Toll, Petrol, and Automobile

The involvement to help out in various campaign work must have taken the time that it is difficult to allocate time to update this blog. Somehow or rather, updating this blog became the lowest priority.

We've been doing a lot of traveling around the country, particularly to Gelang Patah. At Senai Airport, Johore Baru one morning and over breakfast that we realised the opposition is singing the same and popular tune on the issues of tol, petrol and automobile.

These issues have been answered by many but this time we like to lend a hand also. The reasons we too like to take a crack is because it is Rafizi, the compulsive and everytime caught lying Strategic Director of PKR doing the delivery.

It has to be understood well because it is a complex issue made simple and can be dangerously convincing to simpleton voters.

At a ceramah organised by PAS at Sri Merlong, the edge of Batu Pahat parlimentary boundary, we heard PKR candidate, Idris Jauzi gave a simplistic and rather convincing argument to this issues of tol, petrol, automobile and  various subsidies they are raising.

We know that for many years since the days of Pak Lah's administration that Anwar offered this populist preposition of reducing petrol by 50 sen a day he takes over government. Although we are entirely convince he will be Prime Minister, even if Pakatan Rakyat wins, Pakatan Rakyat will have to honour that promise.

Then he builds it to other subsidies for the rakyat, in which he basically exploited the rakyat's ignorance of the already many subsidies that government had absorbed. Today, they pushed it to another level of offering free tertiary education.

It is good that they decided to offer this because at one time, Pak Lah's administration was toying with the idea of reducing the government's subsidy burden. It reminded us of our heated debate that was almost on the verge of a quarrel with the late Tan Sri Aishah Ghani's son, Dato Astamam after just being introduced by Mohd Aziz Sri Gading's son.

It was with regard to subsidies and that time, the hot topic was the 75 sen increase in petrol that could not be handled properly by Dato Shahrir Samad due to Pak Lah's infamous string of boo boo.

We argued that subsidies was a way for the wealth of the nation be felt by the rakyat. Basically, salary and wages does not serve that mechanism. That was the same arguement that Idris Jauzi used to convince the voters living at the "Ulu" part of Batu Pahat.

The political argument used was very cheeky.

"Tempat ini sama 40 tahun dahulu seperti masa saya masih di sini. Kita sudah tidak ada apa-apa melainkan harga minyak diturunkan, kurangkan tol supaya kos pengangkutan murah, kawal barang jangan naik dan pendidikan untuk ditinggalkan untuk anak-anak kita."

To make it sounded politically attractive and financialy viable, he raised issue of corruption, cronyism, nepotism and RM20 billion leakage estimate by Accountant General.

If we are to argue that Pakatan current budget busting Manifesto basically went back against their  economic agenda in their 2008 Manifesto, which wanted to reduce subsidy and increase Malaysia's competitiveness, it is not sufficiently convincing.

Let us hear Rafizi in his delivery and we rebut it back. First this one on Tol:

Oh what a sissy voice. It seemed he is actually gay. Read in House PK blog.

Rafizi claimed:

“Tol tingkatkan kos pengangkutan. Kos pengangkutan menyebabkan harga barang naik…”


The rebuttal is:

• Tol for PLUS highway has not been increased since 2005. Lebuhraya Utara-Selatan tidak pernah dinaikkan sejak tahun 2005. But yet, price of good and cost of trans[ortation still on the increase because Consumer Price Index still increase by 2.6% a year.

• There is no direct correlation between food prices and toll. Never in any article by professional/economist mentioned that the cause for food price increase is toll imposition: 

      http://www.isis.org.my/attachments/768_MZA_TheEdge_11April11.pdf

http://thestar.com.my/news/story.asp?file=/2011/1/24/focus/7857359&sec=focus 

• Based on table below, transportation cost in 2011 increased by 4.4%, but toll for PLUS remain unchanged in 2011. F & B prices also increase every year!

Country	2006	2007	2008	2009	2010	2011	2012
Malaysia CPI	3.8	2.0	5.4	0.6	1.7	3.2	1.6
% change for main group ·   Transport				(-) 9.4	1.6	4.4	0.7
·   Food & non-alcoholic beverages				4.1	2.4	4.8	2.7

Rafizi claimed:

“Ambil lebuh raya yang sudah memberi pulangan modal...”

The rebuttal is:

• Apart from the initial construction cost, huge money has been invested and spent on maintaining and upgrading of expressway network and facilities. For example, 4^th lane widening at cost of RM1.6B is fully funded by PLUS for the rakyat.

• UEM and EPF acquired PLUS at RM23bil. Reason for the acquisition is to reduce toll for the benefit of rakyat, but at the cost of the concession company through loan obligation of RM30B. 

He went on to claim:

“Mengambilalih tol secara berperingkat-peringkat. Kos ambil alih dibayar secara ansuran setiap tahun...”

PLUS dimiliki oleh badan rakyat seperti Khazanah dan KWSP.

