2nd thoughts on 2nd Bridge
- From: pluto <pluto@xxxxxxxxxxxx>
- Date: Thu, 01 May 2008 01:10:42 +0800
2nd thoughts on 2nd Bridge
http://www.penangwatch.net/node/2331
30 April 2008 - 10:56pm
Second bridge needs multi-dimensional solutions
Cheah Kah Seng | Apr 30, 08 4:19pm www.malaysiakini.com
The new Penang government deserves a compliment for its efforts reported in your
article Second bridge: 7-man body set up. It shows the new state government is
more willing to stand up against the federal government, conduct its own
"thinking" and analysis to avoid being led by the nose by the federal
government, and yet deal with the federal government in a cordial and
professional manner.
To increase the chance of a successful resolution on the second bridge issue, I
suggest the committee should also look into these strategies and tactics.
First, the committee should go as far as proposing an alternative bridge
structure, contracting arrangements, and a financial plan that are independent
of the federal version. Why? This healthy competition of ideas will nudge the
federal government to speed up and modify its current version to make it
feasible sooner.
If so, Penang will benefit. Moreover, nothing focuses the mind and digs up as
much information as a moneyed and detailed plan. The information generated will
inform the state government and enable the civil society to probe into the
federal version. If Pakatan Rakyat comes into power, this alternative plan can
be developed into the new federal version, with less time wasted re-examining
the contracts.
Second, the Penang government should take advantage of a media law loophole to
disseminate these bridge findings. Robust coverage will ensure that, even if the
state version is eventually pre-empted by a federal bridge, the people will be
informed enough to monitor the federal bridge, and the PR state government will
receive some credit.
Commentator Wong Chin Huat has been arguing that the State government can take
advantage of a loophole in the Printing Presses and Publications Act to issue
its own publishing license to groups of independent-minded journalists, such as
here and here.
Such state-franchised, but privately funded and independently operated press has
the potential to paralyse the PPPA, paving the way for the repeal or deep reform
of PPPA.
The alternative bridge proposals and contracts should be made public. Taking
advantage of this transparency, the federal cronies will likely attack the state
proposals as inadequate here and there. Then civil society will have the media
space to respond by asking the federal government to reveal details to support
its contentions or shut up. Without announcing supporting details, any federal
attack will look awkward and lack credibility.
Third, reduce the cost of the planned bridge by promising to conduct open
tenders for all bridge contracts and also enact an Equal Employment Opportunity
Act at the state level. Given the secrecy of the federal plan, I have no problem
asserting that the real cost of the second bridge can be cut by more than 50%
with an open tender. If the federal government disputes that, let them prove it
-- by making all the planning documents and contract proposals public
information.
To make the open tender politically feasible, and taking an opportunity to
experiment with a progressive law to show the way for the federal government,
the Penang government should enact an Equal Employment Opportunity Act at the
state level (again, this is Wong Chin Huat's idea).
Create two ferry companies
This EEOA should require that contractors looking to bid for state government
projects comply with the new state law to employ engineers, planners,
contractor, and technical workers of all races, gender, age, physical
capability, and backgrounds. It should be flexible enough that it does not
become a rigid and counter-productive quota system, and should NOT be applied to
non-government-contract contractors until the experiment is well tested and
debated.
It can legislate an independent arbitration panel for employment disputes.The
emphasis should be on honest and vigorous efforts to create opportunities and a
diverse working and recruiting environment. One of the goals is that, as
non-Malay-owned contractors win more contracts in an open tender system, there
will be an increase of Malays in these firms, and vice versa.
It is not reasonable to decide that a Korean company in early 1980 could build
the first Penang Bridge at a reasonable cost, but that Malaysian firms cannot
build the second bridge today, also at a reasonable cost. It is also
unreasonable to deny Chinese-Malaysian contractors building the second bridge,
only to award the contract to a communist Chinese firm. How ironic is this? I am
not fixated on getting contractors from any country or any race, only pointing
out our seeming blind spots.
Fourth, the state government should consider financing the bridge with a
private, corporate bond to be repaid from the toll fee. When the bond is paid
off, either eliminate the toll or reduce it to finance the third bridge.
