RAFIZI SHOCKER: Why hike, toll road firms already make PROFIT margins of up to 121%

KUALA LUMPUR - Even as the Opposition exposed the amount of "obscene profits" made by highway concessionaires, Prime Minister Najib Razak looks set to hammer through a toll rate hike of another 50 sen to RM2 effective next month.

The move is closely monitored by civil society, consumer and citizen groups as it will surely distress many ordinary Malaysian households, most of whom own at a least one car due to a perennially weak public transport system.

The reported increment is extraordinarily large and even Works Minister Fadhillah Yusoff has acknowledged the hike may be 'double' as the concessionaires had not adjusted their prices in 6 years.

Although Fadhillah insisted no final decision has been made, he told the mainstream media that 15 highways would be affected. These would include the New Pantai Expressway (NPE), Damansara Puchong Expressway (LDP), Ampang-Kuala Lumpur Elevated Highway (Akleh), Western KL Traffic Dispersal System (Sprint), Konsortium Expressway Shah Alam Selangor (Kesas), Kuala Lumpur-Putrajaya Maju Expressway (Mex), Sungai Besi Highway (Besraya), Stormwater Management and Road Tunnel (Smart) and Sistem Lingkaran-Lebuhraya Kajang (Silk).

Greedy operators already making obscene profits

Opposition MP for Pandan Rafizi Ramli, who has led the charge against higher tolls, minced no words slamming the government's "greed".

According to him, many of the concessionaires were already operating with profit margins as high as 121%.

For example, PLUS Berhad, which operates six highways, enjoyed a pre-tax profit of RM2.5 billion in 2011 or approximately 61 per cent of revenue, while Litrak, the operators of Puchong-Damansara Expressway (LDP) and Sprint, registered a profit before tax of RM180 million or 49 per cent.

Another concessionaire, Kesas Highway, recorded 121 per cent profit annually from 2008 to 2012.

Rafizi said that based on PLUS Berhad’s 2011 financial statement and annual report, the toll concessionaire collected RM4.098 billion in toll in 2011, but spent just RM241 million as maintenance costs in 2010.

“Seeing that the cost to maintain the highways is only 6 per cent of the total toll collection each year, this shows that the current toll rate is too high and gives multiple profits to PLUS,” Rafizi told a press conference on Tuesday.

Najib has the power to stop the toll hikes if he wants to

Rafizi, who is also strategy director for Parti Keadilan Rakyat, had the day before revealed that the Najib administration had the power to stop the toll hikes. Most of the toll firms were controlled by cronies of the ruling Umno party as well as by government-linked agencies.

He debunked the explanation given by the government that it could not stop the increment, otherwise it would have to pay RM400million in compensation to these concessionaires.

"They are already making obscene profits. You do not subsidize obscene profiteering. The money will ultimately go back to Putrajaya's )(the federal government's) pocket," Rafizi had said.

Most of the deals inked with the toll firms also involved the government granting subsidies for land takeover, easy funding (through the Development Bank) and financial grants, Rafizi pointed out.

"In addition, most concessionaires in the country obtain immense monetary aid from the government during construction," Rafizi had said.

'I am not a populist PM' Najib determined to push through price hikes

Yet, despite the public anger at the latest hike, Najib looks determined to push through what he has termed "spending cuts".

“If our country spends more than our income, we will have to borrow from financial institutions to pay salaries and this will be alarming to our future because this is the recipe to an economic downfall, if that happens, a great misfortune will take place, not just to Malaysians but also on civil servants and on pensioners.

“I believe you are aware of this reality, that is why we must govern the country in a prudent manner, our way is not the way of populist.

“I can be a prime minister riding on a populist platform but I will destabilise the economy and ruin the future of our beloved country,” Najib had said to an auditorium packed with civil servants at the 26^th Congress of Unions of Employees (Cuepacs) Triennial Convention.

Passing the buck to the people

The PM's doubletalk is bound to anger the Opposition as well as many Malaysians who have been following the reckless spending chalked up by his government over the past 5 years with grave concern.

They had warned the populist steps he opted to take in order to win votes at the recently concluded 13th general election would come with a heavy price.

Indeed Malaysia's record high national debt, at 53.6% or just below the 55% ceiling set by Parliament, has prompted Fitch Ratings Agency to downgrade to negative its outlook on Malaysia.

"We would expect Najib to be prudent by cutting expenses on himself, his government and the Umno cronies first. But what he is doing is to continue to splurge on unnecessary overseas trips for himself and his wife, continue to rake up a huge operating expenditure for the government, protect the Umno cronies and pass the buck over to the Malaysian public to bear," MP for Batu Tian Chua told Malaysia Chronicle. - Malaysia Chronicle