The landslide, the fourth this year, is a costly affair to businesses and caused many problems to Sabah motorists especially in terms of time lost and extra fuel costs in using alternative routes. Money is also spent on the landslide and road repairs.
The tunnel link would not only reduce travel time between Kota Kinabalu and Tambunan by half and facilitate travel to the Interior, it will provide an impetus to development of the Interior region.
It is understood that JKR had done some preliminary studies on the tunnel link. The Sabah government should work on the proposal and seek the federal funds to finance and implement its construction.
The tunnel link can only bring about many advantages and benefits. Its estimated RM2 billion costs will also create a positive impact on the Sabah economy especially on the construction, building materials and related industries and services with multiplier effect further downstream.
The MPs for Penampang and Keningau, opposition and BN respectively, can lobby their respective coalitions to support the tunnel link proposal. The former as Sabah Minister of Infrastructure can also add his support for his Chief Minister to lobby the Prime Minister for the allocations.
What is an additional RM2 billion for Sabah if the federal government had spent tens of billion as presented by the federal Minister from Kota Belud recently and having paid RM1.53 billion in compensation to highway toll operators in the Peninsula to prevent a toll hike?
With the federal Umno BN coalition needing the support of Sabah to remain in power, and the Pakatan Rakyat also canvassing support from Sabah to be the next government, the project allocation is waiting to be approved if seriously asked by the Sabah Chief Minister.
If the project is not approved, it can only mean one thing for Sabahans, “Sabahans being treated as second-class Malaysians by the federal government”.
Reference ..............
Gamuda, IJM to get bulk of RM400 million toll compensation
FEBRUARY 12, 2014 - Gamuda and IJM Corp will reap the most from the RM400 million toll compensation, an amount taken from taxpayers’ money, say analysts.
Construction conglomerates Gamuda and IJM Corp will get most of the RM400 million paid by taxpayers after Putrajaya agreed to hold toll rates for 2014, say analysts.
While motorists using 14 highways around the Klang Valley cheered Deputy Prime Minister Tan Sri Muhyiddin Yassin's announcement, the reality is that all taxpayers will bear the brunt of the controversial compensation that comes at the start of an austerity drive.
CIMB Research said in a research note that the RM400 million due in 2014 will be the highest in seven years and would bring Putrajaya's cumulative compensation to RM1.5 billion since 2008.
"In our construction universe, blue-chip contractors/highway concessionaires are Gamuda and IJM Corp.
"They own most of the highways due for an increase in toll rates this year and are likely to benefit from a bigger share of the compensation due," CIMB Research said.
Muhyiddin announced the compensation after a cabinet committee meeting last week to mitigate criticisms over subsidy cuts and price hikes for fuel, sugar, electricity and assessment rates.
CIMB Research estimated the average hike in toll rates in 2014 could have been 43% for the 14 major urban/intra-urban highways.
"A no-hike scenario is a net positive for the concessionaires, in our view, as compensation will be paid and traffic volume will not suffer.
"The decision not to increase toll rates appears to accommodate the public's concerns arising from last year's hike in fuel prices and electricity tariffs," the research house added.
It said a no-hike outcome also eliminated the risks of a dent in traffic volume, which usually dips for three to six months after a rate increase.
The no-hike decision was criticised by global financial firm Credit Suisse, which warned that it could prove detrimental to the economy as rating agencies may announce a downgrade of Malaysia’s economic outlook.
In its report titled “Red Flag: Market valuation premium at risk”, the firm said that any move by Prime Minister Datuk Seri Najib Razak to back away from austerity measures could affect foreign investors’ sentiments.
“Rating agencies are watching PM Najib to assess his resolve in the unpopular, but critical, policy of reducing the fiscal deficit. The apparent U-turn on toll rate hike is a red flag,” said the report.
“A major U-turn could cause a rating downgrade. In a rising interest rate environment, foreign investors would then sell their huge bond holdings.”
The report also said that any rating downgrade by rating agencies would affect Putrajaya’s plan to achieve a balanced budget by 2020.
Putrajaya has embarked on unfavourable austerity measures to cut its fiscal deficit after receiving a rating downgrade by Fitch Ratings in July. The agency had warned that “Malaysia’s public finances are its key rating weakness”.
Credit Suisse said that in the event of a rating downgrade which would likely lead to bond selling by foreign investors, domestic funds would have to step in “to absorb the foreign bond selling” but that the move will come at a cost.
“Domestic funds would, to some degree, be forced to sell domestic equities or at least, not to buy any more,” it said.
Malaysia’s stock market is at risk of such movements due to the high levels of bond ownership by foreign investors, said the firm.
“Malaysian bonds have proven popular due to their yield and the fact that the Malaysian government has never defaulted,” it said.
“Some 44.9% of government bonds are held by foreign investors – these are worth US$43 billion (about RM143 billion),” it added.
But it also forecasted that the risk of an economic slowdown diminishes if Najib demonstrates that he has the resolve to see the austerity drive through.
Credit Suisse also highlighted the need for Putrajaya to stick to its guns to cut debt in order to keep foreign investors interested.
“In order to mitigate a rush for the door by foreign bond holders, Malaysia cannot afford to have a ratings downgrade and ideally should aim for an upgrade,” it said. – February 12, 2014.
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