The cost reduction from competitive tenders will make this possible. The state
government should avoid guaranteeing any principal amount of the debt, perhaps
only committing to guarantee up to a limited amount of the interest payment
after a safe delay, and let the physical bridge itself be mortgaged. So what if
some foreigners take over the bridge in case of failure? They can't move it to
Sumatra. The government can allow part of the nearby land leases to be taken
over by the creditors in case of failure, but not the permanent title of the
land.
What entity will bear the main risk then? Incorporate a bridge-owner company
that can be later listed on the stock exchange, and legislate to allow a equity
return rate range, of say 10%-15% (this rate is higher than borrowing rate
because owning stock equity is riskier than owning debt).
The formula can allow the eventual reduction of toll fees when bridge traffic
reaches a large volume, because it can be designed to put a cap on maximum
return, without guaranteeing a minimal return, except for the best effort by the
state government to adjust bus and ferry access.
The precise rates and formulas can be decided upon financial advice - which may
be eagerly offered by local and foreign merchant banks who want to build their
reputation in this area. The Penang government can promise in a contract to
adjust its ferry services for so many years, to help ensure but not guarantee
that the bridge's traffic volume reaches a minimum level. Which brings us to the
next point: the ferry service.
Fifth, the Penang state government should take over the money-losing ferry
service, conduct open tenders to invite new owners, and create two ferry
companies for indirect and strategic competition.
Similar to public transports such as bus networks that have to bear some
money-losing routes, we should not be looking for the two ferry companies to
compete directly, but should look to create independent benchmarks to compare
operating efficiencies. (?Compared to the other company, how much is your repair
cost, fuel consumption, manpower cost, etc, per ferry, per trip, per km, per
year, per employee, broken down by route, by time of day, per pessenger, per
car, etc??)
Complexity of problems
Then, establish new ferry routes. The first route expansion should be the Batu
Maung-Batu Kawan ferry route, to ?pre-link? the second bridge. The ferry
terminals (and connecting bus terminals) should be 2km to 5km away from the
future bridge landing points, to avoid direct duplication of routes when the
bridge is completed.
It will benefit the second bridge to pre-establish a commuting pattern even
before the bridge is completed, so that the second bridge can ?hit the ground
running? having an immediately sizable commuter demand upon completion.
By establishing the ferry service a few years before the bridge, families living
on the island will start buying houses in Batu Kawan while families from Serang
Prai Selatan can start taking up employment in Bayan Baru, for example.
These developments will ensure Batu Maung and Batu Kawan will have vibrant job
and family connections early on. Such early ?ramp up? of commuting demand will
further assure the financing success of the second bridge, reducing the
borrowing costs. With the volume brought by the ferry, bus routes - which also
require years to build ridership - can start spanning out from the Batu Maung
and Batu Kawan terminals more quickly.
As soon as the second bridge opens, the Batu Maung-Batu Kawan ferries should be
reduced to mostly passenger, non-car, services. The remaining ferries should be
diverted to open new routes around Penang, such as Weld Quay-Batu Maung, Batu
Maung-Gertak Sanggol, Weld Quay-Teluk Bahang, and Tanjong Tokong-Kuala Muda.
This will divert most of the car traffic to the second bridge. It will be within
the power of the Penang government to promise in a contract to reduce
car-carrying ferries along the Batu Maung-Batu Kawan route to ensure the
financial feasibility of the second bridge, until a certain volume is reached a
few years later.
In the end, I feel such boldness and creativity in development planning and the
accompanying demands illustrated above -- to solve the multi-dimensional
problems that will arise from the media, employment, contract, transport,
planning, financial, development, environmental issues -- will best be balanced
and solved through an intensification of the local democratic process.
That is why some of us continue to demand direct local election so impatiently.
I understand the short-term difficulties, see some improvements in the new local
council appointments, and see responsiveness to try to explain the appointment
shortcomings.
But, the complexity of the problems are way beyond what any one of us, or teams
of us, can take responsibility for. So do push the calendar for direct local
elections please.
CHEAH KAH SENG is trained in investment and portfolio analysis, considers
himself a student of the Austrian School of liberal economics. He is currently
interested in how Web databases reflect individual freedom of choice and the
aggregate learning process.
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