PETALING JAYA: While the government has given the assurance that it does not have to fork out a single sen for the proposed buyout of four toll highways in the country, there are concerns whether the congestion charge model will be sufficient to offset the whopping takeover sum of RM6.2 billion.
In case it does not, what would be the consequences to the overall economy of the country and the government’s financial position?
Generally, economists view the takeover offer as a positive move and would not hamper the government’s target of reducing the fiscal deficit to 3.4% to gross domestic product this year.
Finance Minister Lim Guan Eng has said that the RM6.2 billion buyout sum will be financed through the issuance of bonds and a special purpose vehicle (SPV) will be set up to facilitate the move.
Sunway University Business School Professor of Economics Dr Yeah Kim Leng explained that since it will only be an indirect contingent liability on the balance sheet if the SPV fails to service its debt, it will not be a burden on the government’s balance sheet.
Last Friday, Gamuda Bhd said it has decided to approve the takeover offer by the government to acquire its stake in four toll highways, namely Damansara-Puchong Highway (LDP), Sistem Penyuraian Trafik KL Barat (Sprint), Shah Alam Expressway (Kesas) and the Stormwater Management and Road Tunnel (Smart).
With the proposed takeover, Lim said the government is expected to save RM5.3 billion in compensation payment to the concessionaire holders and the toll charges will be replaced with the congestion charge model with variable rates for peak period and off-peak period.
As the proposed takeover is done on a willing seller-willing buyer basis, Yeah believes that it will be a confidence boost to the market.
Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew dismissed the risk of the highway takeover cost to the government’s credit ratings.
“There is no risk of a downgrade on government credit ratings. While the takeover will require an immediate capital outlay, it is intended to shield the public from a toll hike.”
He explained that the payoff could be viewed as a net positive in the longer term as the government will no longer have to contend with compensation payments.
For this year, the freeze on toll hikes for all vehicles on 21 highways and the abolition of motocycle tolls is projected to cost the government RM994.43 million.
The government’s overall debt and liabilities stood at RM1.1 trillion or 75.4% of the gross domestic product (GDP) as at end-2018, partly due to a RM54.2 billion rise in direct government debt to RM741.0 billion from RM686.8 billion in the previous year.
Despite that, Lim said the government’s fiscal consolidation remains on track as it is targeting to cut the fiscal deficit from 3.7% in 2018 to below 3% by 2021. For 2019 and 2020, the fiscal deficit is expected to be 3.4% and 3%, respectively.
Source: The Sun Daily