Tolls: Mahathir, this time you must listen

Dr Mahathir Mohamad has started to talk about the need to impose toll charges in Malaysia to cover the cost of constructing and maintaining expressways.

What he said is true. We obviously can’t have the convenience without paying for it.

But then it is more than that. We can’t continue doing things the old way. We must rethink privatisation and the manner in which toll concessions are dished out.

For a long time, we dished out privatisation and toll concessions in the most opaque manner. Over and above that, the government guaranteed revenue and profit to concessionaires.

As it is, I think the government is providing very lucrative returns to most concessionaires, given the risk level they have to bear.

Mahathir was right on the need to impose tolls, but he was wrong in dishing out the toll concessions in the manner that he did.

He shouldn’t be using Japan as an example when comparing toll charges in Malaysia. The cost structure, income level and cost of living are vastly different between the two countries.

Why not he compare with UK and Norway where no toll charges are imposed?

When toll concession agreements are “secret” and when revenue and profits are guaranteed, there is nothing to prevent the concessionaires from engaging in “cost padding”.

The bank extending the loan doesn’t care that a project is overpriced because it is guaranteed by the government. If the concessionaire fails to pay, the government will.

With cost padding in building and maintenance, the concessionaires are justified to charge high toll charges. They are also given “built-in” clauses to increase toll charges over time, failing which the government must pay compensation to them.

This is despite the increase in traffic volume beyond the original estimates, allowing concessionaires to reap enormous revenues although users still suffer traffic congestion.

It is time to remind Mahathir his way is not always right. It is time to review and renegotiate toll agreements in the country, as intended by PH.

Toll concessionaires cannot continue enjoying lucrative returns doing risk-free business. At one time, our independent power producers (IPPs) were also given the same privileges.

Mahathir was too powerful and obstinate to listen to advice when he first started the privatisation of highways and IPPs. This time around, he must listen.

It is ridiculous for him to ask us to compare toll charges with Japan. Malaysia is not Japan.

TK Chua is an FMT reader.