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Govt mulls options to bring down toll rates

KUALA LUMPUR (October 5): Following its deferment of toll abolition, the government is now considering giving rebates or discounts for road users, as well as extending the concessions for tolled roads, to bring down toll rates, according to Works Minister Baru Bian.

The government is still looking at proposals from industry players and has yet to make a decision as it has yet to hear from all stakeholders, Baru said.

“[We will announce a] decision in two to three months’ time,” he told reporters at an appreciation ceremony for man-hours without lost time injury for highways yesterday.

The new Pakatan Harapan government pledged to abolish tolls under its election manifesto but has since deferred the promise, citing the nation’s tight fiscal position and the high cost of the endeavour as reasons.

“We are currently still negotiating to find a [solution] that is mutually beneficial to all stakeholders,” said Baru, adding that parties have been understanding of the government’s position.

An industry executive who declined to be named suggested that one way for the government to lower the costs of highway construction is by guaranteeing bonds. As a higher credit rating is typically attached to government guaranteed debt, this would lower the cost of borrowing compared to bonds issued by private companies.

The executive told The Edge Financial Daily that the government could also look into delaying the construction of expressways that “don’t have to be built now”.

Separately, Ekovest Bhd managing director Tan Sri Lim Keng Cheng said he is fully supportive of the government’s intent to abolish tolls, but stressed that there is still a need for private sector financing and involvement in the construction of highways.

“There are a lot of good proposals that the government can consider, like the PPP (public-private partnerships),” he said, adding that private firms could better control costs, such as those related to time, building materials and manpower.

The private sector has also been helping the government shoulder the costs of infrastructure expansion, including tapping into international funds through borrowings from foreign banks, Lim said.

“The only thing I can see that is negative [from construction of highways] is that [consumers] will have to pay. But our highways follow a user-pay concept,” Lim said, adding that relative to other countries, Malaysian road users are paying a relatively low rate for highway use.

“What we are doing is providing alternative routes. [Road users] are still free to use the original roads. Private highways are something that can [help generate] economic growth,” he said.

As such, Lim is hoping for more privatisation incentives from the government in the upcoming budget in relation to toll concessionaires.

This article first appeared in The Edge Financial Daily, on Oct 5, 2018.

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