THE financial implications from Malaysia’s transport system will get worse with rising petrol prices and interest rates, Liew Chin Tong said.

“With fuel subsidies – petrol, diesel and liquefied petroleum gas – estimated to reach RM37.3 billion this year, the need to build highly connected and bus-centred public transport systems has never been greater,” said the DAP leader in a column in Fulcrum today.

According to Liew, there are now 33 million registered vehicles in Malaysia.

“In 2020, Malaysia’s vehicle ownership reached 993.7 registered vehicles per 1,000 inhabitants, second highest in Southeast Asia to Brunei Darussalam’s 997.8. 

“Very few adults do not own a vehicle, yet the mobility needs of many are unmet and traffic congestion is rife,” wrote Liew.

He said that Malaysia’s skewed transportation system poses three major economic problems: fuel subsidies, off-budget debts and consumer debt brought on by vehicle ownership. 

Liew added that fuel subsidies already take up a big chunk of the national budget. 

“RM30 billion was budgeted for subsidies for 2022 but the government worries that this bill will reach RM77.3 billion, of which fuel subsidies alone would cost RM37.3 billion –an explosive rise from RM13.2 billion in 2021 and RM 6.1 billion in pre-pandemic 2019.  

“(Finance Minister Tengku) Zafrul suggests that generous subsidies are untenable, but with a general election not far off, the government will be very careful with the unpopular step of reducing fuel subsidy,” said Liew.

Secondly, transport-related public infrastructure projects constitute the bulk of the nation’s off-budget debts, said Liew.

“Over the past decade or so, many big-ticket transport projects were implemented, consisting of highways, city rail networks and inter-city electrified double tracking, and megaprojects such as the East Coast Railway Line (ECRL). 

“Most of these projects were funded through off-budget channels with government-owned special-purpose vehicles (SPVs), thereby raising government-guaranteed debts. Should these SPVs become unable to service their off-budget debts, the government will be required to undertake the payments.”

He said the most recent data already shows that government guarantees for DanaInfra Nasional Bhd, Prasarana Malaysia Bhd, Malaysia Rail Link Sdn Bhd, and Projek Lebuhraya Usahasama Bhd – summed to RM149.1 billion, or 49.6% of the RM300.4 billion of guarantees provided by the federal government.

Liew said last, the loans for purchase of private cars form a significant portion of private debt. 

“Bank Negara Malaysia statistics showed that in April 2022, that car and housing loans comprised 43% of total loans provided by banks. A car loan to pay off a continuously depreciating asset isespecially unproductive, but a lucrative and relatively straightforward business for the banks.” – June 29, 2022.