TOLL FREE HIGHWAYS!

-related to P3, some extend F7 & F9 and all Road users in Malaysia



From left to right:
Pic01 : Datuk Lin, MD of Gamuda Berhad which owns LDP, Kesas Highways;
Pic 02: Famous hanging bridge over Federal Highway, near to Motorola Factory
Pic 03: Next big idea? Toll road for pedestrian walk ways.

I. Global recession is here and scary. Everyone is concerned with their survival. Jobs are at stake. The government can do wonders in stimulating the economy by effectively making the Malaysian economy the best place to do business, at least in the South Asian region.

II. One way is to reduce the burdensome transportation costs. Already Malaysia has the second highest tax rates on cars in the world, after Singapore. But in Singapore, a car cost is equivalent to 2.5 years of average wage, whereas in the Boleh Land its 7 years! So that should makes us No.1 ranking, as in the most expensive car.

III. Below is the proposal of how to make our highways toll-free expecially beneficial to the ones where commuters use it daily! The BEST part of the proposal, there is no toll fee increase needed.

PROPOSED TOL FREE BUDGET

NOTE 1. Borrowings __________________________17.20 billion
NOTE 2. Interests at 2.5%_______________________ 3.01 billion

TOTAL NATIONALISATION COSTS______________20.21 billion

NOTE 3. Toll profits for 7 years to 2017 (no price hikes) __25.00 billion
NOTE 4.SURPLUS [Note 3 less Note 2]_____________ 4.79 billion

EXPAINATORY NOTES:
1. Nationalise all 5 highways (LDP, Shah Alam Highway, Cheras-Kajang Highway, Kuala Lumpur-Karak Highway and the Guthrie Corridor Expressway) purchasing shares not already owned by government. PLUS comes with the highest price, buying 32% shares. The current share price is at RM2.99. Government gives a mandatory offer at RM3.26 per share which is the highest price level past 1 year. That amounts to RM2.98billion. Government needs to undertake PLUS liabilitiesof RM8.72billion. PLUS nationalised bill works to RM11.7billion. All 5 highways nationalisation bill works out to approximately RM17.2billion.

2. Fund the nationalisation program with borrowings with Government bond at 2.5% interest rate. The interests payment then works out to RM430million per year. Over 7 years total interests liability is RM3.01 billion

3. If we continue pay toll, all 5 highways expected to generate profit of RM25billion over 7 years. This is assuming a modest traffic growth of 3% per year. By 2017, the amount can completely repay the Government debt and still has a surplus.

All road users, from thereon, get to use the highway for FREE due to the nationalisation program. We could spend on other more productive industries such as homes, durable goods, retails and food (BAK KUT TEH!) sectors

4. Take note that by year 2017, government still has surplus of RM4.79 billion! This is so even when there is NO increase in toll! This save taxpayers approximately 30% which translates to RM7.5billion over the 7 year period. In other words, the government is taking less money from rakyat's pocket. The amount which otherwise could be spent on productive industries.

IV. Other benefits are :
a) Substantially reduce the cost of doing business
b) Increase our standard of living. Noteworthy is in Shanghai, China of 10 million population has toll-free “Elevated” highways. Propels commercialism sector.
c) encourage more inter-state travels, giving an economic spillovers to poorer states like Perlis, Kelantan and Pahang.
d) The above proposal is far less burdensome compared to current system of double loss.Firstly road users face a toll hike prices every 3 years until 2030. Secondly government guarantees to pay the shortfalls in event Toll Operators didn't collect the minimum sum. In year 2007 and 2008, government [our money again] forked out RM2.85billion and RM2.82billion respectively. These subsidies have been ongoing for last 20 years!

V. The above is a broad extraction knowledge from F7, F9 and P3 of ACCA. A demonstration to you all ACCA students that knowledge is power! So study hard and your brains will be your most valuable asset. Employers and Business partners alike will like you.

Disclaimer: Due to lack of transparencies in accounts, I could not dwell deep and accurately calculate the figures. Hence they are 'roughly' right.