Fernandez: The agreement should prohibit subcontracting of the concession.
A former Petaling Jaya councillor has backed the city council’s decision to delay signing the Selangor Intelligent Parking (SIP) deal, calling the privatising of a stable revenue stream as a contradiction of good governance principles.
Lawyer Derek Fernandez, who served on the Petaling Jaya City Council (MBPJ) from 2008 to 2023, said local councils were empowered by law to manage and collect parking fees themselves.
“Parking revenue forms part of the local authority fund under Sections 39 and 40 of Local Government Act 1976,” he said.
“The power to collect is given to MBPJ under federal law through Road Transport Act 1967, not the state.”
Fernandez stressed that MBPJ should never accept a concession that left the city council with less income than it currently earned.
“Under no circumstances should the city council get even one sen less than its existing revenue, and there must be annual increase in line with normal growth,” he said.
Fernandez was commenting on StarMetro’s Sept 23 report that MBPJ had refused to sign the SIP agreement until outstanding issues were resolved, including guarantees that its RM13.8mil in annual parking revenue would at least be maintained.
Petaling Jaya mayor Mohamad Zahri Samingon told StarMetro that details such as manpower and closed-circuit TV (CCTV) roll-out must be clearly stated in the contract.
The SIP scheme, awarded to Selmax Sdn Bhd, proposes a centralised parking system starting with four local councils, with revenue split 50% to the company, 40% to the local councils and 10% to Menteri Besar Selangor Incorporated (MBI).
While Subang Jaya, Shah Alam and Selayang have signed on, MBPJ is holding off on its decision pending a briefing between councillors and MBI today.
Fernandez said it was not normal practice to privatise a well-performing, income-generating function of a financially sound city council.
“Otherwise, by the same logic, one could privatise the collection of quit rent or assessment tax; and that clearly is not in the public interest,” he pointed out.
He warned that handing over revenue-generating functions to private parties could lead to abuse, unless properly justified in exceptional circumstances.
“Any agreement must protect public funds and ensure revenue security for the local authority.
“It must also be regulated to ensure that any agreements entered into, fully protect the local authorities’ revenue and public monies,” he said.
He listed several safeguards MBPJ should demand before considering the concession.
Among them is evaluating whether it can expand its own camera monitoring system, as there are existing systems in Petaling Jaya New Town area that can be upgraded.
“The concessionaire must also have a proven track record in boosting parking revenue, and its directors should have the necessary expertise,” said Fernandez.
He said MBPJ must have clear rights to terminate the agreement if the concessionaire failed to raise revenue as promised.
He cited a case in 2008 where the previous parking contractor defaulted, leaving MBPJ with more than RM7mil in losses.
He also said that any system installed must undergo a comprehensive cybersecurity audit to ensure it could not be compromised or misused for criminal purposes.
“The agreement should prohibit subcontracting of the concession and prevent the operator from demanding higher parking rates.
“The company must also show it has the financial strength to deliver its promised investment, pay utilities, carry out infrastructure works and provide security deposits in case the deal is terminated,” he said.
Fernandez added that any agreement must include an unconditional payment guarantee with security, ensuring that MBPJ would not get less than its current collection, with an annual adjustment to reflect normal growth.
