Want to make some money ? Ayoyo Samy, toll sana toll sini
Ever wanted to venture into a business with zero risks and confirmed returns? Ever wanted to make money from hard earning tax payers? Do not look far, become a toll operator..I’m not kidding !! All you need is have a lot of money as an initial investment, then build the highway and the rest will be taken care of. Sounds a little bit like our local ah long, isn’t it? I forward you money and then I’ll squeeze you.
My favourite Malaysian Minister, Samy, said in a statement yesterday that the government had paid RM38 Billion to toll operators in the last 20 years as a compensation because they can’t hike up their already high and burdening prices. RM 38 billion is a hell of a lot money !!! Where does the money come from, I wonder? Oh yeah, how can i forget, the chunk that the govt takes away from me every year from my salary and my bonuses ( which seriously hurts, I admit ).
Now, I’m not an anti-establishment person, I believe that taxes is neccessary for nation building but is paying RM38 billion to privatised companies the right way? I don’t think so. If u take tax payers money and build hospitals ( Puncak Alam really needs one, so does Shah Alam), schools, pay oil subsidies (yeah right !), build better facilities, then I think that’s valid and solid; but if you take our money and pay toll operators who’s already making money from people like me who pay a whopping 6 bucks a day for toll, then I say that’s bloody unfair. don’t even get me started on taking taxes and paying for a RM 5 million farewell party or even a RM250k farewell party.
Seriously folks, toll operators like PLUS, KESAS etc are profit based company and are making profits from their businesses, do the government really need to compensate them.Why did the govt go on privatisation is this is how these businesses are going to be run!!!
C’mon, this is Malaysia and this is money laundering at its highest level….
Damn, where do i get RM1 billion, to build a toll highway ?
Oh i forgot, tax payers money as well…..
September 23rd, 2005 at 4:49 am
aiyaa fren,
i put it like this la, very easy. u need 1 bil? mou man tai. i borro u, u bild haiwei. follow me? ok. i charge u interest. say 10% la, very high risk bisnes ma, if u cannot pay back, i sei maa. some more, got collateral or not? so now, total borrowings, 1.1 bil. how long wanna borrow? errr… (is it PVIFA or FVIFA? forget la) some more u already gerenti get the project or not? if not how many levels gotta ’sue up’? highest level, how much coffee does he drink? what type of coffee? starbuck very expensive maa, ok….
foreign labor.. also got tu cow ver. if want fast, then u know laa….. how much coffee need to prepare. profit margin? 10% only ar? haiya, so cheap. how to buy S class to meet all the tai longs? the most superflous business card on 4 wheels.
so bro. it’s like a ‘layer cake’ (go watch it, nice movie, me thinks its guy ritchie stuff). every layer wants a piece of the cake. only my personal view hah!
September 24th, 2005 at 3:15 am
“Damn, where do i get RM1 billion, to build a toll highway ? ”
Yup… If you had I billion dollars, wouldnt you want to invest it in something that will generate good returns? Toll operators entered into a fairly risky contract for a profit - as agreed in the terms. So, its only fair that they are given a chance to make their profit, for their risk and investment they put in.
On the compensation - if the contract calls for it, then it MUST be paid. Its about fairness and keeping your word and maintaining investor confidence. If our govt doesnt keep its word, we’re sure going to lose a lot of FDI.
Finally, if you think its grossly unfair for this toll operators to rake in so much in profits and compensation, why dont you be a part of them? A lot are publicly traded, so you can get a piece of action. Then you’ll be the rich one
September 26th, 2005 at 12:10 am
Dear Rajiv,
Thanks for the comments.I’m especially thrilled as there’s someone who has a different opinion, to be honest, the reason this blog is up is mainly to create intellectual discourse among my friends.
Are you working for a toll operator? hehe, kiddin dude !
Anyway, with the way things are going, yes, if i have a billion dollars, I would invest in a toll operator. You know why? The agreement of course. In the agreement, the govt agrees to compensate the toll operators certain amount.Which other business provides clause that ensures the government to compensate your business if u can’t raise the prices.
On the second issue,the govt has to pay because that’s what written in the agreement. Precisely, why does the govt goes into such agreement in the first place,baffles me.
Thirdly,on the issue of FDIs..C’mon dude, most of the toll operators are local conglomerates and GLCs anyway, so what FDI are u referring to. PLUS(which owns ELITE,2nd Link etc) are a subsidiary of Renong. Very local I would say and very connected to the govt anyway. If u check, PLUS’s website via UEM/Renong, U’d see that the majority shareholder is Khazanah Nasional…not so foreign afterall..may i add, Khazanah is owned by Ministry of Finance
Fourthly, on the issue that they’re given chance to rake in millions in profit. If you study the posting, u’ll realise that its not the toll companies that i’m unhappy about. Its the party that guarantees compensation to them that I’m concern of. PLUS, according to their 2nd quater results 2005, had made 681 Million ringgit in Profits…and the government had provided with them with more than 83 million in compensation (6 months alone) and if u check its Balance Sheet, Plus is still able to collect from the govt a further 572 million from recievables compensation. Good business isn’t it?
