Govt studying DAP proposal to buy back North-South Expressway and end toll collection in six years

The government is studying the DAP proposal that the government buy back the North-South Expressway to end toll collection completely in six years.

In reply to my query during the winding up of the committee stage debate for the RM60 billion mini-budget, the Second Finance Minister, Tan Sri Nor Mohamad Yakcop said the government is studying the DAP proposal to return the expressway to the people.

The proposal, a comprehensive, practicable and creative one formulated by the DAP Ops RESTORE (Restructure Toll Rates & Equity) Team, after consultations with legal experts, investment bankers as well as the general public, has the following features:

1) Impose no further increase in North-South Expressway toll rates.

2) End toll collection after 2015 instead of 2020.

3) Create RM14 billion savings for Malaysians from 2009-2015 – 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.

4) Incur no additional cost for the Malaysian Government or Malaysian tax-payers

The North-South Expressway ‘buy-back” scheme, worked out by the DAP RESTORE Team, helmed by The Chi Chang, economic adviser to DAP Secretary-General and Tony Pua, DAP MP for Petaling Jaya Utara last month, was based on the following mechanics:

1) PLUS is listed on Bursa Malaysia at a price of RM2.88 per share and a market capitalisation of RM14.4 billion (24th February).

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

3) PLUS has outstanding net debt amounting to RM8.5 billion.

The buy-back scheme calls on 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 assuming 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 also have the following effects:

• 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.

To another query, Nor Yakcop said the government welcomes public input to the government’s study on the viability of the proposal for government buyback of the North-South Expressway to relieve the toll burden of the government and the Malaysian public.

  1. #1 by Godfather on Thursday, 12 March 2009 - 8:03 pm

    MGS at 3 pct p.a. or less for 6 years ? With all the money that this government has to borrow for the stimulus package plus efforts to stem a falling Ringgit, what do you think the appropriate MGS rate should be in a year’s time ? I think it is closer to 6 pct, so tell the advisors to double the level of interest rate.

  2. #2 by HJ Angus on Thursday, 12 March 2009 - 8:42 pm

    High hopes this will materialise but it is a good initiative and puts the government in a defensive position.
    Yes the NSH is definitely a major factor that drives up the costs of goods for everyone and does not matter if you drive or not.
    For KL residents, they should also propose to buy out some toll companies as driving in KL is a nightmare with so many tolls – it causes delays and perhaps DBKL should use different strategies to control the car population.

  3. #3 by alberttye on Thursday, 12 March 2009 - 8:53 pm

    Tan Sri Nor Mohamad is willing to study DAP’s proposal because he is not a typical Umnoputra politician !

    An Umnoputra man would never consider good points from DAP in the national interest.

    Perhaps he may even be attacked for siding the opposition. haha

  4. #4 by lopez on Thursday, 12 March 2009 - 9:01 pm

    marco polo and his uncles travel wide and far…everyone knows that….

    but many of us cant even travel just a tiny weenie fraction of how many places he has visited.

    more so to many of our fellow malaysians , their children and parents….and we brag about bercuti cuti malaysia

    if household economies is what drives our nation’s GDP then lets start removing all the tolls from our roads and lets us roam our nation and meet more with our brothers and sisters, cousins and friends and more often we return to our hometowns and kampongs and villages to bring news of hopes and progress….the best way by way of mouth…not the things we read.

    lets remove them immediately, before we die of starvation and joblessness.

    malaysians …all dressed up and no where…no where to go.

  5. #5 by limkamput on Thursday, 12 March 2009 - 10:36 pm

    Sorry, what about the 65% of PLUS owned by Khazanah? To be given to the road users free? If 35% is worth RM5.25 billion, the Khazanah share is worth RM9.75 billion. But if i hardly travel the NS Highway, why would i want Khazanah to give up the 65% share in PLUS which i believe should earn income for the benefit of all. I am assuming Khazanah is operating efficiently and without the normal hanky panky here and there.

  6. #6 by limkamput on Thursday, 12 March 2009 - 10:56 pm

    To the DAP Wizard team,
    You fellows think the government can issue MGS at will and without limitation. Please don’t behave like UMNO d-heads ok. There are limits to government borrowing and money creation. If the government can create money and issue debts at will, there is no need for interest rates (cost of money) and saving. Hello, Malaysia is not like the blessed country – the United States of America. Look at the performance of Russian ruble recently. Are you saying that the Russian economy and its currency is worse than US$. Please be more circumspect and don’t squander away my hard earn retirement saving.

