Saturday, February 28, 2009

"Unsound Mind"

I was speaking at a forum organised by the Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM) this morning with regards to the "Declassified Highway Concession" contracts. I won't bore you with many of the details which I have already written about, but I thought this particular exchange with a member of the audience was most witty ;-)

Someone asked, given the unreasonableness of the terms of these highway concession contracts, isn't it possible that someone challenge their validity in the courts? To a lay man like me, that certainly sounds plausible. No?

But my colleague who was speaking at the same forum, a lawyer and MP for Serdang, Teo Nie Ching, responded that the unreasonableness of the terms of these contracts can only be challenged for their validity in court for 2 possible grounds.

The first, was if the contracts were signed under duress a-la the alleged resignation letters signed by the Perak assemblymen. Well, this is clearly no go, for the Government couldn't have justified itself in court that they signed these unfair terms "under duress" (they're the Government, for goodness sake!). So that's out.

But the second, was more interesting. You could challenge the validity of the unreasonable terms, and hence the contracts, if you could prove to the courts that they were signed when you are of "unsound mind".

The floor cracked up laughing when Nie Ching asserted that, it might just work for not many would deny the fact that the BN Government (and its ministers) are of "unsound mind" especially in the light of the their many perplexing decisions, and worse, their subsequent flip-flops and U-turns! ;-)

Anybody want to volunteer giving it a shot? ;-)

Buy Up PLUS: Yes or No?

Frankly speaking, I quite like the new Works Minister, Dato Mohd Zin Mohamed. He's the only Minister I know to date, that actually replies to every small query which was raised within any of my speeches. And when Parliament's not in session, his office will mail the answer(s) to me. I was frankly speaking, impressed. And honestly, I think (for whatever reasons), he does try to improve things within his very very limited means and scope.

But you'll certainly have to help me here with the cryptic answer he gave in a short interview with Malaysiakini after announcing the embarrassing 24-hour U-Turn of the toll rates increase for several highways.
Why can’t the government buy up the highways?

That is the principle of privatisation to nationalisation. We have to look at the financial capabilities of the government, what would be total liability, who are the shareholders. It is not also technical parameters but financial parameters we would have to address.

Are you looking into it?

I’m just defining the parameters we have to is a question if whether we want to stick to privatisation vis-a-vis nationalisation.

What do you think of DAP’s proposal for the government to buy up Plus highway?

Anyone can come up (with such plans). What Tony Pua should do is not look at Plus as a standalone. The whole concession is operating as an integrated entity.

Are you rejecting his proposal?

I didn’t say that.
So what say you? I can assure you that based on the declassified contract agreements, the Government can certainly afford to "expropriate" many of these toll concessionaires.  But  I didn't understand his "operating as an integrated entity" bit, but if it's any consolation, he hasn't yet rejected our very constructive PLUS buy-back proposal ;-)

Friday, February 27, 2009

BN Rubs Salt On Our Wounds

At a time when Malaysians are facing the greatest economic challenge, when 100,000 Malaysians are expected to be out of a job by the end of the year as projected by the Minister of Human Resources, the Barisan Nasional Government has decided to increase toll rates from 5 to 25% for 5 toll concessions, while at the same time still pay compensation amounting to RM277 million to these toll concessionaires! The act is clearly a case of rubbing salt onto the wounds of anxious and suffering Malaysians.

In announcing this, Works Minister Datuk Seri Mohd Zin Mohammed said the increase was “minimal” and hoped the public understood that the increase was “stipulated in the concession agreements” that the government had signed.

Firstly we will like to reiterate that the increase was by no means minimal. For PLUS itself, even a 5% increase in toll rates will increase toll revenue by as much as RM120 million in 2009. This doesn't yet take into consideration the fact that the Government is likely to have to compensate PLUS for the other 5% which has yet to be increased, which may be an additional RM100 million. It is an insult for to all Malaysians to say that RM220 million to be incurred by road users and tax-payers “minimal”, especially in times of economic hardship, and shortfall in Government revenues.

In fact, we would like to ask the Government if the compensation sums being paid to concessionares are part of the “economic stimulus packages” to help turnaround our economy, badly affected by the global economic crisis.

Secondly, while the toll rate increase is indeed “stipulated in the concession agreements”, there were also other clauses stipulated in the agreements such as the “expropriation” clause which the Government has chosen to blatantly ignore. This selective compliance to the legal agreements smacks of a government favouring the interest of cronies instead of those of the people.

The DAP Ops Restore team has demonstrated using many examples over the past 2 months how expropriating these highways as per the terms “stipulated in the conession agreements” are more economical and cost effective for both the Government and the road users. But the Government continues to turn a blind eye to these constructive proposals.

Just yesterday, the team have outlined a detailed proposal on how the Government can “take back” PLUS Expressways Bhd without costing tax-payers a single cent and without unfairly penalising minority shareholders (they are to be offered 15% premium to the current share price) which will result in a toll-free North South Expressway by 2016.

Why does the Government who owns directly 65% of PLUS Expressway, continue to choose the route of unfairly “taxing” road-users and tax-payers (if compensation is paid) instead of taking appropriate actions to help the people?

It should also be noted that PLUS Expressways is extremely profitable. PLUS made RM1.31 billion in net profits before tax, which translates into an enormous net profit margin of 57.3% in 2007!

The privatisation policies a-la Barisan Nasional have brought an enourmous burden on all Malaysians and have profited only Barisan Nasional crony businessmen. If Prime Minister-elect, Datuk Seri Najib Abdul Razak wants to commence his term on the right note, then we call upon him to take back these highways, and other unfairly privatised projects to relieve the burden of the rakyat, especially in these difficult times.

Thursday, February 26, 2009

PLUS Toll Free by 2016?

Well, if Pakatan takes over the Government.

Just as we had a press conference yesterday to provide the Government with a proposal to make PLUS toll free by 2016, in a most timely manner, our Government decides that a toll rate increase for PLUS (and 4 other highways) are most appropriate today.

But before I make my comment on the toll rate increase as announced by the Works Minister today, coming so soon after the celebratory toll booth "demolition" at Sungei Besi Highway and New Pantai Expressway, here's our concrete proposal on how we can have a toll-free PLUS by 2016 without costing the Government a single cent!

The DAP Ops RESTORE Team calls upon both the Works and Finance Ministers to make the entire North-South Highway and its related concessions such as the ELITE, Butterworth-Kulim (BKE) and the Second Link Highways under PLUS Expressways Bhd completely toll free by 2016.

Following our team's consultations to date with our legal experts, investment bankers as well as the general public, we have developed a comprehensive, practicable and creative programme to return the highways to the people in the least possible cost, and shortest possible time without compromising the integrity of the financial markets.

Our proposal will:
  • Impose no further increase in North-South Highway toll rates

    For example, a return KL-Penang journey will remain at RM86.60 today instead of RM115.30 in 2015 and RM168.80 by 2030.

  • Create RM14 billion savings for Malaysians from 2009-2015

    This will be the amount saved either (i) by Malaysians using the highway because of no further toll rate increases or (ii) in terms of compensation which would have to be paid by the Government to PLUS Expressways.

  • Continue to collect toll only until 2015

  • Incur no additional cost for the Malaysian Government or Malaysian tax-payers
Background information:
  • PLUS is listed on Bursa Malaysia at a price of RM2.88 per share and a market capitalisation of RM14.4 billion (24th February)

  • The Government of Malaysia, via Khazanah owns 65% of PLUS.

