quo of the present inefficient administration. While we should honour contracts signed, is it wrong to question why government leaders favoured businessmen at the expense of the public?
When taking into consideration the risks borne by the government for the privatizd projects, the concessionaires should have been able to offer much better deals instead of being greedy. Perhaps if what we perceived is true, then the actual returns may not be as attractive as they seem after taking into account payments to certain beneficiaries.
Anyway, I believe what the Pakatan is offering is not ready solution to 51 years of domineering rule, but a more open administration which any lack of experience is tempered by public opinions and constructive criticisms. Compare this with the current 'take it or leave it' or 'we have the mandate' so we can thump our noses at you kind of arrogance, which is better?
A more open administration is also more vulnerable, unlike now, which means any major problems and they will be thrown out by the voters. This is what we are hoping for, aren't we?
From the very beginning the privatisation of road construction is wrong. This is proven. Look at the tolls that we are paying, practically making holes in our pocket. For some it form a significant portion of their pay. And the many alternative road promises never materialize or worst still block to ensure that toll road makes more money. The BMC episode open many eyes because even the polis appears to take sides and sadly uses excessive force against the rakyat to protect the toll concessionaire.
Pua, EXPROPRIATION is unaccepted to the politician. Toll concessionaires are just Cashcows. And I believe they are also politically link. Meaning they are a source of funds for the politicians. Cut them off, you will cut away a major supply source....Will they exprop.....definitely not. But we must pursue till then end.
Rgds
Pathfinder
Yup. Its cheaper to take it over because interest rate is so low. Put it this way, when long term govt bond is trading at 3-4%, a 12%return of capital of essentially govt guaranteeed asset is daylight robbery.....
Anon @ 1:01 am
Did the concessionaire sign the agreement willingly or not? How can you say good biz = rugi, bad biz = pun rugi?
It is not exactly business in the true sense here anyway: guaranteed revenue, guaranteed debt, expropriations made on behalf. In these conditions, everyone would do "business" (the BN way).
Hi Tony, it doesn't take a genius to be able to digest what you wrote about.Malaysian highways are obviously damn good business. Everybody can see that. Except our government. And it really isn't brain surgery la. The flers in Singapore have long realised that roads and highways are a wonderful, long term business which generate rising revenues each year. And we all know how they have capitalised on that. Okay la so they channel the profits back into the system to benefit road users and public transport commuters which may not happen here but that is another story. Do you think you will get an answer to your questions?freadig
Take listed LITRAK private is even cheaper. Currently, Gamuda owns 46.5% and EPF owns 6.22%.
Currently, trading at RM1.85 -> mkt cap of RM915mln. Even with a 50% premium over current price still less than RM1.5 bn. But taking a listed company private is not an easy feat...
The LDP is actually part of the MRRII from the Petaling Jaya Selatan (Sunway) toll to the Petaling Jaya Utara (S.g Penchala) toll.
Get rid of these tolls and take over the other three toll gates (USJ and in Puchong) and there will be.....traffic jams still.
The only difference is that people will not be paying toll to sit in traffic jams-which is only just and reasonable.
But what I really want to see is better public transport service using these expressways.
The toll concessionaires can give back by allowing free transit for urban buses and introducing a "Bus Tag" system to reduce delays at toll plazas.
For example, consider the NKVE + DUKE corridor:
Public transport on this corridor would serve the rapidly expanding north Klang valley. It would provide direct public transport links between Klang and Shah Alam and west PJ and KL as well as Wangsa Maju and Ulu Kelang.
Routes serving this corridor could potentially integrate with the LRT and KTM Komuter network and pave the way for more rail lines in the future.
Cheers, Moaz
Singapore, good business gover take or compete. You telling me they got no investment from oversea compared to malaysia?
Tony,
I can't resist to comments (personal interpretation) on the
"revenues be used to expand its public transportation infrastructure". This translate to less car on the roads which then translate less petrol use and less Proton sales and finally less $$$ to someone somewhere...
The basic mistake was the lack of competitive bids in the selection of consessionaire; in addition, the successful concessionaire took full advantage by proposing and receiving profiteering rates. The EPU acted like the store keeper who helped the burglers. So whose fault was it? Unwise and dishonest politicians; because they favoured the concessionaire over the people who voted them; the voters , because they voted in crooks time and time again.
While on the issue of unfair contracts, why not also check IPP contracts where TNB and by extension the consumers were forced to pay higher rates. In all of these, there is a similarity, ie the store keeper worked hand in glove with the burglers and the people become the victims. The store keepers all made their pile and disappear now, but if we dig deep enough, there's still a chance to expose the crooked store keeper.
I'm all for expropriation. However, my only concern is the upkeep of the highways by the civil service. I think a good workaround would be to collect toll as usual but the money goes to a contractor which will manage the upkeep.
Of course, open tender is preferred.
For a start, the government should withdraw all subsidy and allow the toll rate to be what it is contractually supposed to be. The higher toll will drive down the earnings and, therefore, the value of the company. This will make it easier to takeover. The present 'subsidy' using public funds is merely increasing the usage, thereby increasing profits to the concessionaires.
