Outdoor ad firms decry NS plan to privatise billboards

Some 12 outdoor advertising companies in Negri Sembilan are furious over a privatisation policy introduced by the state government to hand over the ownership and management of all billboards in the state to a single company.

The company allowed to monopolise the multi-million ringgit business is said to have no track record in the advertising industry, and it will allegedly hike the billboard rental to more than 10 times the current cost.

According to Alex Yew, the vice-president of the Outdoor Advertising Association of Malaysia (OAAM), billboards were previously under the purview of local governments.

For the past 20 years, he said, media owners who wish to erect a billboard would apply to the local council, detailing the billboard’s location and size.

“If the council thinks it is appropriate, it will issue a licence and temporary occupation licence (TOL) for state land, and the media owner will construct the billboard and make annual payments for both the licence and TOL," Yew explained toMalaysiakini.

“If the billboard is constructed on private land, the media owners will still need to apply to the local council for a licence and pay an annual licence fee, but the rental will be paid to the landowner."

Their nightmare began in October 2011 when the state government decided to transfer the local government’s authority over billboards to Yayasan Negri Sembilan (YNS), a state foundation chaired by Menteri Besar Mohamad Hasan.

The reasons given by the state government, said Yew, were that it needs to regularise the billboard format  and to fund the charity and welfare programmes under YNS.

“Using this as an excuse, they instructed us to take down all our  billboards and refused to renew our licences,” claimed Yew.

He is also director of operations of Kurnia Outdoor Sdn Bhd, a company under Big Tree Outdoor Sdn Bhd which is affected by the privatisation.

Malaysiakini obtained copies of official letters written by YNS director Jamaludin Abu Bakar to media owners, instructing them to dismantle their billboards within 14 days as their licences had expired on Dec 31, 2011.

“If (you fail) to do so, the council will take down the structure and all the (related) costs will be borne by your company,” reads the letter.

Under the privatisation plan, YNS has appointed a private company, Semarak Media Sdn Bhd, to replace all billboards in the state according to the new format and lease these to the media owners, said Yew.

Even for the billboards on private land, YNS has asked media owners to surrender their contracts with the landowners together with the rental rights to Semarak Media, revealed Yew.

The copies of YNS letters to media owners obtained by Malaysiakinishowed that copies were sent to Semarak Media.

Rental 12 times higher

Yew described the new rental rate imposed by Semarak as “daylight robbery”.

For example, the media owners were verbally informed that the annual rental for a 40x10ft billboard has skyrocketed to RM18,000, over 12 times higher that the previous annual fee for licence and TOL, which was less than RM1,500.

“The rate is unfair. They based it on Klang Valley rate. This is a no-brainer, no advertiser will take up the billboards,” said Yew, adding that the privatisation policy is clearly a grossly unfair monopoly.

The current cost for a 40x10ft billboard in the Klang Valley can be as much as RM36,000 per year.

The new policy will affect some 200 billboards in the state operated by some 12 media owners including major outdoor advertising companies Big Tree, UPD, Gelombang Jaya and Seni Jaya.

The annual revenue generated is between RM5 million and RM6 million. If the rental is hiked up 10 times after privatisation, the amount would balloon by RM50 million to RM60 million.

According to Yew, YNS had explained that the foundation has no knowledge in managing such a business, hence the decision to appoint Semarak Media.

“YNS also claimed that the new policy had been endorsed by the state exco,” he said.

However media owners argued they are more than willing to follow the new billboard format or guidelines set by YNS, and the foundation can deal directly with them without the involvement of a third party.

“You might as well deal with the existing companies. We are happy to follow your guidelines. Why give it to a new company which just comes in to mark up the price by 10 times more?” queried Yew.

Newbie in advertising industry

According to Yew, who has 28 years of experience in the outdoor advertising industry, neither the shareholders nor directors of Semarak Media have any experience in the industry.

“If you want to privatise the business, at least have an open tender and give to existing operators. Why give to a company with no experience at all?” he asked.

A search with the Companies Commission of Malaysia revealed that Semarak Media is a dormant company with RM1 million paid-up capital.

Aside from a registration address, it has no business address.

The company directors are listed as Ibrahim Abdullah, Teh Hee Lok, Teh Jin Chin and Chan Tiam Hin. All except Ibrahim are shareholders of the company. Another shareholder is named as Tee Lok Teck.

The media owners as well as OAAM have held a few meetings with YNS but the latter is adamant about continuing with the privatisation move, said Yew.

“They gave us the lame excuse that they had signed an agreement with Semarak Media, so they must proceed with the plan.”

Several demands from the frustrated media owners to meet with the state secretary and menteri besar to present their case were rejected. A memorandum and an appeal were also sent but to no avail.

“Hear us out, maybe we can come up with a win-win solution,” Yew pleaded.

Move may be expanded to other states

The current situation is critical, Yew said, as YNS has started to forcibly take down some of the billboards after the media owners refused to abide by its order.

Semarak Media even wrote to the advertisers asking them to skip the media owners and deal with it directly, and some advertisers who are in dire need for advertising space have engaged the company, claimed Yew.

He disclosed that the privatisation model was first started six years ago in Malacca and emulated by Perlis last year. The media owners had compromised at the time because there are comparatively fewer billboards in both states than in other states.

The Johor Baru Tengah Municipal Council has also privatised the business to a private company, he said.

The media owners are worried that the same model will be expanded to other states after Negri Sembilan.

“When you monopolise the business, there will be no competition. The price will go up and there will be no innovation in the industry.

“It does not add any extra value to the state or the general economy. Instead the revenue from the industry will drop,” warned Yew.

Malaysiakini has contacted YNS on the matter but the foundation has yet to respond.