  • PLUS has outstanding net debt amounting to RM8.5 billion
We call upon the Government to take the following actions:
  1. The Government should make a General Offer (GO) to acquire all minority shareholders of PLUS with a generous 15% premium at RM3.30 per share, costing RM5.25 billion thus ensuring that minority shareholders are protected.

  2. The cost of acquisition, added to the RM8.5 billion net debt of PLUS will amount to RM13.75 billion.

  3. This cost will be funded by issuing Malaysian Government Securities (MGS) at 3% interest (or less), costing RM413 million per annum. Total repayment will amount to RM16.2 billion over 6 years.

  4. At the same time, PLUS should generate at least RM20b in net positive cashflow the 6 years to 2015 without further toll rate hikes and a conservative 3% pa traffic growth.

  5. Therefore by 2015, the government can completely repay the MGS and still have RM3.8 billion excess which could be used to build a better public transportation system throughout the country.
Not only will the execution of the above proposal bring joy to all Malaysians with a toll-free North South Expressway, the exercise will fit perfectly with the upcoming “mini-Budget” by the Finance Minister:
  • RM14 billion saved by Malaysian consumers will reduce the cost of living for the average Malaysian in times of economic difficulties we face today.

  • RM14 billion saved will also redirect expenditure to other more productive sectors of our economy by increasing domestic consumer demand.

  • The reduced toll rates and its subsequent abolition will substantially reduce the cost of doing business in Malaysia, increase logistical efficiencies and ultimately make Malaysian companies more globally competitive.

  • Best of all, the plan will stimulate demand and make available substantial funds for public infrastructure development without the Government having to increase the precarious budget deficit further.
Hence, the DAP Ops RESTORE Team would like to reiterate our call to both the Finance and Works Minister to include the above proposal in the proposed mini-budget set to be announced by the Finance Minister on the 10th March for the benefit of the Government and all Malaysians.

Wednesday, February 25, 2009

Supporting PAS?

I'll be honest. After nearly a year in a coalition partnership with PAS, have I managed to satisfy myself that I'm completely comfortable with PAS and all their principles and philosophy? No. There are issues of politics which I'm not so happy with in Selangor PAS, and there are of course issues which I've blogged often in relation to narrow views of "morality" (e.g., rock concerts are immoral) that pops up every now and then.

However, have there been a greater understanding of PAS as a political organisation, as well as much improved relationship with some of the leaders within PAS? Absolutely. I'll go so far as to say that I'm proud to be sitting on the same side of Parliament with some of these PAS leaders, whom I've grown to have tremendous amount of respect for.

As an example, I am completely impressed by PAS Member of Parliament for Shah Alam, Khalid Samad (for those who may not know, he's also Datuk Shahrir Samad's younger brother). If he is my MP, I'll give my vote to him any time, irrespective of who is challenging him from Barisan Nasional, be it UMNO, MCA or Gerakan. I can also say with utmost certainty that he will be one of the PAS candidates whom I'll be personally campaigning hard and actively for, in the next general elections - whenever and wherever he chooses to stand.

Checkout for example, one of his recent column contributions to The Malaysian Insider, entitled "A Question of Morality". It's certainly no ordinary piece, if you were to have a stereotypical impression of PAS leaders.

On differences on morality:
For Pas we have a clearly defined set of right and wrong, moral and immoral and although it may have similarities with some universal values, there are some huge differences particularly in that of the “personal arena”. What Pas and Islam see as immoral may be something quite acceptable in the eyes of other cultures. Take the question of drinking wine, for example. Similarly, there are items which Islam accepts, which to other cultures is not quite as acceptable. The easiest example here would be polygamy.
And on over-zealousness:
Actually it is this kind of zealousness which the non-Muslims fear from Pas and this is where we must emulate the spirit of the Islam more accurately. We should not become zealous moralists who wish to enforce their moral code on others. As I always say, preach, reason and argue with them in the best of ways. Never give them the impression that we wish to impose something on them irrespective of how noble the intentions. That was the way of the Prophet and that too must be our way.
Read of course, the full article for context. With enlightened leaders such as Khalid Samad, I certainly see no reason why the Pakatan Rakyat "shotgun" coalition cannot withstand the test of time. Instead, I can possibly imagine that the coalition partners can increase their mutual respect for each other with better understanding, which will ultimately deliver a better and brighter Malaysia in time to come. ;-)

Jed Yoong Faces Police Harrassment

A sometimes controversial blogger, and often a critic of Tony Pua, Wong Chun Wai and many others, is currently being harrassed by the Police. Honestly, I'm not a fan of Jed Yoong but I respect her right to freedom of speech and I never once attempted to stop her from say her piece.

But then again, I'm no fan of the Malaysian police either, who has a tendency to beat up citizens who light up candles for a cause in a peaceful manner, and take on (or ignore) investigations at the whims and fancies of their political masters. Clearly, Jed is now being investigated for sedition for one of her blog pieces, due to police reports filed by some UMNO ultras in Petaling Jaya.

Without dwelling on the merits of her case, the police investigation against her shows the bias of the force, for a similar report I made against "Kelab Penyokong Maya Umno" last year was never investigated despite my statement being taken.

The police attempted to intimidate bloggers last year, for example with the high profile arrest of Nathaniel Tan, and it appears that they'll only continue to exert such pressure on bloggers, possibly increasingly so, after Najib takes over as the new Prime Minister.

Anyway, below is the press statement issued by Jed Yoong to all press.

February 25, 2009 WEDNESDAY

Inspector Mohd Riduan Abd Majid (Office Phone No.: 03-26163989 / H/Phone No.: 019-9890484) from the Bukit Aman Commerical Crime Department's Cyber and Multimedia Crime Investigation Unit emailed me this morning, saying:

"I want to continue a statement recording with you. There are several questions to ask, so it will make your statement very clear. Hope you to come at JSJK Bukit Aman this evening at 5pm or 6pm. I will make it fast."

I've agreed to go in at 7pm this evening (Wednesday, Feb 25, 2009).

On Monday (23/02/2009), I went to the Bukit Aman Commerical Crime Department's Cyber and Multimedia Crime Investigation Unit and gave my statement to Inspector Riduan from about 6pm -- 10pm after he called and emailed me on the same day. I was unrepresented by a lawyer as, when asked, Inspector Riduan says he doesn't need one.

Under tremendous pressure, with my handphone taken away from me, facing two officers and one or two that came in and out, I felt I had no choice but to give and sign a statement against my wishes in order to ensure my safety. Riduan at many points refuse to allow me to give me the answers that I want and changed my statement many times to fit his preferred answers. I was also not allowed to see the police report and had no idea why I was being interrogated. However, the police were courteous and professional at all times and I am happy to cooperate with the police who are merely doing their jobs.

Following that, at about 10pm, as instructed by the police, I brought four policemen (ASP Hazizi Bin A Samad, Insp Mohd Faizal B Zainal, Insp Zurina Bt Alias and KPL 128548 Zawahid Bin Nik) to my family's house. I led the way with Insp Zuraina in the car while the others followed my car.

Before entering my house ASP Hazizi informed me that he is entering the premises and seizing my computers under the Sedition Act, which I am being investigated under. They came in drew floor plans of my house, took photos, recorded videos and confiscated my laptop, its power cable, a desktop CPU, a router and a modem. At all times, the police were professional and courteous.

