This article first appeared in Forum, The Edge Malaysia Weekly on December 11, 2023 - December 17, 2023

The Multi Lane Free Flow system (MLFF) is not a new topic. It has been talked about for more than 15 years but never got off the ground, as there was no resolve from the parties involved.

The authority, which is the Malaysian Highway Authority (LLM), left the responsibility of implementing the MLFF, which allows for seamless flow of traffic at toll booths, to the concessionaires.

The concessionaires, citing cost and enforcement issues, did not take up the challenge seriously. In a country where discounts on traffic offences are given so often, the concessionaires fear that they would be left to grapple with enforcement issues related to non-paying motorists if they were to implement the MLFF without the “buy-in” from the Road Transport Department (RTD) and the police.

The MLFF was put on the back burner — until now.

Last week, Works Minister Datuk Seri Alexander Nanta Linggi confirmed that under the previous government, an approval in principle was given for the implementation of the MLFF and to facilitate discussion between the parties involved to implement the MLFF.

A joint venture (JV) between Konsortium Jaringan Selangor Sdn Bhd (KJS) and SEP Synergy (M) Sdn Bhd was given the approval in principle in 2021 to implement the MLFF. KJS is a subsidiary of YTL Group, and SEP Synergy is a bumiputera entity.

The government’s confirmation has jolted the concessionaires into action, and they are insisting that they be allowed to implement the MLFF by themselves.

The KJS-SEP JV contends, however, that it had already engaged with the concessionaires since 2021, after receiving the approval in principle. The model will replace the toll booths with a system whereby vehicles are identified through radio-frequency identification (RFID) and an automated number plate recognition (APNR) system. Consequently, toll charges will be deducted from their existing mode of payment.

According to the KJS-SEP rollout schedule, the system will be ready by the end of next year. It also insists the new system will not cost the government any money nor increase the annual operating cost of concessionaires.

KJS-SEP’s cost of running the toll collection system is estimated at RM650 million a year, which is said to be lower than the cost currently incurred by concessionaires.

Under the KJS-SEP model, the savings from implementing the MLFF would go to a new entity — the Central Tolling Agency (CTA) — that would be under LLM.

CTA would collect all proceeds from the toll operations and be in charge of collecting any uncollected toll charges.

The system itself would be operated by a Central Tolling Company (CTC) that would be responsible for the design, building, financing, operating and maintenance of the MLFF. In return, it gets a concession.

In the current MLFF controversy, KJS-SEP has an agreement in principle to undertake the role of the CTC in return for a 30-year concession. KJS-SEP is confident of keeping leakage (uncollected toll) at less than 0.06%, which would be covered by the cost savings.

The concessionaires, led by the largest, Projek Lebuhraya Utara Selatan (PLUS), are fighting back with a proposal of their own.

The concessionaires contend that they are in the best position to implement the MLFF system because they have the experience and would be able to come up with measures to mitigate the risk of leakage by non-paying motorists. In their proposal, they plan to work with the RTD and implement the MLFF in phases.

In the concessionaires’ counter-proposal, the first stage is to remove the barriers only at the entry points and not at exit points, where motorists will have to pay to exit. The second stage is to remove the barriers at both entry and exit points when the system proves to be robust.

Under the current system, where there are barriers at both entry and exit points, the leakage of non-paying motorists is almost negligible. The concessionaires fear that a new system provider may not be able to control the leakage of non-paying motorists and, eventually, the problem will fall on the concessionaires.

To assuage fears of leakage, KJS-SEP’s proposal includes a financing facility for the LLM-controlled CTA to cover any shortcomings due to non-payment of toll charges.

The issue of toll concessions and charges is highly charged politically. There can be changes to the ecosystem, but there cannot be any increase in toll charges. It is politically unacceptable.

Increasingly, the government has to look at ways to generate more income from highways, as there is increasing demand from voters for seasonal toll-free usage.

For instance, it has become the norm for the government to instruct highways to do away with toll charges during festivities. That is a cost to the government.

LLM and the concessionaires have been at loggerheads for the longest time. The differences range from the cost of maintenance of the roads to toll booth collection systems and service levels of concessionaires.

Now, LLM has found an alternative provider for the toll collection system with the KJS-SEP proposal.

Under the proposal, LLM will have a more hands-on role to play. It will control CTA, which collects toll revenues and has oversight over the operator of the MLFF system.

The concessionaires feel, however, that LLM should remain a regulator and not get involved in the operations of highways. The concessionaires believe they should be left to manage the process of appointing the operator of the MLFF system.

It is difficult for the current government to ignore the KJS-SEP proposal. A lot of work and effort was put in before it came up with a cheaper alternative. Also, the JV is providing a financing facility to cover any shortcomings in the form of leakages of uncollected toll charges.

At the same time, the government cannot dismiss the interests of the concessionaires, which built and operated the highways for many years. Government entities such as the Employees Provident Fund and Khazanah (via UEM Group) own PLUS, whereas Permodalan Nasional Bhd (PNB) owns Projek Lintasan Kota Holdings Sdn Bhd (Prolintas), which operates the Damansara-Shah Alam Elevated Expressway (DASH), among others.

Can a middle ground be found?

M Shanmugam is a contributing editor at The Edge

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