THE government’s proposed takeover of four major highways may have won public approval but   financial analysts said it would have been more prudent to use the money to promote economic growth instead.

They said the takeover of highways will not have any significant economic impact and would only benefit the users of the four roads
 
Universiti Tunku Abdul Rahman economics assistant professor Wong Chin Yoong said: “It’s like taking a loan to pay off another loan; there’s little difference as far as the economy is concerned.”

Wong said the people could buy the shares and reap the benefits of being a shareholder if the highways were owned by public-listed companies.

“But the opportunity to enjoy benefits as shareholders is no longer there,” he said.

Wong said even though profits came first if the highways were privately managed, it also meant having to constantly make improvements to stay competitive while being accountable to shareholders.

“But once the government takes over, there’s no longer a question of responsibility. Issues of maintenance, congestion, accidents etc no longer arise,” he said.

Wong said both private and public ownership had its pros and cons but he could not say which was better as it all depended on implementation.

He said both the debts and bonds of the highway companies were still guaranteed by the government.

“According to the Finance Ministry, they still qualify as contingent liability.”

Senior economist Ho Kee Peng said he does not understand the government’s rationale in purchasing the highways as it had on multiple occasions said administration is short on funds.

Ho said even though the economy is projected to grow at 4% at a time of global economic downturn, the projected number is still lower than usual, and he questioned if the time is right for highway acquisitions.

“The government is trying to appease the people, but this sets a bad precedent in the investment market. It’s as if the government will buy over profitable companies from now on,” he said.

Ho said this is one of the worst decisions the government can possibly make at the moment as it could affect Malaysia’s status as a financial market.

“The outlook has been negative, and now it’s even worse. But maybe it will be different in 8 to 10 months’ time,” he said.

Malaysian Industrial Finance Development (MIDF) Research Institute had said the government’s acquisition price was reasonable and is not far from its own estimate of RM2.5 billion.

The institute said the government’s takeover may cause an unexpected windfall for those involved as some companies’ concessions are nearing its end, and not all highways have been profitable.

“So the government’s acquisition can be good opportunity to throw in the towel,” the institute said.

Finance Minister Lim Guan Eng recently announced that the government had made a RM6.2 billion bid to take over four concessions of toll highways, which could save taxpayers RM5.3 billion in compensation to the concessionaires.

Gamuda Bhd has accepted the Minister of Finance Inc’s offer to purchase its stake in  Kesas Sdn Bhd, Sistem Penyuraian Trafik KL Barat Sdn Bhd, Lingkaran Trans Kota Sdn Bhd and Syarikat Mengurus Air Banjir dan Terowong Sdn Bhd. – July 1, 2019.