YB Tony, You are the best...!Hopefully, more younger generations like you in our homeland !More and more....!
It's a long and tough journey in fighting for justice...for people-orientated-government.. .!May be this is the RIGHT-TIME. You have all our supports...!Be very certain in every thing..make sure the whole process going on...with due diligence study and impact..back-up plans....never be trapped....by the demon...!
It's not only economy..but the politics too....!
May God bless you.
YB Tony,
Long time no leave comment here. All the best to Pakatan Rakyat for the coming KT by-election.
Toll concessionaire agreement been signed, what ever government can do it base on the agreement. Like it or not, we have to follow. Gentleman ma... Fair enough...
If Federal Government refuse to privatised it, do the State government have the right? If yes, why not the state government do so? As long as you Pakatan Rakyat do what ever decision base on competence, accountable and transparent (CAT), I will support on it.
Last blogged by Tony, someone say that 14 times return is fair enough, I agree on it by the principal of CAT.
Everyone like profit, but are we ethical enough when make the profit. Legal or not is another issue, someone maybe can do something base on law, but... ... (can't comment much here)
We not need to argue over this issue, different people have different point of views. Let the rakyat to choice, what, which, who political parties they want.
Let rakyat have better life, is my ultimate goal. Increase Malaysia productivity, efficiency & etc.
I like Malaysia, I am proud to become bangsa Malaysia.
Tony,
cannot thank you enough to you, Teo Nie Ching and Lim Lip Eng for analysing those contracts immediate when they are available.
Thank you for providing such fine analysis under time constrain and maintaining your cool. I would have read 3 pages of the agreement, cussed and died of spontaneous combustion.
Ong Tee Keat the transport minister has hardly uttered a word about the lopsided agreement. if BN can claim PR has no experience in governing, I dare say no one in the world has experience drafting such lop sided agreement.
Che Det has left us citizens a mountain of debt to pay. I would love it if we could do a Sadat, nationalizing these assets and kick out the rent seekers but to preserve the good name of the Malaysian government, we have no choice but to honour the contract no matter how stupidly agreed to by the office bears, past and present.
Is the any clause that the concessionaires did not comply that would render the contract voidable?
Regards
Lee Wee Tak
hmm... how about buying back all the tolls and collect a minimum RM1 only. All the profit made by the highways are to be channeled to our public transport - LRT and Bus.
Was just wondering if you have the numbers for the 'maintenance' of the road? I think that you will need to factor this into the maths if it is significant. If the government expropriates the road, it would still need to spend money on maintenance. If the government decides to still collect a lower rate toll, it would still need to spend money on hiring people to do it too. Just wondering.
Hi Tony,
My comments would seem to detract from the discussion on highways but i believe this topic warrant a space in your blog and I don't see where I can post comments, so forgive me posting this here. Would love to hear your view on this.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_325155.html
I know that this should belong to your Education in Malaysia blog but there would be interest as to how we (Malaysia) would want to continue to groom people like her and retain people like her. I don't think the current government cares about these talents as I don't see much being done.
Improvement of mobility along LDP can only happen after a proper public transport system along that corridor is set up. The flow should go something like this:
Expropriation >> Toll money for public transit >> Shift of some users to public transit >> Reduction in total traffic flow >> Continue funding transit through toll collection
This is because the only way to reduce congestion is to reduce its users, and a recent study in UK has shown that only those road congestion methods that take money out of people's pockets are effective. Thus carpooling, new highways, odd/even number plates restrictions, HOV lanes: ineffective; but congestion pricing, expensive parking fees: effective.
What's done is done. It's a huge damage to the rakyat. Yes, we may have the lowest toll rates - but the point that is missing here is that we have TOO MANY tolls. Our current & previous transport ministers fail to admit this & always use the Samy Vellu answer method that compare with this country that country, M'sia toll rates are lowest.
In the first place, all those directors of the toll concessionaires are only proxies to unknown masters. Everything the ruling gov (BN) touches are all sensitive matters as it is to protect those in power.
First, all the directors (god knows how many...if not wrong I recall seeing 12 in PLUS alone) have to wiped out - & this will save the rakyat a lot of $$$ or channel it for better use than just to a few (this is the NEP policy again). How much are each of these directors raking? How were they appointed? Where did they get the $$$ to be a director in the first place?
Once that is done & millions saved, the cost of operation will be lower. A std rate of RM 1 toll is not a bad idea. How can one justify that the roads for public use must be a profit generated entity? In that case, what is road tax for? Besides road tax, why do we pay excise & sales tax for car purchased?
Basically, we are being shortchanged by our gov & by the policies they engineered.
Malaysia will sell a record amount of bonds this year to fund economic stimulus spending and may offer its first foreign-currency bonds since 2002, according to CIMB Investment Bank Bhd.
The finance ministry will probably sell a record 73 billion ringgit ($20.9 billion) of securities as revenue trails spending for an 11th straight year, said Lum Choong Kuan, head of bond research at CIMB, a unit of Bumiputera-Commerce Holdings Bhd., the second-largest banking group.
