This article first appeared in The Edge Malaysia Weekly on October 16, 2023 - October 22, 2023

A private sector proposal to implement the multi-lane free flow (MLFF) toll collection system on our highways is facing pushback from the toll concessionaires who feel that any solution should come from the industry.

According to sources, in a meeting organised by the Malaysian Highway Authority (MHA) and the Ministry of Works two months ago, the concessionaires were presented with a proposal to implement the MLFF by a privately held company that is 60%-controlled by a local conglomerate that has interests in the power, telecommunications and construction businesses.

During the session, the concessionaires were briefed on the concept of the proposed MLFF system that would cost an estimated RM3.46 billion for the 33 highways in Malaysia currently. Sources say the proposal generally centralises the operations, maintenance and collection of all toll booths.

An executive says the private company seems to have the ear of the government as top officials of the Ministry of Works were present at the meeting.

“The concessionaires are open to any proposal for a MLFF but it should be a transparent process. If there is going to be a switch to the MLFF system, there should be a request for proposals from several companies.

“Why must it be given to any one company that does not even have a track record in toll collection? And the process to appoint the company with the mandate to implement the MLFF should be managed by the concessionaires, not the government or any of the agencies under it,” the executive points out.

Officials at the works ministry said they could not comment on the matter for now while the MHA’s key executives could not be reached for their feedback. When contacted, several of the concessionaires also declined to comment.

It is believed that the private company was given approval in principle by Datuk Seri Ismail Sabri Yaakob’s administration. The works minister then was Datuk Seri Fadillah Yusof who is now the deputy prime minister.

Sources say the concessionaires were not comfortable with third parties undertaking toll collection on their behalf because there could be leakages, which could affect overall toll collection.

“Currently, the leakage of vehicles not paying toll charges is below 0.01%. How can we be assured of such low levels of leakage from a third party handling toll collection from a barrier-less toll system via MLFF?” a source asks.

While the private company has assured the concessionaires that it would cover any leakages arising from the MLFF system, the latter have expressed concern about the exorbitant cost that they may incur if the private company is to cover any leakage.

“If the leakage is covered by the private company, will it add to the cost of implementing the MLFF? What is the amount of leakage that will be covered and at what cost to the concessionaires?” asks the source.

Executives familiar with financing for highways raise the question of bond holder approval should there be any migration to the MLFF system.

“Any significant change to the toll collection system will likely need the approval of the bond holders as there will be an impact on collection,” says the executive.

Apart from bond holder approval, it is learnt that the MLFF system needs changes to the existing laws with regard to enforcement for motorists who do not pay their toll.

“While the system may seem more efficient, it has not been tested. It is also not as straightforward as the company operating the toll system needs enforcement powers to go after those who do not pay the toll,” says a source.

In July this year, Works Minister Datuk Seri Alexander Nanta Linggi said the government was still in the process of consulting the highway concession companies on the MLFF system and hoped to implement the system at the end of 2024.

“Various other related matters need to be refined because this involves many concession companies as well as legislation, regulation, preparation to develop the system and the technology involved,” the minister was quoted as saying in an interview.

It is understood that once the MLFF system is implemented, conventional toll booths with boom barriers will be removed from the highways and replaced with MLFF gantries — which are essentially barrier-less toll plazas similar to Singapore’s Electronic Road Pricing system, which is operated by the republic’s Land Transport Authority — giving road users a seamless experience.

The overall objective is to ease traffic congestion before the toll booths. However, traffic congestion, especially on the highways leading to and out of the city is also after the toll booths.

The current toll collection system has been run for over 20 years by Touch ’n Go (TNG), which is deemed a monopoly. All motorists have to pay toll, either using TNG cards or a Smart Tag on-board unit or OBU that is linked to TNG cards or Radio Frequency Identification (RFID) payment that is linked to TNG’s e-wallet.

At the moment, highway concessionaires collect their own toll charges through the toll booth system.

In an interview with The Edge in April this year, Nanta said the government has, via the MHA, appointed a legal firm to study and propose to the government the legal framework that is required for the proposed MLFF system.

“The ministry anticipates that the law will be passed by the end of the second quarter of 2024, just before the MLFF system is fully implemented. The relevant law and enforcement activities need to be in place to avoid greater leakages,” he said.

He also pointed out that “a specific agency” will be responsible for managing the day-to-day collection from users and transferring the funds to the concession companies.

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