  7. #7 by monsterball on Thursday, 12 March 2009 - 11:00 pm

    That has always been UMNO style…to show they do sometimes..respect oppositions suggestions…..a mind war to let voters for the 3 by-elections… open minded fair and democratic UMNO is. So vote for UMNO.
    The matter of truth is UMNO…never listens to any oppositions ….true Malaysians suggestions…all these 30 years. They are such hypocrites and arrogant.
    Why now talking so nice?
    Like I said….mind wars for the 3 by-elections.
    When election isl over….just observe the mentalities and behaviors…so arrogant and telling only half truths….to their advantages.
    UMNO saying 6 years from now…all tolls will be free??
    6 years from now…UMNO will have no voice nor power to decide.

  8. #8 by albert308 on Thursday, 12 March 2009 - 11:25 pm

    Dear YB Lim KS,
    I read the title only. This government is hopeless, no way the proposal will be adopted. Even the idea to buy back PLUS is workable and pass through first round, the final decision still NO. Privatization is about crony capitalism at the cost of public interest. It safeguard interest of the ruling elites in power.

  9. #9 by passerby on Thursday, 12 March 2009 - 11:37 pm

    I just don’t trust all these mega amount shuffling by these crooks in umno. Every time this is done, the public has to pay for it and someone in umno will ended up super rich!

  10. #10 by WonderPets on Thursday, 12 March 2009 - 11:48 pm

    If people want changes as signaled by 308 Political Tsunami last year, I think this is a good start to kick off. We should put pressure to the Government if they reject it. At least the people are made known to this proposal and they will know who to vote for during the next election if they want the changes to continue.

  11. #11 by chengho on Friday, 13 March 2009 - 12:25 am

    They should handover the company to a chinese controlled company
    the bumi company been there too long…

  12. #12 by ekans on Friday, 13 March 2009 - 12:31 am

    It’s too early to be optimistic about the 2nd FM’s words.
    To say that the government is studying the proposal is one thing, especially when three by-elections are coming soon.
    The government’s final decision on this matter could just end up being something else.

  13. #13 by Godfather on Friday, 13 March 2009 - 7:48 am

    The eunuch chengho is instigating racist comments when there are none. Maybe we should sell PLUS to the Singapore government ? Nothing to do with efficiency, just expediency since they have money and we don’t.

  14. #14 by monsterball on Friday, 13 March 2009 - 8:14 am

    I do not think chengho is a racialist.
    Under such strong race and religion politics played by UMNO for more than 52 years….uttering a change of a race to do a better job…is quite natural.
    Until a Malaysian Malaysia is realized….I was accused many times as a racialist too …in the past by pro UMNO guys..who are infact…the racialists themselves.
    They learn the art to accused others before being accused by their master….Mahathir.
    Godfather needs to read more and judge chengho writer…based on all his messages…not just…by one message.
    I have not doubt whatsoever… Godfather writer is a true Malaysian.

  15. #15 by monsterball on Friday, 13 March 2009 - 8:27 am

    And chengho is right.
    A Malaysian Chinese is a better businessman than a Malaysian Malay.
    All Malaysians know that…..including UMNO.
    UMNO sometimes pick a MCA or Gerakan Chinese man to be Min.Of Finance.
    When Mahathir took over…his race…party are priorities in everything.
    These Chinese Min.of Finance are just for power.
    Only the late Tan Siew Sin answered to no UMNO man…performing his duty as Min.Of Finance..for all Malaysians.
    When come to money…and business involving money….Malaysian Chinese is the best….with plenty of well educated Muslims..catching up and .performing much better..but they are not interested to be UMNO members..or be used by UMNO at all.

  16. #16 by k1980 on Friday, 13 March 2009 - 8:48 am

    EPF gone under, belly up?

    It is almost 21/2 months into 2009 but the Employees Provident Fund has yet to declare the annual dividend for last year. This delay is causing much inconvenience and hardship to members, especially the retirees who depend on the dividend for their survival.

    The current economic situation is not helping at all. Why is the EPF slow in acting?

  17. #17 by Bigjoe on Friday, 13 March 2009 - 9:31 am

    Yeah, but it also mean there is less ‘business’ to hand out to cronies.. If they do a buyout, its NOT going to cost as little as the opposition suggest. Furthermore, agreeing to a visionary plan and policy of the opposition is just too hard to swallow..

  18. #18 by Loh on Friday, 13 March 2009 - 9:37 am

    It makes sense to buy PLUS to keep the toll rate unchanged. Toll collection can continue beyond 2020, and be a source of governemnt revenue, but it should not be a monopoly for private company.

  19. #19 by ALLAN THAM on Friday, 13 March 2009 - 9:37 am

    No need to study as study have done just implement it if people is going to benefit.

    At this kind of financial environment what choice we have ?

    when the cake is there you will not fill the pain when the cake is no longer that what else you can squeeze to feed the corrupt ???