The next day (Tuesday, February 24, 2009), I lodged a police report at the Brickfields police station/IPD about the the items confiscated as I am concerned that the data in the items would be tampered with as I am not the only one using the computers (which are not password protected) and I did not check the data before I handed over the items to the police.

I feel that I am being set up by the police and my rights has been violated as I've not been shown the police report, my statement taken from me under conditions in which I feared for my safety, items seized from my house and I've not been advised by the police to get legal representation.

If I have broken any laws, I wish to say that it is unintentional and there is no malice involved, what more an intent to incite hatred of any sorts. I am merely expressing my opinion using modern technology in the 21st century.

I feel that the country's laws are not equally applied to everyone but used to silent dissent, in particular ordinary bloggers with no political backing.

My blog is not particularly influential, compared to mainstream newspapers like Utusan, The Star, Sin Chew, etc, and other news outlets like TV3. These media have the potential to easily incite hatred and cause racial riots. In my view, in many cases, the Malay-vernacular press have published many articles that can be said to incite racial hatred, for instance, Utusan's frontpage yesterday that claimed DAP Hina Islam? (DAP Insults Islam?) ( )

Hence I strongly feel it is ludicrous and absurd to say that I can even influence anyone what more incite racial hatred or any sort of hatred towards anyone. If anyone is hateful, they will be so without reading my blog. I am not God.

I also wish to say as a Malaysian, I am loyal to King and Country. In many posts I've always expressed my gratitude towards the country for allowing my family to have a happy prosperous live, especially under the Barisan government led by Dr Mahathir Mohamad. If I've offended anyone with my honest feelings based on facts, it is not my intention to do so. In the 21st century, rulers of all kind should be open to feedback because after all they are not gods that are are beyond reproach.

It would be much appreciated if the media will carry my statement or send reporters to the Bukit Aman Commercial Crimes Unit tonite. I will be there from 7pm and am not sure what time this second interrogation will end.

I've lost my handphone and can only be contacted via email now till I get a new handphone later today.


Jed Yoong Yui Foong

Offer to Water Concessionaires Sabotaged

As highlighted in the earlier blog post, the Selangor Government's offer to acquire the assets and concessions from the privatised water companies in the state was sabotaged by the Federal Government in a most shocking manner, and it certainly reeks of another mega bailout for failed privatisation projects.

The Selangor Members of Parliaments involved in the above acquisition exercise issued another statement yesterday to the above effect, as follows:

Federal Government Sabotaged Offer by Selangor Government to Acquire Water Assets and Concession in the State

The Selangor state government made an offer to 4 privatised water service providers – Puncak Niaga Sdn Bhd (PNSB), SYABAS, SPLASH and ABASS to acquire their water assets and concessions on the 13th February 2009.

The combined RM5.71 billion offered was made with the objective to deliver the lowest possible water tarriffs for the residents of Selangor and Kuala Lumpur. At the same time, the offer was consistent with, and guided by the terms and conditions specified in the concession agreements signed willingly by all parties involved. It was a comprehensive offer because it encompasses the audited asset value of all water-related assets as well as a very fair and reasonable return to the capital invested by the respective concessionaires.

However, before the concessionaires are able to respond to the state government's offer by the 20th February, we are shocked that the Ministry of Energy, Water and Communications, via Dato Teo Yen Hua, CEO of National Water Services Commission (SPAN) announced on the 18th February that the Federal Government will proceed to negotiate directly with the water concessionaires.

Instead of supporting the state's offer, SPAN intentionally threw a spanner in the works to sabotage the Selangor state's attempt at delivering the lowest possible water tarriffs to her people.

For with an alternative competing offer which will not only encompass higher cash valuation but also more lucrative terms and conditions from the Federal Government, SPAN has single-handedly destroyed any likelihood of a positive response from the concessionaires to the state government.

Therefore with SPAN's interference, it was not surprising that the concessionaires rejected the state government's offer on 20th February, last Friday. We will like to call upon the Minister to explain the actions of his Ministry for sabotaging the efforts of the Selangor State Government.

We will like to reiterate our position that if the offer from the Federal Government to acquire these assets and concessions at the same or lower price than what the Selangor state government has offered, we will not only agree to letting the Federal Government lead the negotiations, but also provide the Ministry with our full support and co-operation.

If however, the Ministry offers the concessionaires a much higher cash value for its assets as well as lucrative license terms for them to continue as the water operators in the state, the Minister must explain why he is forsaking the rights and interest of 7.3 million population of Selangor and Kuala Lumpur.

We will also like to emphasize to the Minister that under the law, particularly the Water Services Industry Act 2006, as well as the terms of the current concession contracts, the Selangor state is a counter-party to all previous and future agreements. Hence the attempt by the Federal Government to unilaterally negotiate with the concessionaires is illegal and will be subjected to future dispute and complications.

Therefore, we call upon the Federal Government to respect the rights of the State and let the Selangor Government proceed with the negotiations with the concessionaires in the interest of the people of Selangor and Kuala Lumpur.

Monday, February 23, 2009

Bailout a-la TARP

The US mega US$800 billion Troubled Assets Relief Programme (TARP) has been subjected to ridicule for its failure of reviving the US economy. But these pictures (which I have received via email) were certainly the best (most ticklish) "commentary" I've seen to date. Enjoy.

What happens next?

Umm... the next picture is still in the process of being taken... ;-)

Sunday, February 22, 2009

Love Affair With Air Asia

There's enough vitriol spewed over the last few weeks in Malaysian politics to make one nauseous. Well, it's a Sunday, so I thought I should have a change in pace and blog about my love affair, well, one with Air Asia. (So don't expect to find me caught on camera a la CSL ;-))

I wrote an article a few weeks back which was published in The NutGraph (which they re-titled "Loving Air Asia")
I have the greatest admiration for Datuk Seri Tony Fernandes, and I'm not abashed to loudly proclaim the fact that I'm a fan of Air Asia, and what it has done not only for travel in Malaysia, but for the entire region. A former colleague of mine once told me, if there's anyone who deserved his datukship, its Tony Fernandes.

Air Asia's mantra of “Now Everyone Can Fly” has really taken millions places, many of whom have never flown before. The airline is of course not without criticism, one of the most ticklish was the perversion of its motto to “Now Everyone Can Wait” for the frequency of flight delays, particularly in its early years. I've often been a victim of Air Asia delays myself, but it's a price and risk I'm willing to pay, in exchange for the affordability it affords me in travelling. After all, I've also suffered delays on trips with either the Malaysian Airline System (MAS) or the world renown Singapore Airlines (SIA).
Now, I know there are many out there who have negative sentiments against Air Asia, some of whom are my Pakatan Rakyat fellow Members of Parliament, especially over the recent issue of the still-born Labu "KLIA East" airport. But if you read my story, you'd know that my "love affair" is personal. I further believe that since I don't hold back much when "whacking" things I find distasteful (e.g., Barisan Nasional), I should also do the same for things which I really like, even if its against the grain.  You can read the full story at The NutGraph here.

