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3 March, 2010

Analysts sceptical about Taiping-JB Highway project

By jagdev@thestar.com.my

KUALA LUMPUR: The proposed new highway connecting Taiping and Johor Baru will bring economic benefits to the country if the project is viable but analysts remain sceptical about its future, considering previous delays in building the highway.

“If the highway is commercially viable, then it will be the right thing to do. Such pump priming will benefit the country,” said a research head of a local investment bank.

On Monday, Works Minister Datuk Shaziman Abu Mansor said the Government was studying a proposal to build a new 600km highway linking Taiping and Johor Baru that would traverse the west coast of the Peninsular.

The idea behind it is that the new highway, if constructed, would help economic growth.

North-south Highway
One concern over the proposed Taiping-Johor Baru highway would be its impact on the government-controlled PLUS Expressways Bhd.

The proposal for the RM5bil highway is currently being studied by the Malaysian Highway Authority and the Public Private Sector Partnership Unit in the Prime Minister’s Department.

Plans for such a highway are not new as Konsortium LPB Sdn Bhd had proposed to build the West Coast Expressway (WCE) about 15 years ago. Shareholders of Konsortium LPB were Kumpulan Europlus Bhd and the state governments of Perak and Selangor.

Analysts said the WCE proposal did not take off due to issues relating to funding the highway and the concession agreement.

News reports indicated that the pertinent documentation for a concession agreement from the Government was submitted but it appeared that none was given.

“This is being re-proposed and maybe there are new parties involved?” asked one analyst.

Analysts believe that the new proposal may be in the form of a private finance initiative and judging by the comments of the minister, they speculate that a proposal would have already been lodged with the Ministry.

“There will be obvious economic benefits from the project given the industries and population base that are located along the proposed highway,” said an analyst.

One concern over the new highway would be its impact on the government-controlled PLUS Expressways Bhd as Shaziman had said that the Government did not want PLUS to be negatively affected by the new highway.

Analysts say that any new highway that cuts through the economically strong states along the west coast would affect PLUS but that chances for a new highway appear to be slim.

One such reason is that going by the initial cost estimates of RM5bil to RM6bil for the Banting to Taiping route, toll charges would be expensive.

They expect the cost of the project to escalate once it connects to Johor Baru.

“The toll charges will be based on traffic projection and how much traffic is there along such a stretch,” said the analyst. “The toll charges might be too high.”