Wednesday, October 13, 2010

4 More New Tolled Highways?

Has the Prime Minister really learnt the lesson on privatisation? Will the proposed 4 new highways expected to be announced in the Budget 2011 by awarded directly without tenders?

The Edge Financial Daily had reported yesterday that 4 new tolled highways have been proposed for the peninsula and are likely to be announced during the Budget 2011 speech on Friday.
“It is understood that PLUS Expressways Bhd would be the concession operator of two of the roads, while Permodalan Nasional Bhd (PNB) wuld run the other two.

The highways to be operated by PLUS are from Sungai Dua to Juru in Penang, and from Kinrara to Damansara in the Klang Valley, while the PNB-operated highways are said to be from Ampang to Cheras and from Damansara to Sg Buloh.”
This piece of news comes as a surprise, first with the Government and Economic Transformation Programmes prioritsing and focusing on public transportation, while secondly, and more importantly, there appears to be no indication at all that these projects are being tendered on a open and competitive basis as promised under the Prime Minister's “New Economic Model (NEM)”.

In fact, one doesn't have to look into the NEM to see that the Prime Minister knows full well the negative impacts of a poorly managed, directly awarded privatisation exercises. Even before the last General Elections in 2008, Datuk Seri Najib Abdul Razak had in his keynote address at the Jeddah Economic Forum (February 2007), outlined the lessons Malaysia has gained from the privatisation exercises since the 1980s.

Firstly, he said that the Government, whenever and wherever possible, should allow for competitive bidding for privatised assets or concessions and ensure that the process is transparent and fair.

He added that even when there is a national agenda of preferential treatment in favour of disadvantaged economic groups, there must be enough competition within this group to ensure that only those with the necessary skills, capabilities and resources are selected.

Secondly, he specifically advised against a "first come first serve" approach. The then deputy prime minister had admitted that “our experience has also shown that by providing exclusivity to one party, this approach has the real potential to escalate the eventual costs and burden to consumers and the taxpayer.”

At the same time, he said that he would be mindful of public concerns over tariff rates and tariff increases. He said that “in designing contracts, we must avoid in-built automatic escalation of tariffs that are not linked to performance and quality of services provided.”

It was an open admission that our Malaysian privatisation policy since the 1980s is a failure in many aspects. The question is, while Datuk Seri Najib has eloquently critiqued our privatisation policies to date to a group of international investors, has he or will he be practicing what he preaches in the “New Economic Model”?

Should the report by The Edge Financial Daily be true, then we fear that the Government has chosen not to exercise its duties in a responsible manner to the rakyat especially when the Government had told the rakyat that we need to tighten our belts and absorb the planned subsidy cuts to help the Government reduce its budget deficits. However, at the same time, the Government is clearly not making its best effort to help the rakyat increase their quality of living and reduce the cost of living by ensuring that toll tariffs are kept to the minimum and imposed only when strictly necessary.

The Prime Minister must explain during his upcoming budget speech if “open tenders” is going to be a cornerstone of his administration, not only for the purchases of “pen and paper”, but more importantly or all the mega-projects being awarded under the guise of “public finance initiatives (PFIs)” or “public-private partnerships (PPP)”.
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