I do have a part II to the above story, focusing a little more on the KLIA-East but given all the other urgent and critical things happening around us today, you may still have to wait a little before the second part sees the light of day ;-)

I'm also a big big fan of Tony Fernandes as a real entrepreneur, and I'll put him right up there with the best in the region. In fact, anyone with real ambitions to become an entrepreneur in Malaysia (I for one, had only half-ambitions, prefering early retirement ;-)), should emulate his "gung-ho" spirit. Unlike many of our country's pseudo-pretend-entrepreneurs who rely on government concession and oblique guarantees to become multi-millionaires, Tony made it big with no government guaranteed passenger traffic, protected air routes, monopoly license or government underwritten loans.

His "politics" could of course do with some improvements (speaking at Shahrizat's campaign trail(?!) Faint!) but everyone makes an honest mistake now and then ;-) After all, I was sympathetic to Pak Lah at the start of his reign, and Jeff Ooi, my fellow compatriot today, even campaigned in 2004 for BN!

For everyone's information, I don't own any shares in Air Asia although I watch over its performance. I have Tony Fernandes' handphone number, but we're not drinking buddies. I don't fly free on Air Asia although they sponsored a ticket each to Macau and Bali for my Charity Golf Tournament in October last year (Tony, I'm sure you can do better than that!!) And Tony is certainly no crony of Tony's for there's nothing I can offer except to buy air tickets at bargain basement prices. ;-)

Friday, February 20, 2009

Bailout of Water Concessionaires Begins

Almost as if on cue, the Federal Government has dismissed the Selangor state government's attempts to return the rights of cheap water and efficient water supply to the people of Selangor and Kuala Lumpur.

Two days ago, National Commission of Water Services (SPAN), on behalf of the Ministry of Energy, Water & Communications, surprised the state and the public by declaring that the Federal Government will unilaterally proceed to negotiate with the water concessionaires in the state directly, by-passing the state.

The CEO of SPAN, Dato Teo Yen Hua (one of those behind the failed original water privatisation exercise which screwed Malaysians throughout the country in the first place) gave some flimsy excuse of an alleged non-existent deadline which was missed by less than week, acting almost like a lackey for the concessionaires.

This came while the state government was still waiting for a response from the respective concessionaires on our earlier buy back offer. In fact, the SPAN U-turn trespasses the constitutional rights of the state and the Menteri Besar, Tan Sri Khalid Ibrahim rightly rapped SPAN and demanded that Dato 'mischievous' Teo declare his interest in the matter.

It was a clear attempt at sabotaging the state negotiations as the concessionaires will clearly reject the offers by the state as they know that the Federal Government will definitely pay much more money to take back their concessions!

Unsurprisingly, as if on cue, these concessionaires rejected Selangor's offer today (Puncak Niaga & Syabas here, Gamuda & Kumpulan Perangsang here) while obviously twiddingly their thumbs and licking their lips for a much more lucrative offer from the BN Government to line their pockets.

As highlighted in my earlier post, the Minister in this case has near absolute powers to determine the outcome of the restructuring exercise. It now appears that he will not use these powers to protect the rights and interests of the rakyat, but instead abuse it only to enrich and bailout the water concession cronies. The country is getting raped twice, right before our very eyes.

Thursday, February 19, 2009

Promised LRT Extensions Delayed

Charts courtesy of The Malay Mail

Another broken promise by the Barisan Nasional government. Only Malay Mail published the story on the delay to the promised extension to the Kelana Jaya LRT line to Subang Jaya.
The trains Klang Valley commuters have been waiting for to alleviate their misery will be delayed — yet again.

Word from transport industry sources is that planned additional lines and stations for the light rail train (LRT) network is now projected to be ready only in 2013 — three years later than originally planned.
To our Minister of Transport, Datuk Seri Ong Tee Keat, how come no announcement? What has happened to all which have been promised in the Budget 2009 for public transportation? What happened to the RM35 billion public transportation fund, and the Public Transport Commission promised by the Prime Minister himself?

Below is a letter from Moaz Ahmad from the Association For The Improvement Of Mass Transit’ (TRANSIT) on the issue.
LRT delay to 2013 (at least) is not a surprise

The quiet announcement of the delay of the opening of the LRT extension to at least 2013 probably did not come as a surprise to many Malaysians. After all, the LRT extensions have been promised, promised, and promised again. Malaysians keep on believing these promises hoping that things are going to happen because of the confident announcements coming from the cabinet and the Prime Minister's office.

One has to wonder if the recent switch of the Defense and Finance portfolios may have something to do with the delays. When Dato' Seri Abdullah became Prime Minister he reviewed many of the projects initiated by Tun Dr. Mahathir and shelved some of them (such as the double tracking and electrification). Would it be much of a surprise if Dato Seri Najib want to do a similar review?

There are also many mixed messages and "behind-the-scenes" events that make it clear that Prasarana, the National Infrastructure Company, will not be able to complete the LRT until 2013 (if not later). Prasarana's former CEO, Shaipudin Shah Hasan, resigned suddenly on September 19, 2008 - the day after attending the National Summit on Urban Public Transport and talking about plans for the extensions of the LRT. The Finance Ministry has announced that there is a plan to integrate Prasarana and RapidKL into a single company - but the Land Public Transport Commission may change things even more after it is created. On the ground, it has been reported that contractors are conducting soil tests in Subang Jaya - but Prasarana has not appointed a primary contractor or finalized their proposal for the LRT extensions.

Even more interesting are these points. It is almost funny to hear that Prasarana is unsure that it can secure the RM5billion in funding for the LRT extension. Remember that Prasarana is owned 100% by the Finance Ministry. How can it be that a company owned by the Treasury of Malaysia cannot secure RM5 billion in funding for an LRT project?

Also, if the government is planning on the extension, why is a contractor engaged by Prasarana asking to arrange a meeting with residents of Subang Jaya and USJ to share ideas for an integrated public transport network? Do they have a plan or not? And if they have a plan, why is it not public and open for discussion?

Prasarana once conducted a survey of households in the Klang Valley to determine their preferred uses and modes of transportation but they have not made the results of this survey public or engaged in any public discussion about the way people use public transport and other modes. They have not prepared or explored any alternatives beyond LRT extensions to show that the benefits of the proposed LRT extensions will justify the massive costs of construction.

They have provided no clear information to show that the proposed extensions are absolutely vital to suburban communities like Subang Jaya and USJ and Putra Heights. They have not examined any other corridors though it is known that urban Kuala Lumpur is in desperate need for at least 5 more lines.

Finally, they did not even have the courtesy to send a representative to a dialogue initiated by the ADUN of Subang Jaya last year.

This dismal "track record" (pardon the pun) makes it clear that there is a long way to go to improve public transport in Malaysia. It also makes it clear that the public should not easily accept and not question plans or promises from the government. If we really want to see improvements to public transport then we must have open public discussion, public consultation ... and active public participation.


Moaz Yusuf Ahmad
klangvalley.transit (at) gmail (dot) com
I'll make the call again. If the Federal Government is unable to sort out our public transportation system throughout the country, for goodness sake, delegate the responsibilities to the respective state and local governments.

Investors' Faith in Barisan Nasional

Further to my blog post last night with regards to a letter I have received defending the interests of investors and bondholders in the water concessionaire issue, there was a comment which highlighted that these investors and lenders who 'invested' blindly (without sight of the concession agreements) should not be protected.

Actually, chances are the bondholders do have "special access" to these supposed OSA agreements and documents (its only when opposition politicians get their hands on them, there's a problem ;-)).