On buying shares of PLUS and becoming rich, well, perhaps I should, only if the pink forms allocation were given to the toll users instead of strongly linked institutional investors and furthermore, i don’t think i’ll invest in a company that pays 3.85 earnings per share per quater.
Cheers mate, waiting for your reply.
October 3rd, 2005 at 9:36 pm
Hi Shazmi,
Sorry for the very late reply, but here it goes…
1. On the agreement…
Becos since you cant determine your toll rates like a free market (the damn parliment and cabinet will interfere), there is a need for a compensation clause. What if PAS wins the election one day and reduces all toll to 20sen? These companies will go bankrupt, dragging with them the finanacial institutions that loaned them the money.
2. Is the agreement overly biased to them?
Is some cases, maybe. But back then, who could predict the amount of cars that would use the highway? The North South highway was conceived ages ago, who could they predict traffic flow today? Kajang-Silk and S’ban-PD highways are among those that have lost/are losing money - and i believe, although not sure, that the east cost highway under MTD isnt doing so well either. Just like in any other business, you take the risk and spedn that billions of dollars, and sometimes u get lucky, sometimes you dont.
However, all agreements stitched up in private - its plain wrong and i dont agree with the practice one bit. But i do see the need for such agreement and the compensation in the first place.
3. FDIs….
Yup, i’m with you on the matter that toll operators are Malaysian. BUT, if our govt cant keep agreements with Malaysian companies, you think and american is giong to feel good about dumping in another billion dollars here in FDI? foreigners will have doubts on making agreements with our govt.
4. You dont need those pink forms. Go find a broker near your office, fill up some forms to open your account, and then place an order for some PLUS shares. Hey presto ,you done. Now wait for the dividens to come in…
PLUS(Renong) was incrediblely lucky to get the contract over 20 yrs ago. but, you have to admit, it took a risk. what if air asia came into exsistance 15yrs ago? what if KTM upgraded to high speed trains 15 yrs ago? What if fuel prices hit $100 15 yrs ago? It would have lost money… It was the surge of cars recently that is leading to its boom. They took a risk, it paid off. Lets not rip the company apart.
October 4th, 2005 at 9:35 pm
Interesting comments and observations Mr. Rajiv, but do you sincerely think that the contracts were drawn out in the way that it was because of market forces and to balance the risk and capital involved? I think the point Shazmi is making is valid… why is PLUS among the few companies where profits are GUARANTEED! Its one thing to balance the risk and the investment, but why at such grossly unfair terms, especially when it is at the expense of the public. Whether they raise the toll charges or the government compensates them it is still public funds. Lets not be disillusioned that when the government gives out these unfair compensations it does not affect the public. Further more, it would have been a risk for PLUS if the government continued to upgrade federal routes, from North to South, or even in the Klang Valley. Take for example the so called Federal Highway, which 20 years ago was a dual carriage way all the way from KL to Klang. This, probably the most important stretch of road in the country was given to PLUS, WITHOUT a proper alternative route (not tolled) between Subang and Klang. Is this fair at all? What is the risk of people not using this route? Sure, they later built the NKVE, which also came under PLUS. If PLUS is a commercial business entity, who’s rights should be protected, where are the rights of the citizens of this country to have an alternative route? In most other countries where there are tolled roads, there are alternative routes. True, they might be more congested, with traffic lights along the way, but the option is there. Take Bangkok for example, where the elevated highways allow cars to travel at 120 km/h almost congestion free. But right under that highway are three lanes (six both ways) that allow toll free travel. So its an option that users can make. This is also true in the US, where all turnpikes (as highways are know there) have alternative federal routes, which are also dual carriage ways, and well maintained.
So the basic question remains, why the single sided contracts that favour PLUS, when there really is very little risk. There are also no performance clauses (time taken to pay/ clear toll plaza, vehicle volume per lane and etc.). If the contract was meant to be fair, it should have also dictated that if the vehicle volume increased a certain amount, certain upgrades need to be made, including the widening of the highways, at the cost of the operator.
So… still think its a fair contract? Perhaps, just like the APs I guess.
October 5th, 2005 at 1:48 am
Hi Mr Anwar,
So this post goes on and on…
What i gather from your reply is that you are sore over the agreement in the first place. I think the argument comes down to the unfairness of the agreement…
I still stand ground on the fact that if the agreement/contract says that certain toll raises and compenstation are due, then its absolutely fair to grant them.
PLUS profits are not guarenteed.If tomorrow we all take the train and the bus, and leave our cars at home - it will suffer. If you want to debate companies getting a guaranteed deal, you should look at some of the water deals, such as SAJ under ranhill. Their contract calls for rate adjustments to ensure a profit (18% if i’m not mistaken). And unlike highways, people are forced to drink and use water. we surely are not going to dig up wells in the midst of condos and office towers?
You see, PLUS is lucky, becos us malaysians like to drive and hate to carpool. we have too many cars - the most in south east asia, despite not being teh biggest. Heck, if someone installed a high speed train, linking up all major towns, and with air asia, and with and improved public transport - i believe plus wil start to lose money. This year, its predictign a drop of 4%. Like air asia rocked mas, something can come along and rock PLUS and KESAS and LDP. its lucrative today (no doubt, i agree with you), but it was and to a certain extend now, it is still a risk…