Link:
http://www.bloomberg.com/apps/news?pid=20601009
&sid=aGzwyKhvbyHU&refer=bond
Y only that company can operate LDP?
Y government dont appoint my company????
VERY UNFAIR!!!!
tony,
we certainly need more leaders like you who see from the people's perspective. this trend of poor governance must end if M'sia is ever goin to progress fwd. another case in point is the klia@east airport that they want to build - more excess 'investment' and to wat end?? to serve one man's (or maybe a few men) ambitions?? knock some sense into them pls.
Rakyat Malaysia tidak mudah lagi diperdayakan oleh "Pembesar-pembesar proxi tersembunyi di belakang KUASA-KUASA yang diberi oleh Rakyat Malaysia" yang hanya sanggup "Berfikir" memperkayakan diri-sendiri sekeluarga serta kelompok-kelompok tertentu masing-masing atas penderitaan dan kesusah-payahan hidup rakyat biasa, KUALITI KOS-HIDUP-RAKYAT-MALAYSIA KIAN HARI KIAN NAIK DALAM SEGALA-GALANYA APAPUN URUSAN HARI-HARIAN..!Baik Swasta mahupun Awam...!MakanMinumLuarNaik ,DudukTidurRumahLetrikNaik,TakMakanTakTidur-Jalan-JalanTollNaik....!Takkan Negara tercintaku hanya bagi ORANG-ORANG KAYA-RAYA DAN BERKUASA SAHAJA..dapat hidup sahaja!
Sanggupkah Tuan-tuan jangan hanya fikir BUAT-DUIT sahaja..!Ingatlah Tuhan..Ingatlah Rakyat-Biasa.!Mamapukah Tuan-tuan berikanlah sikit "RUANG untuk Rakyat Malaysia BERNAFAS " Janganlah sampai suatu waktu Wawasan 2020 NEGARA MAJU MALAYSIA, "UDARA yang dihisap pun KENA BAYAR jugak"...!
Tuan-tuan yang termulia di bumi ini ,berhentilah buat Rakyat-BIASA-Malaysia terus menjadi ATM Tuan-tuan sekalian......!
Buatlah sesuatu yang dapat memperkayakan Negara,Bangsa dan Agama....Kalau nak Buat-Duit, buatlah di tempat-tempat orang Luar,janganlah hanya fikir poket-poket rakyat biasa yang hanya cukup bulan cukup makan minum sahaja...!
Mr. Pua can I bring to your attention 2 interesting articles I have come across.
Article 1
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/10/AR2009011002236_2.html
The article above (last paragraph on the 2nd has more details), indicates there is a network of companies in Malaysia aiding Iran to get banned US technology.
Article 2
In a rather longish article in the New York Times, I came across a reference to a Malaysia company, the Malaysian Smelting Co. this is a company listed on the KLSE but it looks like the majority shareholders are Singaporeans.
The relevant page is below.
http://www.nytimes.com/2008/11/16/world/africa/16congo.html?pagewanted=4
on the 2nd last paragraph on this page, it implies that Malaysian Smelting Company is buying Tin from international brokers who source from the conflict zone in Congo.
the exact extract is :-
The flights land in Goma, the provincial capital, where other middlemen buy and process the ore for export. Alexis Makabuza’s Global Mining Company is one of these buyers. Amid the sorting and cleaning equipment of his rudimentary processing plant sit dozens of barrels of tin ore. On each is stenciled the address of Malaysian Smelting Company Berhad, a major tin smelter. Mr. Makabuza said he sold to the company via a minerals broker.
Further reference to Malaysian companies buying tin from warlords in the Congo is here from the BBC
http://news.bbc.co.uk/2/hi/business/7723988.stm
The extract from the BBC article is below :-
Located predominantly in India, China, Malaysia and Thailand, these smelters sell tin to component manufacturers.
So while Malaysian Smelting Co buys from an international broker, it can request that they not source from Congo. If you read the entire article you will realise that buying these ore’s are only lining the pockets of these warlords and destabilising the country.
I e-mailed the company but they have not replied. I would have not replied too in similar circumstances.
Why not setting up an fund ala Amanah Saham Wawasan to expropriate the toll concessionaire? We would raise the money in no time as in latest ASW units offer, and the return would be to the rakyat who owns this fund. The rate return might be lower, but the toll is also lower. there's no need to increase toll, as investors can ditch out anytime they want. its a matter of either BN government wants it or not. same for pakatan rakyat.
The focus on the concession by PKR is wrong. The agreements will probably look kosher. It will show a reasonable ROI and reasonable profit guarantees by Govt.What everyone is forgetting is that the ROI's and guarantees are based on HIGHLY inflated construction costs ie high cost therefore quantum of return high even if ROI % is reasonable. If I remember correctly, LDP cost RM 40 mill a km and Sprint cost 60 mill a km.I guarantee you no JKR QS will dare sign off on these cost figures.If concessionaires use these costs figures to nego the agreements, it would be tough not to make money !
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