But more importantly, these "investors" invested on the basis that the BN Federal Government would always act in the interest of the concessionaires as most of whom are cronies to UMNO. Hence, in all probabilities, many of them invested based on "faith".

Nobody expected the result of the March 8 elections last year and the subsequent focus of the Pakatan governments to give the people a "new fair deal".

Should the investors (or their advisors) then, be compensated for their blind faith in the BN government, at the rakyat's expense? You tell me.

(Remember the days when people invested and lent heavily in UEM, Time and Renong because they believed that BN will always back and bail them out - should these investors and lenders be compensated not only for their losses but also additional profits? BN bailed out UEM, Time and Renong alright, they rescued their cronies - remember Halim Saad? but left everyone else high and dry)

Wednesday, February 18, 2009

Selangor Water Concession Buy-Back Offer: A Response

I received the following response below from HYS, who believes that our approach to the take over of water assets and concessions in Selangor victimises bondholders and shareholders. I will not respond in detail, as I believe the answer is already in the statement made earlier on the basis of our acquisition.

My short reply is, shareholders and bondholders enter into agreements eyes wide open. Should a concessionaire decides to so over-leverage itself, raising more money than it ever needed to operate the business relative to its actual equity investment, should the Government (i.e., Malaysian tax-payers) be made to bear the brunt of the bailout?

The politely written letter is as follows:
According to respective company's announcement, the Selangor Government offer to acquire their respective water business without taking over the debt.

Personally, I find it not fair to the shareholders of the company and the lenders.

The initial investment in the business was financed by equity holder through the company's share and lenders via debt. The purchase consideration offered by the State Government is below the sum of company's market capitalisation and net debt. Eventhough the management of the company would love to support the State Government's Proposal, they still need to take care the stake holders' wealth.

If the companies are being forced to sell the assets to the State Government, the implication to the malaysia stock market's sentiment is unpredictable. The lenders may end up holding huge NPL.

Hope I make my point clear.
Just to comment a little further, it's a little like the bailout of Malaysian Airlines (MAS), which got into deep financial trouble in the early 2000s due purely to excesses and weak management, and was unable to pay back its bondholders - should the Government have step in as it did and pay double the value of MAS, at the expense of the tax-payers?

So what do you think?

Forum: Can We Have Our Highways Back?

A gentle reminder for the forum (in English) tonight.

This will be our first public consultation and dialogue on Malaysia's highway toll concession agreements since they were "declassified" for public viewing about a month ago. For members of the public who wish to find out more details of our findings, as well as for the professionals with additional information, please join us for an evening of sharing and brainstorming.

The details are as follows:
"Can We Have Our Highways Back?"
Venue: Crystal Crown Hotel, Petaling Jaya
Date: 18 February (Wed)
Time: 7.30pm
The panel speakers include:
  • Sdr Lim Kit Siang, DAP Parliamentary Leader
  • Sdr Tony Pua, MP Petaling Jaya Utara
  • Sdri Teo Nie Ching, MP Serdang
  • Sdr Tommy Thomas, Corporate & Constitutional Lawyer
  • Sdr Teh Chi Chang, Economic Advisor to DAP Secretary-General
All are welcome. For background information, please feel free to browse the articles here.

Don't Rape the Country Twice!

I've blogged on "We Want Our Water Back Too!" two weeks ago. The Selangor state government has since issued offer letters to the concessionaires to take back the water concessions.

The four Selangor members of parliament [Charles Santiago (Klang), William Leong (Selayang), Dzulkifli Ahmad (Kuala Selangor) and myself] who are involved in the Water Review Panel issued the following press statement today. Additional comments are available at The Malaysian Insider, Malaysiakini and The Star.

Call Upon the Minister of Energy, Water & Communications to support and endorse the Selangor Government's Offer to Acquire the water assets and concession in the state

The water privatisation exercises in Selangor was started in the early 2000s by the Mahathir administration, where hugely lucrative concessions were granted to politically-linked private companies with neither the skills or experience in the water industry, nor the necessary equity funds to operate these businesses. As a result, the residents of Selangor and Kuala Lumpur were forced to pay high prices for the water supply, unreasonable penalties as well as often poor service quality.

In view of the clear unsustainability and failure of the privatisation exercise, where some of these concessionaires are facing serious concerns in repaying its bonds and water tariffs are scheduled to increase beyond tolerable range, the Federal Government has embarked on an exercise to nationalise the water-related assets nationwide under the new Water Industry Services Act (WISA) enacted in 2006.

The people has suffered once already when the assets were forcibly piratised by the Government. We will like to call upon the Minister not to rape the country twice by buying back these water assets and concessions at inflated prices. Doing so will only provide the basis to the dictum that the Barisan Nasional government privatises profits and nationalises losses.

The Selangor members of parliament who sits in the Selangor Water Review Panel call upon the Minister, who is granted wide-ranging powers under WISA, to not only support, but help execute Selangor's fair and reasonable offer to acquire the water assets and concessions in the state. The offers to the concessionaires were made last week on Friday, 13th February.

The offer made by the Selangor Government was made on the basis of one-time book value of the water-related assets in the concessionaires as at 31st December 2007, and a fair and reasonable return to the actual equity invested by the concessionaires since the industry was first privatised. It should be noted that the offer made by the Selangor state government is guided by and in compliance with the terms and conditions willing signed by all parties in the concession agreement. Therefore contrary to press reports in the last few days, the acquisition offer is neither a cynical offer which is too low, or without basis.

It should be noted that all investment analysts have been using the “discounted cashflow model” which results in significantly higher valuation for these concessions. However, the “discounted cashflow model” is just a technical term for paying the concessionaires its future profits, which in itself is a totally unreasonable proposition, and defeats the purpose of the Governments' water restructuring exercise.

If we were to acquire McDonald's today, it will be fair to put a value to its future profits as it's a wholly private enterprise. However, we are acquiring government concessions in this case – which means that the Government should not be paying for future profits for licenses and rights which it has itself granted!

The Minister is granted wide-ranging powers under the WISA (2006) Clause 191(5) where:
The determination of what amounts to national interest issues arising from the coming into operation of this Act shall be made by the Minister and such determination shall be final and binding upon all persons and shall not be challenged, appealed against, reviewed, quashed or questioned in any court.
Therefore with the powers vested in the Minister, Dato' Shaziman Abu Mansor, a newly minted Minister since the last elections, we call upon the Minister to do the right thing and act to ensure that the rights and welfare of Selangor people and that of all Malaysians.

Tuesday, February 17, 2009

Taman Medan Toll Plaza Abolished

First of all, we will like to express our sincere thanks to the Works Minister, Datuk Seri Mohd Zin Mohamed for giving Malaysians a Valentine's Day present by abolishing the Kuala Lumpur-bound toll plaza at PJS2 on the New Pantai Expressway (NPE) with immediate effect.

The Minister said removing the toll was also meant to soften the effects of economic uncertainties for the residents of PJS 1 and 2.

However, before Malaysian's decide to pop the champagne bottle for the celebratory dinner marking the possible start to a review of all other toll plazas and toll rates across the country, we will like to call upon the Minister to disclose the compensation paid to the concessionaire for the abolition.

As reported vaguely in The Star today, analysts have disclosed that the concessionaire will be compensated.

In addition, the Minister must disclose the yearly compensation involved relative to the toll revenue collected by the concessionaire annually since 2004.

