Thursday, 21 July 2011

Malaysian government seeks toll cuts prior to election

Reuters reports that the Malaysian Prime Minister has announced that he is “soliciting industry views” on freezing, cutting or abolishing tolls on privately owned toll roads in the country.

He has also called for no extensions to concessions and no compensation for any reduction. In short, it looks like a measure to gain favour with voters in advance of the election.
It followed the announcement by operator, MTD Capital, that it was freezing tolls without any government compensation. The other major operator, PLUS Expressways has since supported another toll freeze proposal. Both companies are currently subject to takeover bids by their own major shareholders (plus being taken over by an employees’ fund and Khazanah Nasional). It is thought that the offers by MTD and PLUS to freeze tolls are intended to improve their chances of winning future concessions, as the government intends to build five major new highways (but also announced a freeze on tolls on four PLUS highways).

What does this all show? It is that the line between government, private enterprise and the transparency of decisions on concessions in Malaysia is very blurred indeed.

Consider this. PLUS Expressways is being “privatised”. It is Southeast Asia’s largest toll concessionaire and the eight largest in the world according to Wikipedia. It is owned by UEM Group (United Engineers Malaysia). UEM Group is a fully owned subsidiary of Khazanah Nasional. Khazanah is the government’s investment company. Khazanah owns just under 15% of PLUS Expressways, whereas it owns the rest via UEM Group.

Yes, this is state capitalism on a grand scale. So in any case, it is hardly surprising that the Prime Minister can tell a state owned toll concessionaire to freeze tolls!

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