No Toll Hike Signature Campaign

To: Kerajaan Malaysia / PLUS

MEMORANDUM ON THE UNFAIR AND EXHORBITANT TOLL
INCREASE BY PLUS!


FOMCA, the custodian of consumer rights in Malaysia strongly opposes the 10% toll hike scheduled to take effect on January 1st, 2005 by PLUS. FOMCA is deeply concerned that the outcry from the general public including Members of Parliament throughout the nation has not been heard by PLUS and the relevant agencies.

Exorbitant toll rates

The scheduled 10% toll hike next year is exorbitant and burdens consumers especially the middle class and the poor. PLUS Expressway Berhad (PLUS) has stated that the average numbers of North South Expressway (NSE) users over the years have increased from 850,548 in 2002 to 902,759 in 2004 (Jan-Sept). A steady and gradual increase of NSE users would generate generous profits for PLUS and it is not justifiable to increase the toll rates yet again. PLUS’ revenue has risen by 4.9% from RM1.15 billion in 2003 to RM1.21 billion this year and has profitted RM546.2 million in the first 9 months of this year.
Market analysts’ have projected RM782 million as consensus for PLUS’ earnings for the financial year ending December 31, 2004 and a projection of RM858 million for the year of 2005. The projected toll rates consumers have to pay until the end of the concession period will be nearly 2 times as much as the rate now.
The Minister responsible, Datuk Seri Samy Vellu, recently informed Parliament that the NSE was built for the projected use of 160,000 cars per day but is now being used by 1.2 million vehicles per day. This means traffic volume is 7.5 times the forecast volume, which also means toll revenue of some 7.5 times the forecast revenue infavour of PLUS. In such circumstances, with the NSE concessionaire enjoying a windfall of traffic volume and toll revenue so many times more than the original forecasts, it would be a strong justification for PLUS not to increase its toll rates. It is actually a windfall for PLUS as the concessionaire and thereby the rates should be lowered!
The ripple effect of the proposed toll increase will inadvertently have an impact on the country’s socio-economy and cause a possible rise in consumer CPI. The transport and logistical industry will pass on the incurred cost to its customers consisting of industrial suppliers. The suppliers will then pass the cost to retailers which will trickle down to consumers ultimately, consumers form the lower income group will suffer the most. The proposed toll hike affects the basic survival needs of people, as transportation is crucial for access to food, shelter, travel, etc.
The government should defer the scheduled toll increase indefinitely until a thorough study on the economic and social implications on Malaysians focusing on the diffetent pockets of society and the national economy is conducted.

Lack of quality on NSE’s infrastructure and services

Despite paying more for toll, NSE users are still facing traffic congestions on the expressway. PLUS should have projected the scenario and proactive measures should have been taken to upgrade the highway infrastructures such as widening of roads to cater for massive traffic.
Malaysian highway users are entitled to ask as to why they have to pay toll increases for more traffic jams, poorer services and deteriorating quality of road conditions on the expressway. There are more and more complaints of NSE users being fleeced on the highway, when their telephone calls to Plus Emergency especially at night do not produce PLUS Patrol Assistance Units but private tow operators instead. By right, with the additional profit obtained by PLUS through the increased volume of cars, PLUS should be improving the quality of their services and infrastructure.

Lack of Good Governance

A detailed explanation of the increase with clear justifications should be made public to avoid an outcry and public protest. The government should be transparent in awarding private concession tenders to ensure fairness and accountability to the public. It is vague to the general masses on what arounds was the concession on NSE was granted to PLUS in 1988. The public is also in the dark over what were the terms of the concession when the government inked the contract with PLUS.
The public is vague and confused whether the government’s high compensation rates for PLUS (RM154 million a year or RM38 billion over the next 33 years which does not tally), already incorporated in the original concession agreements, have benefited the consumers by way of reduced charges or has it merely improved the profits of the highway operators? Therefore the government should implement an open tender system to ensure fairness, credibility and quality of any privatised projects and not blindly sign on lop sided agreements that burden not only the consumers but the government as well.

Absence and prohibition of laws and regulations

The toll concession was based on a build-operate-transfer (BOT) concept. The concept is innovative as it allows private sector capital and management to build the infrastructure and after a limited time to recover costs and profits. A BOT Act should be drafted and established to govern and monitor concessions. The government should not rely entirely on the Economic Planning Unit in deciding on every governmental project. The Act will ensure transparency and public confidence and acceptance. On this matter, FOMCA will be happy and willing to assist in the preparation and drafting of the Act.
One of the probable reasons for the lack of transparency is due to the definition of `official secrets’ in the Official Secret Act 1986. The Act defines official secret as government tendered documents and other documents or material that Ministers or public officials may deem secret or confidential. FOMCA is of the view that the government should amend the Official Secrets Act in order to ensure that all private concessions and government projects be made public in order for the general masses to determine whether these privatized projects are cost effective and actually benefit the rakyat.


Conclusion

FOMCA reiterates its opposition to the scheduled 10% toll hike and we are apprehensive of the socio-economic impact to the rakyat

Therefore, FOMCA is calling for:

1. An indefinite deferment on the scheduled toll increase until the Government and Parliament conducts a thorough study on the economic and social implications on Malaysians and the national economy.

2. Full transparency and disclosure in the awarding of any privatization projects and to practice an open tender policy based on merit.

3. Amend the Official Secrets Act and formulate a Build-Operate-Transfer (BOT) Act to ensure that the public is informed of the terms and conditions contained in the agreement.

4. A thorough review of all previous privatised concessions.


FOMCA urges the government to take necessary measures to ensure that the rakyat’s rights and welfare are its priority and well protected.

Sincerely,

The Undersigned