If the compensation approximates or exceeds the value of the toll revenue collected by the concessionaire, then this Valentine's Day present is not a real present, but is paid for by the rakyat themselves. If such is the case, then it will demonstrate the lack of sincerity of the Barisan Nasional government in restructuring the unfair toll concessions in Malaysia.

If however, there is no compensation paid, or the amount is small, the full credit must be given to the Minister for finally listening to the grievances of the people and we'd provide full support to the Minister to do the same for all other toll roads in Malaysia, particularly those which continue to provide poor service and causes traffic congestion to road users while making extraordinary profits.

Sunday, February 15, 2009

Perak Coup D'etat:: What Say You

Klang MP Charles Santiago will be holding a forum on the Perak coup d'etat as follows:
Date : 17th Feb 2009 (Tue)
Time : 8:00pm
Venue : Dewan Hamzah, Majlis Perbandaran Klang, Klang
Speakers include Ngeh Koo Ham, A. Sivanesan, Lim Kit Siang, Khalid Samad, Dr. Dzulkifli Ahmad, Haris Ibrahim, Charles Santiago

Please contact Yap (016-2026300) / Sarah (016-6267797) if you have any further enquiries.

UMNO Thanks EC

Just as the new Election Commission chairman, Tan Sri Abdul Aziz Yusof denies any consideration of the UMNO party elections in the setting of the by-election dates of Bukit Gantang and Bukit Selambau, UMNO leaders wasted no effort in thanking EC for helping them out(!)

As reported in The Star,
Umno information chief Tan Sri Muhammad Muhammad Taib said the commission had exercised its discretion in timing the polls so that they would not overlap with the Umno event.

“The Election Commission is being practical otherwise there would be a conflict of agenda between the Umno meeting and the by-elections,” said Muhammad, one of the three candidates for the Umno deputy president’s post.
So it's quite clear, who's the real boss in Election Commission.  Not even any pretence of independence or impartiality.

Development in Petaling Jaya

Development issues remain as some of the most thorny issues in Petaling Jaya. As I've blogged a month or two ago, there are many projects approved in the previous state government which have become sore points for the local residents, especially since they were not consulted on most of these projects.

Paramount View. Picture courtesy of The Star

One of the recent project which has been highlighted (in the press) in my constituency is the Paramount View condominium project located between Kg Tunku (SS1) and Seksyen 22 where its construction and density will only bring grief to the local residents, especially since the roads in these housing estates tend to be ill-suited towards heavy traffic.

If you look at the picture above of Paramount View, it's not much of a view isn't it? We can only wonder how such a high-rise project situated within a few feet from the high-tension cables was approved in a narrow piece of land in the first place. For those who are not aware, this piece of land was former a squatter colony which have been moved out into low-cost flats (which is another controversy in itself).

The problem for us is we have taken over the state government, and the local authorities, and hence we now have to carry the development babies which have been handed down to us, as much as we'd rather start with a fresh sheet. I've written on a few projects previously, like Glomac Damansara and The Paradigm and Tropicana City in Kelana Jaya and SS2.

Other areas of concern which have been highlighted in the press includes the development of the FAS field in Kelana Jaya, Seksyen 19 and the Seri Setia new village.

The dilemma if any, at this point of time is that because this new state government has come out more strongly in favour of consultation with residents, as well as greater stringency in obeying development by-laws, many property developers are complaining that we are anti-business and anti-development. Whereas in the past, requirements and guidelines can be waived at ease (how, I would not say), now things seem to slow a bit and project density are often intensely questioned.

In fact, some developers have complained to me that the local councils are now "managed" and "controlled" by resident associations (RAs). My reply to them was most straightforward - shouldn't that be the case? Unlike the past where residents have little or no say at all towards how their city and neighbourhoods are developed and often changed beyond recognition, residents now have much greater say, rightfully to manage their own city.

We are not against development. Neither are most of these RAs which I've dealt with. What the residents are often objecting to is reckless development, or development which does not take into consideration externalities such as traffic congestion which needs to be resolved.

Friday, February 13, 2009

Will Khir Toyo be Charged?

I was arrested (and whacked) for lighting candles at a peaceful gathering of 200 or so people last year in an open park and charged for my "crimes".

Four days ago, Khairy Jamaluddin, UMNO Youth Chief candidate led a 1000-strong crowd chanting "kill him" at those accused of alleged treason in Ipoh. He got away scot free (not for the first time too!).

When UMNO Youth also demonstrated in an unruly manner outside Karpal Singh's legal office in Kuala Lumpur 2 days ago, and Karpal

related that he had spoken personally to an officer in uniform, whom he identified as “Mr Chan”, and was told that the organisers had not got a permit for their protest but that he was “under instructions” not to break up the rally.

Finally, when Khir Toyo led an UMNO Youth march in Penang heading towards Karpal's personal home, the police arrested him. (That must have been such a slap in the face for Khir Toyo, the other UMNO Youth chief hopeful)

Thank you to the police for acting impartially in Penang. The next step is for the Attorney-General's office to prosecute Khir Toyo for "illegal assembly".

I'm all for protecting our constitutional right for freedom of assembly, for holding peaceful demonstrations. But all must be equal before the law, as expressly stated within our Federal Constitution - therefore if the police are to prosecute anybody for peaceful assembly, then all should be prosecuted. If not, then all charges to all accused of 'illegal assembly' must be immediately dropped.

Will Khir Toyo be charged? (Was that a rhetorical question?) And if he is charged, it'll be absolutely hysterical if his defense was the right to peaceful assembly as provided for in our Federal Constitution!

Where's The Credibility?

On 20 January 2009, Prime Minister in-waiting said:
Barisan Nasional (BN) leaders should break out of their comfort zones and reorientate their approach to be constantly in tune with the people's aspiration, Datuk Seri Najib Tun Razak said today.

Calling on BN leaders to raise to the occasion, the deputy prime minister also urged them to rearrange their strategies and resolve to make changes not only to themselves but also to the party for the sake of the people and country.

Can you believe him?

(I'm biased of course, as I was charged in court for lighting up candles in public without permit within 3 days of him making the statement)

Now we have the new Chairman of Election Commission, telling us with a straight face that the nomination date, is set more than a month away on 29 March has "nothing to do with the UMNO General Assembly" that is scheduled to be held from 24 to 28 March.
He was quick to deny the scheduled dates were made to accommodate the Umno party polls in late March, saying the law required the by-elections to be held within 60 days of the seats being vacant, which falls on April 11.

"The date was chosen for the convenience and comfort of all parties and not with any political considerations," said Abdul Aziz, who assumed the post six weeks ago.

He said the situation in Perak was still tense after a government switch and the time-frame for the Bukit Gantang by-election would allow all parties to "cool off", adding he was hopeful there would be a high voter turnout despite polling day being a Tuesday.
Yeah, right. He's an UMNO stooge, no question about it.

Oh, and BN reform? My foot.

Thursday, February 12, 2009

Can We Have Our Highways Back?

This will be our first public consultation and dialogue on Malaysia's highway toll concession agreements since they were "declassified" for public viewing about a month ago. For members of the public who wish to find out more details of our findings, as well as for the professionals with additional information, please join us for an evening of sharing and brainstorming.