  20. #20 by HJ Angus on Friday, 13 March 2009 - 10:05 am

    There is always a way to solve a problem if we are really serious about it.
    For example Khazanah could offer to sell its PLUS shares to the Malaysian public and still retain management control by keeping say 10% stake.
    The public would be invited to buy, subject to a maximum of say 10,000 shares so that the ownership is widely distributed.
    PLUS would then introduce cost-cutting measures so that operating costs are low and the company will peg its compensation paid to directors and management based on statutory body rates.
    I believe costs can be reduced by at least 25%; the company earns profit each year and toll rates can be maintained or reduced.

  21. #21 by shortie kiasu on Friday, 13 March 2009 - 10:24 am

    We fully support the proposal put forward by DAP. DAP has come a long way to be a mature and profesional political party and the quality of membership has improved by leaps and bounds in the recent years with real qualified and dedicated people with the party.

    This is something we, as supporters all these years, feel really heartening to note and to continue to support in the coming and future polls.

    People has been suffering economically all these years under the distorted and corrupted manner of implementation of the ‘NEP’ just to enrich an elitist few in UMNO. These leakages had impoverished all the rakyat of this beloved country.

    The corruption and cronism in this country under BN and formerly Allaince is so deep rooted that it is impossible now to unwind and brain wash those in power in BN and UMNO.

    We can only watched with wretched heart and wrenched fists but nothing else the common people can do. The money ammassed by the ruling elite has been used to corrupt whoever that stand in their way, and under the pressure of money, not many citizen in this country can resist and just be swept along.

    Good examples are the toll road concessions all over the country to skin the people of the hard earned money, the lop-sided IPP power purchase agreements signed by TNB, the water agreements, the waste disposal agreements, and there are so many others.

    With the people getting more aware of their right we hope there will be change for the better with an alternative government coming into place in the next general election.

    With reversion of tolled roads back to the public, we hope this will the first step into more good things for the people.

    Syabas to DAP and those who work hard for the people.

  22. #22 by HJ Angus on Friday, 13 March 2009 - 10:41 am

    The PM to be talks of a better NEP for all Malaysians with a gradual cut-back of the special crony deals.
    Just take a look at APs which have been around for about 20(?) years. Also property discounts not based on type of property like low-cost but across the board so millionaires can also enjoy discounts.
    Now if he were really serious, he should have given a date-line like “within 5 years” or “by 2012” and indeed some policies can be stopped immediately like the property discount and APs.
    But if the government is really short of funds and needs to still baby-feed Proton, the APs can be sold to individuals and the amount used to subsidise Proton or offset toll payments.

  23. #23 by i_love_malaysia on Friday, 13 March 2009 - 11:13 am

    I dont quite understand why the Rakyat still need to wait for 6 more years before enjoying toll free NSE & continue to pay toll even at constant rate if DAP proposal is adopted!!!
    DAP should propose to stop the blood sucker immediately as the benefits will be multiplied!!! Moreover, this proposal is not very helpful to PR at all as the Rakyat will know that even if they voted for PR in the next election, they still have to pay toll if PR formed the next Federal govt!!!
    Short term pain is a long term gain!!!
    Let all the blood flow without clogging through out our country’s heart of change!!!
    Change now or never!!!

  24. #24 by voice on Friday, 13 March 2009 - 12:46 pm

    Study what? talk only, I bet they won’t do anything.

  25. #25 by taiking on Friday, 13 March 2009 - 1:19 pm

    Just nationalise – the reversal of privitisation.

  26. #26 by Godfather on Friday, 13 March 2009 - 3:39 pm

    No, nationalisation is the reverse of piratisation.

  27. #27 by taiking on Friday, 13 March 2009 - 6:30 pm

    how true godfather. how very true.

  28. #28 by lee wee tak_ on Friday, 13 March 2009 - 9:51 pm

    under the circumstances the proposal looks the best way forward. I bet Utusan Malaysia won’t report BN considering DAP proposal….do they?

    sigh, another way is to study if any concessionaire committed a gross breach of terms and conditions of the agreement and revoke the agreement … hahahahaa…….

  29. #29 by funnyeskay on Saturday, 14 March 2009 - 1:47 am

    I don’t mind paying the gov’t toll charges. This will only be fair to the taxpayers who don’t use the toll roads. However, the revenue should be used for the maintenance of the roads and it should always be in good condition. Nevertheless, the toll rate should be affordable for everyone.

  30. #30 by undergrad2 on Saturday, 14 March 2009 - 3:59 am

    “Please be more circumspect and don’t squander away my hard earn retirement saving.” limkaput

    Yes, if you call kowtowing to your BN masters and living off your bumiputra privileges, for more than 30 years ‘hard earned’.

  31. #31 by limkamput on Saturday, 14 March 2009 - 8:50 am

    Look undergrad2 aka 101. Whoever one may be, it can’t be worse than someone leveraging on the bankrupted US system. Worse still, that someone is milking nicely in one of those good for nothing and do nothing international organisations. A nearly 60 year old 101 undergrad, pergi lah.

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