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With the sharp incline of highway toll rates due to take effect this Thursday, analysts from Hong Leong Investment Bank (HLIB) have weighed in on the matter, suggesting that the latest round of toll hikes will have little impact on the earnings of most highway concessionaires.

In a report by The Edge Markets, it’s said that highway concessionaires involved were already on the receiving end of their stipulated rates in accordance with the “rates contained in the concession agreements, via compensation from the government.”

This is based on a note provided by HLIB, which says, “in essence, the hikes merely transfer the burden of the toll, which was previously shared between motorists and the government, solely to the motorists.

“Cash flows of concessionaires will nonetheless be eased as they no longer have to wait for compensation to be paid,” the HLIB note concluded.

That analysts also reiterated that it has been seven years since the last major toll hike, and that it was only last year that the government had paid RM559 million to compensate highway concessionaires in an attempt to avoid a rate hike as determined by the concession agreement. This time around, it looks like the balance of burden is being passed on to motorists instead.

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With that being the case, HLIB also speculates that with the recent toll rate hike, traffic volume in the effected areas are expected to decrease, with fewer motorist expected to willingly pay the considerable prices.

The HLIB note elaborated on that point, saying that, “based on the experience from past hikes, our simple back of the envelop calculation suggests that every 10% toll rate increase would result to a 1% drop in traffic volume.

“However, given that the hike this time around is more widespread, the price elasticity of motorists could be higher,” it concluded.

Yesterday and today, we brought you widespread coverage of the 17 highways that will endure new toll rates this Thursday, with increases ranging from RM0.20 to RM2.30.