The details are as follows:
"Can We Have Our Highways Back?"
Venue: Crystal Crown Hotel, Petaling Jaya
Date: 18 February (Wed)
Time: 7.30pm
The panel speakers include:
  • Sdr Lim Kit Siang, DAP Parliamentary Leader
  • Sdr Tony Pua, MP Petaling Jaya Utara
  • Sdri Teo Nie Ching, MP Serdang
  • Sdr Tommy Thomas, Corporate & Constitutional Lawyer
  • Sdr Teh Chi Chang, Economic Advisor to DAP Secretary-General

All are welcome. For background information, please feel free to browse the articles here.

Friday, February 06, 2009

Job Opportunities @ The Rocket

Yes, the economy is not faring too well. But DAP needs to continue to grow to reach out to the people, and attract greater talent into the party. Hence, as part of our aggressive expansion plans, we are looking to recruit intelligent, young and dynamic individuals to join our team to make The Rocket one of the most successful and respected party newsletters in Malaysia.

The objective of the newsletter is to be able to provide Malaysians with a better understanding of both the political environment in Malaysia as well as the policies and comments by our party leaders. The Rocket also provides coverage for various activities carried out by our branches and members throughout the country.

We are looking for JOURNALISTS and WRITERS for all languages - English, Malay, Chinese and Tamil.

You can apply via Jobstreet here, or email your detailed resume to daprocket(at)rocketmail(dot)com.

Thursday, February 05, 2009

Lawan Tetap Lawan


The Speaker of the Perak State Assembly and the Perak State Government will be filling a suit this morning at the Ipoh High Court to declare that the 3 State elected representatives namely Puan Hee Yit Foong, Encik Jamaluddin bin Mohd Radzi, Kapt(B) Mohd Osman bin Mohd. Jailu for Jelapang, Behrang and Changkat Jering are no longer elected representative for the said constituencies respectively. The speaker have already accepted the resignations of the said elected representatives and the state Government also recognizes that they are no longer elected representatives for the said constituencies.

This declaration is sought to compel the Election Commission to recognize that the said 3 seats have fell vacant and by-elections must be called. BN also cannot claim that it has the majority in the State Assembly as The Pakatan Rakyat has 28 members while BN also only 28 members. The position of 3 other elected representatives will now have to be determined by the court.

In view of the hung situation the Speaker and the Perak State Government are in full support of the requests by YAB Menteri Besar that the State Assembly be dissolved. We sincerely hope that HRH the Sultan of Perak will grant the dissolution of the State Assembly as requested.

In situation of doubt, it is best to go back to people to seek a fresh mandate as such practice is an inherent part of parliamentary democracy. We do not know why BN is so fearful of seeking a mandate from the people if it purports to rule with the people's support.

Wednesday, February 04, 2009

The Star Still Shine?

Is it me, or is it a fact that after a mini-Prague Spring post the March 8, 2008 elections where The Star demonstrated greater balance as "The People's Paper", the blooming period is all but over? It appears that we have now entered the period of "normalisation".

Reading The Star (yes I know it's difficult reading the paper, but it's part of my job) these few weeks has been more often than not, a little (understatement) nauseating, especially with the editorial slant and direction.

What happened to the lessons learnt after the last elections? Quickly forgotten obviously. The Unbearable Lightness of Being no more... Sigh.

Of course, it'll now also become the key vehicle for it's shareholders to launch its "rebranding" exercise. Maybe they'll come up with a new name for MCA... (or a new tagline for The Star).

Update: Interestingly, this report was published after I wrote the above post - The Star is expected to suffer first contraction in 10 years.

Tuesday, February 03, 2009

New Election Commission Chairman A BN Puppet

... and a major disappointment and disgrace too.

The new Election Commission chairman, Tan Sri Abdul Aziz Yusof was appointed in January this year, and the issue of the Perak state by-elections presented the first major test of the competency and impartiality of the new chairman after the previous one was looked upon with contempt.

However, it is unfortunate that the Commission's decision today to not call for the by-elections, which went against the ruling of the Perak state assembly speaker on the vacancy of the 2 state seats.

Tan Sri Abdul Aziz went to the extent of declaring that "it is not the place of the speaker to declare the seats vacant, but to keep the EC informed; it is the EC's role to declare the vacancies. The EC's responsibility is to determine if there is a vacancy or not. Our answer is not."

This is an absolute and blatant contempt of the state constitution of Perak, and serves only to prove the impartiality and incompetence of Tan Sri Abdul Aziz, who acts as a stooge for his Barisan Nasional paymasters.

Can the decision of the Speaker be subject to challenge? Of course, but only by the aggrieved parties through the court of law. For e.g., the 2 affected assemblyman could file of an injuction against the EC or the state assembly.

Even the former tainted chairman of the election commission has stated that the EC has no choice but hold elections unless otherwise instructed by the courts. But it is certainly NOT the place for the Election Commission whose role is to effect elections when requested by the Parliament or the respective state assemblies, and not make the decision as to whether there should be elections.

Monday, February 02, 2009

We Want Our Water Back Too!

Syabas hits the headlines in The Sun
(edited montage of 30th Jan edition)

Amidst all the political hoollaboo over the state of affairs in Perak, and some say the rest of the country, you would be pleased to know that the Pakatan Rakyat government continues to exert pressure on the federal government and other relevant parties to provide a better deal for the people.

You have read my multiple posts whether here, or in the media (the latest published yesterday in The Star) with regards to efforts DAP is making to press the Government to ensure a more equitable toll rate for our highways, or if not possible, then buy them back as provided for in the concession agreements.

At the same time, I also sit in the Selangor Water Review Committee, which is appointed by the Menteri Besar in September last year.  The committee also include Charles Santiago (DAP - Klang), Dr Dzulkifli (PAS - Kuala Selangor), William Leong (PKR - Selayang) and several other activists, have been very actively looking into how restructuring the water assets and distribution ownership can be done to remove similarly, extraordinary profits made by private concessionaires at the expense of the Selangor rakyat. 

While I had objected to the Selangor Government's plan for free water earlier, I'm in full support for its plans to take over the water distribution business from its current concessionaire, Syabas, which is 70% owned by Puncak Niaga Berhad.

At the end of the day, this exercise if successful, would mean lower cost of water for all Selangor (and Kuala Lumpur too!). If you have not already known, the Syabas concession agreement gives Syabas the right to increase the water rates by as high as 37% for 2009 and delays in doing so will only result in compensation being paid by the state or federal government.

After studying the Syabas contract and receiving the audit report from Jabat Audit Negara, the state government has written officially to the federal government to request for its agreement to terminate the Syabas concession agreement as there were clear breaches to the agreement. (Under the agreement, the state government can only terminate the agreement with the consent of the federal government.)

As reported in the Sun last Friday:
Sources said the audit showed that more than 72% of contracts worth a total of RM600 million were awarded to selected companies via direct negotiations and only 25% via competitive open tender, which clearly violates the agreement.

In addition, the audit also found more than RM325 million in discrepancy between the summary of contracts awarded in 2005, 2006 and 2007 and Syabas’s review document (referring to general accounts).
Of course, the extraordinary profits do not just get reflected in the profit and loss statements but also by the way Syabas spends its money.
Aside from the breach of contract issue, questions are also being raised over the RM51.2 million spent to renovate the Syabas office when the Selangor Water Regulatory Department (JKAS) only approved RM23.2 million for this in 2005. The audit review found that Syabas had failed to comply with the requirement as approved by JKAS.
I was at the presentation by the Jabatan Audit, and there were certainly many more points of contention and extravagance on the part of the Syabas management.

