Here’s another example of how privatisation has not benefited the people.
In 2014, Penang Port Sdn Bhd was privatised to Syed Mokhtar Albukhary’s Seaport Terminal (Johore) Sdn Bhd in a restricted tender for RM170m – a figure that was described as “low”.
Barely three years on, Penang Port Sdn Bhd is now being sold to listed MMC Corp Bhd (which is 52 per cent owned by Seaport Terminal) for RM420m. This means Syed Mokhtar’s Seaport Terminal makes an easy profit of RM210m by flipping the port, which reportedly has over RM1.2bn in debt, over to a listed company.
The profits from Penang Port (last year profit after tax was RM67m) have been effectively “privatised”.
But the dredging of Penang port, estimated to cost around RM350m, has not yet been done. The Penang state government is crying foul as it claims Seaport Terminal was supposed to see to the dredging to deepen the port waters from 11m to 15m. The deepening of the Penang channel was deemed necessary so that larger ships could call at the port.
Did Penang lose out to other major ports in the country, including the Port of Tanjung Pelapas, which falls under Syed Mokhtar’s empire, because the dredging has not yet been carried out?
Penang has also lost out in another way. In the past, the funds from the operation of the port were used to cross-subsidise the iconic ferries, which were providing an essential public service. But after the privatisation, the loss-making ferries were further neglected and reduced to a skeleton service. In the end, MMC wanted the ferry service hived off – and the service eventually landed up with Prasarana Malaysia Bhd.
So, the public is left holding the costs: federal government-owned Prasarana is saddled with the RM15-RM20m in annual losses from the ferry service. (In the first place, why is the ferry service incurring losses when fuel prices have dropped significantly?) And who will bear the dredging cost now? Will MMC now absorb the cost – or the public?
There are a couple of other issues as well.
First, has any study been done to find out why Penang port needs to be periodically dredged at great cost? What is the impact of all the existing land reclamation, which earns huge profits for private developers? Who bears the long-term cost of any dredging that may be required? The public? Why should they, if the siltation of surrounding waters is aggravated by land reclamation, which reaps large profits for private interests?
Second, the ownership and management of Penang port and the ferries, which were under Penang Port Sdn Bhd, should have been handed over to the Penang state government rather than privatised or handed to a federally owned entity like Prasarana.
In almost all federal systems, the responsibility for education, culture, welfare, labour, policing, healthcare and public transport (other than inter-state rail) comes under state or local government jurisdiction. We should be moving towards decentralisation. Numerous studies on ‘subsidiarity’ (the principle that decisions that affect people at the local level should be best decided at the local level) have shown that such decentralisation would actually enhance accountability and transparency in government.
Privatisation is not the same as decentralisation, nor does it guarantee efficiency. In fact, it can often work against the public interest, while profiting private interests. Indeed, the privatisation of Penang Port illustrates for us once again the maxim “privatisation of profits, socialisation of losses”.
Aliran executive committee
7 July 2017