PUTRAJAYA’s proposal to allow a non-profit company to take over four popular highways in the Klang Valley is a good idea but there remains more questions than answers, said economists.

They told The Malaysian Insight that there is a possibility of malpractice and abuse with the takeover, adding that the government must have firm control over the highways instead of giving it to Amanat Lebuhraya Rakyat Bhd (ALR).

They however agreed that the takeover is cost effective and benefits the consumers.

Renowned economist Prof Rajah Rasiah said there is an urgent need for more clarity from Putrajaya on ALR’s takeover of concessions of four highways in the Klang Valley.

While noting that the offer from ALR to acquire the four highways – Shah Alam Expressway (Kesas), Damansara-Puchong Expressway (LDP), Western KL Traffic Dispersal System (SPRINT) and Stormwater Management And Road Tunnel (SMART) – for RM5.48 billion is appealing, Rajah said the proposal raises more questions than it offers answers.

“ALR officials claim that their proposed takeover or RM5.48 billion aims to shorten the concession extension as it has to return the highway concessions to the government once its debts are fully repaid.

“Who will be picking up the debts and how would the non-profit-based support claims be accounted for?” asked the Asia-Europe Institute economics professor.

“The proposal looks good but it raises more questions than answers,” he added.

Last week Works Minister Fadillah Yusof said that ALR – a new non-profit company – would take over the toll concessions of the four highways as part of a restructuring programme, so no toll hike would be implemented till the end of the concession period.

As a result, existing toll rates will remain until the end of their respective concession period.

Former Federal Territories minister Khalid Samad however said Putrajaya should be taking over the four toll concessions instead of giving it up to ALR.

“This will reduce the likelihood of abuse and cronyism, and if ALR receives the toll concessions, no safeguard will be in place should the firm award ‘fat and profitable deals to crony companies’ in exchange for work done,” said Khalid.

In 2019, when Pakatan Harapan was in power, it proposed to take over the four highways for RM6.2 billion, making them toll-free for 16 hours a day and giving a 30% discount for the remaining hours.

Responding to Khalid’s suggestion, Rajah said that the government should revert to the agreement made when the toll concessions were granted.

“There surely is a need for an authority to hold possession for maintenance of the four highways but even if Putrajaya takes possession, it should be one that considers the highways as public utilities that ought to be run with the peoples’ interest in mind,” he stated.

Watch out for malpractice

Universiti Tun Abdul Razak economist Barjoyai Bardai meanwhile did not dismiss the possibility of malpractice occurring with ALR taking charge of the four toll concessions.

The academic stressed that Putrajaya should hire independent auditors and place government officials to monitor the whole takeover process.

However, he lauded the government’s initiative to allow a non-profit company to assume control of the highways.

“If there was no action from the government, the highway concessionaires can increase toll charges because there is a clause in the agreements that allows them (concessionaires) to do so. With the takeover, there will be no toll hike.

“Once the RM5 billion payment is completed, which is paid via instalments that may take up to 10 or 15 years, the highways then belong to the government and it can abolish tolls. It is a fair deal but the most important thing is that it must not burden the people.”

He said that if the government’s experiment with ALR succeeds, it must then implement it to take over more highways.

“But it needs to be monitored closely to prevent scandals and abuse.

“ALR should not be taking any profit from it, but in Malaysia anything is possible, so government representatives and auditors should constantly monitor the process,” he stressed.

Sunway University economics professor Yeah Kim Leng on the other hand opined that the takeover is beneficial to the people as it minimises the impact on the government.

He also mirrored Rajah’s sentiment that a more transparent answer must be produced.

“It is cost effective and benefits the consumers. The highways will be well cared for and maintained.

“The key is to minimise the cost and not burden the public. With the fixed toll rates, it is a win-win situation. The people cannot be paying tolls for a longer time to come.

“But it is naive to say that this takeover has no risks, there will always be risks. Therefore, there needs to be clarity and transparency. The terms must not be one sided and there needs to be a permanent solution,” he said. – April 17, 2022.