But, making this populist claim is not viable:

• The takeover on stages basis is illogical and unfounded from commercial point of view. Lenders would definitely not agree to such a deal whereby the borrower is one entity without ANY source of revenue and hence, no security against the borrowing. Severe impact to the entire bond market of Malaysia as well as global debt market, as PLUS Sukuk is the biggest global Islamic Sukuk. There would also be implication to the FDI and Islamic financing market. 

• As PLUS is owned by “badan rakyat”, any profit will flow back to the rakyat either via EPF.

Rafizi elaborated that:

“Anggaran tahunan bersih untuk ambil alih lebuh raya PLUS untuk hapuskan tol adalah RM4 bilion setiap tahun dengan pecahan:

i.         RM1.473B: beli kembali pegangan KWSP dan Khazanah pada kadar 50% kutipan tol tahunan.

ii.       RM850 juta: untuk biaya kos operasi tahunan (termasuk kos selenggara, gaji, pentadbiran dan lain-lain)

iii.      RM1.5B : Bayar faedah hutang bon Sukuk yang ditinggalkan oleh UMNO BN berjumlah RM30B

iv.     Simpan RM1.1B untuk bayar hutang bon Sukuk UMNO”

We rebut:

• Where will the funds come from? National income will be affected and how would this expenditure address the country’s budget deficit? 
• Would it be fair to takeover of a highway located in West Coast Peninsular Malaysia at the cost of other rakyat especially those living in Sabah, Sarawak and East Coast? Amount used for takeover could deprive Sabah Sarawak and East Coast of good infrastructure.
• What is the basis? Why based on 50% of annual toll collection? How could equity acquisition use 50% revenue as the acquisition cost and payable on an annual basis?! The takeover cost of PLUS for Khazanah and KWSP was RM23B. Divestment would definitely affect both Khazanah and KWSP’s investment return.
• The RM800+ million figure is just on maintenance. What is there’s a need to expand the highway? Where would the cost come from and who is to bear this cost if without any toll income? PLUS’ 4^th lane widening project cost RM1.6B is fully funded by PLUS.
• With free-toll, more people will be using the highway and this will jam up the highways even more quickly – coupled this with the fact that PR plans to reduce car prices, double whammy!
• With more motorists on the road, more pavement maintenance work would be needed, more lane widening projects would have to be undertaken to ease traffic, more cost to maintain the R&R and more complaints from the rakyat! All these cost will escalate significantly over the years and, who to bear?  
• The Sukuk was issued by a corporate entity under a comprehensive regulatory framework with good governance. Malaysia continuing to dominate as the destination choice for Sukuk issuances in the global Sukuk market. Based on RAM report in 2013 (http://www.theborneopost.com/2013/02/24/malaysia-to-continue-leading-global-sukuk-market-growth/), Malaysia issued US$97.1 billion of Sukuk last year, accounting for 69.7 % of the total globally. Continuous development plans especially in the infrastructure sector ensured the growth of the Sukuk market.
• Changing the Sukuk terms will dampen investors' confidence and ultimately, the future of Sukuk and debt market in Malaysia.

It shows Anwar sleeping during presentation when he was in cabinet or he is too dumb on economics that he did not understand it.

Rafzi claimed:

“Apabila tol dihapuskan, Kerajaan amat menjimatkan beberapa perbelanjaan tahunan:

i.         RM800 juta pampasan yang dibayar setiap tahun kepada PLUS oleh Kerajaan…

ii.       RM50 juta penjimatan daripada kos operasi

iii.      Kerajaan kutip RM589 juta cukai tambahan setiap tahun apabila wang yang dijimatkan daripada membayar tol dibelanja dalam ekonomi domestik...”

That simplistic logic miss out:

• PLUS had in 2011 announced the restructuring of toll -- with no increase for 5 years and rate of increase for future years has also reduced from 10% to 5% every 3 years) and no compensation payable to PLUS.
• There won’t be savings, in fact, operations and maintenance cost will increase with the sharp rise in traffic volume on a toll-free highway.
• Whether this saving eventually benefits the right group of people? The ones who are paying toll are those who can afford to own a car, and pay for the road tax and fuel.  

For Rafizi's closing:

“Setiap tahun, rakyat membayar tol kepada PLUS sebanyak RM3B dan Kerajaan mengguna dana rakyat utk membayar pampasan RM800 juta kepada PLUS. ….Kos tanggungan rakyat setiap tahun berjumlah RM3.8B…



Rebuttal:

• Again, no compensation payable to PLUS. During the corporate restructuring of PLUS, both UEM Group and EPF agreed to waive RM2.9bil compensation owed by Government.

http://biz.thestar.com.my/news/story.asp?file=/2011/11/17/business/9920154

Rafizi's video on reducing petrol prices:

To answer:

His video on reducing car prices

Rebuttal for Rafizi:

This issue of toll, petrol and automobile is popular and appealing but it is too simplistically presented by Pakatan. To solve this, it require more comprehensive understanding of the implication. This the Pakatan people could not do.