Hence, the biggest question now is whether, inspite of the various material breaches in the concession agreement will the Barisan Nasional federal government stand on the side of the concessionaire, or will it stand with the people and act in the latter's interest?

It has been more than a month since the letter was sent to the Minister of Water, Energy and Telecommunications, and we have not heard a single response from the Minister despite our many meetings with its officials since. You can be assured that the Selangor state government will do its utmost, despite having to do many things with our hands tied behind our back, protect the interests of the people.

Hence, not only do we want our highways back, we want our water back too!

Sunday, February 01, 2009

Memo To Works Ministry

As mentioned and blogged earlier, DAP Ops Restore team has submitted our preliminary findings on the highway toll concession agreement to the Minister of Works. Below are the contents of the memorandum, some points which have been raised earlier as well.

Attn: Dato' Ir Mohd Zin bin Mohamed
Minister of Works

Dear Sir,


First of all, we would like to express our appreciation for taking the momentous step of declassifying the highway toll concession agreements for study and viewing by the public. We must congratulate the Minister for having taken progressive steps with regards to the above issue since taking over this position in March 2008.

After conducting an initial review of the toll concession agreements, we would like to take this opportunity to present our preliminary findings to the Ministry for immediate actions to be taken in the interest of the rakyat.

    It is clear from the concession agreements when read in conjunction with the financial statements of many of the toll concessionaires, the toll rates and its formula of calculation for future adjustments have allowed these concessionaires to make extraordinary profits at the expense of the rakyat.

    PLUS Expressway for example, had RM2.28 billion in revenues and made RM1.31 billion in profit before tax for its financial year 2007, representing a colossal profit margin of 57.3%. What's more the cost of constructing the North-South Highway was less than RM6 billion. This rate of return has yet to take into consideration future increases in toll rates at 10% every 3 years as well as traffic volume for the next 30 years.

    What's more, the Government has in the contract with PLUS, agreed to bear the cost of all substantive upgrades including for example, the new Seremban toll plaza which cost RM168 million, the Jelapang toll plaza and the construction of additional lanes on the highway.

    Similarly for LITRAK, the concessionaire of Lebuhraya Damansara Puchong (LDP), it had RM293 million in revenues and made RM142.7 million in profit before tax for its financial year ending 2008, representing a margin of 48.7%. Furthermore, the toll rate for LDP is scheduled as per the agreement to be increased to RM3.10 from the current rate today before government compensation of RM2.10 in the year 2016. LITRAK had even in its Bursa Malaysia listing prospectus in 1997, forecast a total net profit of RM18.8 billion during the 30 year concession period despite LDP having cost only RM1.33 billion in construction and capitalised interest.

    The colossal profits were made despite the fact that the risk taken by these concessionaires were minimal as the Government in effect guarantees the multi-billion loans and bonds secured by the concessionaires. In fact, in certain highway projects such as the Grand Saga Highway, the concessionaire was granted a loan as part of the agreement which covered the entire construction cost of the highway. This means that the concessionaire was not only able to secure a very profitable highway concession, it didn't have to come up with any capital or risk to undertake the project.

    Therefore, the Ministry of Works should immediately make revisions to the agreed toll rates as well as its review mechanism to ensure that the highway concessionaires will make reasonable returns on invested capital. For regulated infrastructure industries such as power producers, water services as well as highway concessions, the acceptable norm and range of rate of return (ROR) is between 8% to 15%.

    In fact, concessionaires should only be able to make ROR in excess of 12% if and only if they are able to maintain a minimum acceptable service level. For example, concessionaires whose highways are often heavily congested before and after the toll plazas such as the LDP or at Kerinchi Link, penalties should be imposed accordingly. 

    These service level conditions are unfortunately glaringly absent from the concession agreements when in fact, the toll concessionaires should grant substantial discounts in the event of heavy congestion, particular before or after the toll plazas.


    It is noted that for a vast majority of the toll concession agreements, the Government has been granted the option of expropriation for national interest by providing between 3 to 6 months notice. In addition, the terms of the relevant compensation required for expropriation appears to be fair:

    1.The Government has to pay for the “value of construction works”, less any loan or bond obligation which the government takes over in the process, and

    2.The Government has to pay 12% interest returns per annum to shareholders' capital and loan invested in the concession, less any dividend or interest which have already been paid to date.

    Therefore, for those concessionaires who are not willing to renegotiate the toll rates to reasonable levels, it will not cost the Government “an arm or a leg” to expropriate some of these highways.

    As a simple example, the Government is already compensating LITRAK RM75 million per annum for maintaing its current toll rates at RM1.60 instead of the contracted RM2.10 as of 2007. Assuming this compensation is maintained for the remainder of its 20 year concession, it would cost the Government RM1.5 billion in payments to LITRAK.

    On the other hand, should the Government exercise its option to expropriate the concession, preliminary calculations show that it'll cost the Government only RM1.4 billion to complete the exercise based on the terms of the agreement, or less than the compensation payments.

    Hence, in LDP's case, it makes absolutely no sense for the Government to maintain its annual compensation payments to the concessionaire when it could buy back the entire highway for less!


    For certain highway contracts such as the North South Expressway and the Penang Bridge, the compensation clauses for expropriation unjustly require the Government to pay the concessionaire for the loss of future profits.

    Hence, the exercise to expropriate the North South Expressway will cost the Government at least RM40 billion, or as high as RM80 billion, depending on future profit projections. This compensation amount is completely ridiculous for the current market capitalisation of PLUS on Bursa Malaysia is only RM15 billion.

    However, as Khazanah Nasional already effectively own 63.88% of PLUS Expressway Bhd, it is certainly not beyond imagination that Khazanah makes a voluntary general offer for the remainder 36.1% of the shares that it does not already own for approximately RM6 billion, assuming a 10% premium on current market prices. RM6 billion is certainly an amount which Khazanah could easily afford or finance.


    We would also like to call upon the Works Ministry to declassify additional documents and information for further transparency and analysis. This includes:

    1.Loan agreements between the Government and the concessionaires

    2.Appendices to the concession agreements, which are missing from several agreements which have been declassified.

    3.Novation agreements where the rights of the parties to the original agreement was assigned to another party.

    4.Concession agreement of highways which are newly awarded or are under construction.
We sincerely hope that the Ministry of Works under your leadership will be able to take quick and urgent actions on the above findings. Besides it being a fairer outcome for the rakyat, it'll also come at a critical time to reduce the cost of living for the people and increase the competitiveness of our local businesses who are facing one of the most severe and economically challenging period in recent decades. The above recommendations on toll concessions should form one of the key cornerstones of the additional economic stimulus package announced by the Minister of Finance.

For your information, DAP has also formed a special committee on “Operation RESTORE” (Restructure Toll Rates & Equity) to provide a detailed and final report on the highway toll concessions which we hope to submit to you by March 2009.

Once again, we thank you for your kind attention.

The DAP Ops Restore team comprises of Anthony Loke (Rasah), Teo Nie Ching (Serdang), Charles Santiago (Klang), Lim Lip Eng (Segambut), Teh Chi Chang, Economic Advisor to DAP Secretary-General, and myself.

Let's hope this "new" Works Minister will do a much better job than the previous who has been kicked out of his office. ;-)