Penang’s transportation policy going nowhere

enangites now face the daunting task of challenging the dubious privatisation of its state transportation infrastructure.

On June 13, the state government announced that it will call for tenders for its RM27 billion Public Transport Masterplan, scheduled to start in stages from next year until its completion in 2030. 

We should be wary of any road-building solutions that lead to more land reclamation. 

The state government’s transportation policies seem to be characterised by the misallocation of funds to low-value activities with misguided policy directions that stifle innovation and escalate transportation costs.

One damaging policy direction involves efforts to finance the state transportation infrastructure project through state-private land swaps that dangerously ignore the need to smooth out cash flow issues. 

With a dire shortage of land, the state government can only rely on land reclamation as a means of providing additional physical space for the land swap. 

This state-private land swap deal will further accelerate land reclamation activities in the state. And when land reclamation is done hastily, it will cause  pollution and result in adverse damage to our ecosystem. 

The absence of clear objectives for land reclamation will also result in a haphazard selection of reclamation sites, lack of integrity of project implementation phases and the inability to choose the best manner in which to use the newly-reclaimed land.

Without developing an explicit long-term transit project financing plan but hastily plunging into a multi-billion ringgit project, the state is ignoring revenue mobilisation, off-budget financing as well as the earmarking of general tax revenues in establishing a secure and stable flow of funds for a transit project.

The risk of project failure due to cash flow problems cannot be ignored especially when involving a project of this magnitude. More businesses fail due to lack of solid cash flow rather than from a lack of profit. 

A capital budgeting risk is the likelihood of a long-term investment failing to generate expected cash flows. Such risks arise from imperfections in future cash flow estimates especially in speculative property development, a situation that exposes the businesses to the possibility of embracing loss-making capital investments.

Another damaging policy direction is the total disregard of the need to fulfil  first- and last-mile travel demands of commuters, another reason why public transportation remains unappealing to the general public.

This aspect of public transportation is critical in promoting the utilisation of public transportation systems once it is up and running.

The state government needs to work at strategies and guidelines supportive of active access to transportation networks, as this will help guide public and private investment efforts in the transportation industry.

Finally, ongoing efforts to build more roads and tunnels have the serious side effect of making road travel more congested.

The state government seems to be pursuing these misguided goals by using its electoral mandate, fiscal powers and regulatory controls, and by diverting our limited resources into less efficient forms of transportation e.g. TRAM, Monorail, Light Rail Transit, roads, tunnels and conventional bus systems.

With limited funding and resources, we cannot afford to divert our resources to lower-priority projects and less efficient forms of transportation.