Tolls: Mabuhay ang Philippines! February 27, 2007Posted by elizabethwong in Current Affairs, Economy, Malaysia, Southeast Asia.
One of the questions put to Works Minister Samy Vellu on Feb 25, 2007 (NST, pp 7) was the following:-
Q: Are you looking at other countries for better methods of doing it (this author’s note:- i.e.tabulating toll figures)?
A: We can’t go to other countries as they are all very costly. We are cheaper. They’ll come to us now. (laughs)
Look no further Mr Minister.
The toll operators of the North Luzon Expressway (NLEX) in February this year decided to REDUCE toll rates by as much as 10%, after it took over the 83.7 km expressway from the Philippines government a year ago.
The operators have a USD 371 million budget (a little over RM 1 billion), which was used to:-
- Construct additional 138 new lane-kilometres, thus easing traffic by more than a 100% (from 2200 vehicles per lane per hour on both directions to 1000 vehicles).
- Resurface 100% of all the roads
- Add 4 new interchanges
- Upgrade the existing 10 interchanges
- Construct a new flyover
- Widened 26 exits
- Build 4 new toll plazas
- Expand existing toll plazas
(Ref., see Philippines National Inquirer, 14 Feb 2007, pp B2-4)
The reduced rate adjustments came after considering the company’s toll-fee formula, as well as the peso’s strong performance in the foreign-exchange market and the increased consumer price index.
The company believed that the reduction would give more reasons for people to use its roads, despite they had to service the loans which were dollar-based.
Now let’s get back to Malaysia.
This is in stark contrast to, say the Malaysian toll operators of the LDP, who increased the rates regardless, based on a ‘secret formula’ and a time-table, in spite of a strong performance of the ringgit in the foreign exchange and a higher rate of inflation.
Worse still, the LDP, according to the Minister in the interview, “(D)id not make any money.” The RM 80 million was only ‘paper profit’ and the 5 interchanges to ease traffic congestion generated a bill of more than RM 400 million.
Dare we even mention the ‘revelation’ by Samy that it appears in these desperate days, Ah Longs (aka loan sharks) are seemingly more reasonable than local financial institutions:-
“See, you borrow RM 1 billion, you pay back RM 1.2 billion as interest. So the cost becomes RM 2.2 billion. In 15 years, the cost becomes higher.”
(NST, Feb 25, 2007, pp.7)
IMHO, I think we should start consulting the Filipino toll operators (pay ‘em well for good advice!). If we’re actually paying RM 1.2 billion interest for a billion borrowed, then a refresher course in Business Administration, Banking and Finance.