Wednesday, April 01, 2009

MCA: Yes, Please Buy PLUS!

It took a while for the official statement to come out since the highway contracts were declassified in January, but MCA has finally issued an one with regards to the Party supporting the "buy-back" programme for PLUS. See the reports in The Sun and Malaysiakini.

The gist of the proposal is roughly similar to the one presented by DAP's Ops Restore, which was also highlighted in Parliament by Sdr Lim Kit Siang. The Finance Ministry has already responded verbally as well as in writing that the proposal is being evaluated.

The key difference between the DAP and MCA proposal is the treatment of the highways after the buy-back by the Government. We have proposed that it be owned as a Government entity, while MCA has proposed a "socially responsible commercial entity" which continues to give some returns to the Government and EPF. We proposed that the outstanding loans be repaid in full over 6 years, while MCA's proposal will repay these loans at a slower pace over 13 years.

While I find the concept of a "socially responsible" commercial entity at best a difficult concept to make practical, at worst an oxymoron, MCA' proposal is nevertheless much better than the current situation we have based on the existing contract. Hence if their proposal is accepted and tabled in parliament or in public by the Barisan Nasional Government, we will give our full support to the exercise.

Of interesting note though, I find it curious that the examples and figures cited were a little too eerily similar to ours...

MCA said that
...the toll rate is currently set at 14.96 sen per km and by 2038, the toll rate is expected to double to 29.16 sen per km. As such, a trip from KL to Penang costing RM86 one-way would cost RM168 by 2038.
In our published statement earlier, we said that
...a return KL-Penang journey will remain at RM86.60 today instead of RM115.30 in 2015 and RM168.80 by 2030.
And yes, they got the figures wrong. It's RM168.80 by 2030 not 2038. In 2038, the toll rate for a return trip to Penang will be RM247 (!).

Also, MCA suggested
Assuming a share price of RM3.50 to RM4 per share is offered for the acquisition of the remaining shares, the total acquisition price would be between RM4.55 billion and RM5.2 billion.
Wah, based on the current price of less than RM3.00, that's a huge premium offered, between 20% to 38%! Under normal circumstances, a 15% premium will more than suffice.

But as I mentioned earlier, we shouldn't be picky. DAP will fully support MCA's buy-back proposal in principle and we'll even go to the extent of doing a joint committee with them, should it make it more likely for the buy-back to happen.
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