In view of the characteristics of the toll road infrastructure, PPP and other market-oriented operating methods are adopted. They stressed that it is necessary to further break administrative monopoly so as to foster a competitive market environment. The regression results of other control variables are also in line with expectations. T. Li, Study on the Expressway Management System of Jilin Province, Changchun University of Technology, Beijing, China, 2017. Moreover, the operation mode of one highway by one company has caused huge losses from scale efficiency and directly suppressed any improvement to the economic performance of the toll highway sector. Not that CMHP needs any cash. Meanwhile, its earnings are set to nearly double to HK$502 million in FY2012 from HK$261 million in FY2010, according to Yongs forecasts. His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.You can read more about Kyith here. Total length of express ways in China 2009-2021, Number of civil airports in China 2000-2021, Total length of public roads in China 2008-2021, Number of road bridges in China 2010-2021. Technological Progress Change Index (TC) is 0.9829 while the Efficiency Change Index (EC) is 1.1545. Although China has more than 70 percent of the worlds toll roads, they suffer a loss every year. Therefore, to continue improving the economic performance of the toll road industry, it is necessary to govern an excessive administrative monopoly by bringing out the effect of the economies of scale and overall improve the toll road industrys economic performance. L. C. Yu and W. Zhang, Intensity and efficiency loss of industry administrative monopoly in China, Economic Research Journal, vol. Please do not hesitate to contact me. This strategy not only lacks social responsibility, but is also illegal. [16], Li et al. Under the constraint of the overall environment of the toll highway sector, operating toll highways actually present an operation management model similar to that of governmental loan-repayment highways. Moreover, the unique operational organization of the toll road industry with a strong administrative monopoly power is the key to the above problems. A political backlash is rising in Texas, one of the states that most aggressively encouraged toll-road construction, as residents realize that many major urban freeways are increasingly no longer . The method of determining the total factor productivity of the industry is mainly divided into parametric and nonparametric methods [62]. JTSE operates 11.57 km length toll road connected to the toll roads operate by BMN, from the Tallo bridge to the Mandai Makassar intersection and providing direct access to the Sultan Hasanuddin International Airport. 377, no. The estimated coefficient of toll road density is 6.851 and statistically significant, which is close to the estimate in column (I). Pertaining to data selection, in view of the special nature of the toll road industrys operations and management, the provincial panel data are used for empirical analysis. Your feedback is very helpful to us as we work to improve the site functionality on worldbank.org. The Toll Roads are owned by the state of California and operated by The Transportation Corridor Agencies (TCA). Average operating efficiency and index decomposition of toll roads in 29 provinces (with 2010 as the base period). A line forms at a highway toll station in Wuhan early on April 8 . Evidently, scale growth and the monopolization of Chinas toll highway sector are backed by nonmarket forces. Toll plaza at the junction of National Highways G106 and G316 in Tongshan County, Hubei Nearly all Chinese expressways and express routes charge tolls, although they are not often networked from one toll expressway to another. People were incredulous that the toll roads could be making a loss while high toll fees were being charged to drivers. Evidently, the inherent administrative monopoly in the toll highway sector, if controlled to an appropriate extent, can promote the development of the sector. Unlike most other state-owned toll-road operators, however, CMHPs assets arent confined to a specific province. According to Jiang, the highway could boost the companys annual cash flow to some RMB500 million, which he believes will enable it to service its debts, gradually repay its bank borrowings and continue paying decent dividends. Toll rate structures may be improved without dropping the tolling principle. X. L. You and S. H. Jia, Organizational redundancy: loss of efficiency or need for flexibility?, South China Journal of Economics, vol. The empirical test results show that the administrative monopoly at the industry level will increase the debt burden of the toll road industry, whether from the perspective of industry structure or property rights. TII can charge and collect tolls from vehicles under the Roads Act 1993. Sydney's toll roads form a ring around the most travelled parts of NSW. Wang et al. The government should also restructure the functions and roles of government departments in the toll road industry. Much like other toll-road operators, the key attraction of CMHPs stock is its potentially high dividend payouts. [33] conducted an empirical study and found that the impact of private hospital entry on the efficiency of the medical industry is not significant. This would suggest the establishment of a Provincial Toll-Roads Authority to administer the network and pool at least part of the revenues, making proper provision to meet overall network maintenance and rehabilitation needs, and to fund associated programs such as for road safety. Q. Li, P. R. Bai, Y. Chen, and X. Wei, Efficiency evaluation of bus transport operations given exogenous environmental factors, Journal of Advanced Transportation, vol. Ministry of Transport of China. Since then, analysts have touted the possibility of CMHP gradually acquiring more toll roads from its parent. Table 9 lists the GMM estimates using panel data. For one thing, toll rates are determined by individual provincial governments. The second is the ratio of cumulative capital funds for the construction of governmental loan-payment toll highways to the total investment of the toll highway sector, since cumulative capital funds are completely sourced from local governments and are highly representative of administrative monopoly. In practice, the excessive administrative monopoly of the toll road industry leads to the coexistence of the offside and the absence of the functions of the government industry authorities. A vignette system may offer other advantages: it may be economical to administer; it would help overcome the criticism of toll variability by automatically equalizing the cost of accessing Expressways across a Province; it would provide an incentive to users to maximize utilization of the Expressways rather than use less safe and more congested parallel roads . Shouldnt the company hold on to its cash ahead of these deals. 3, pp. The nonparametric method is represented by data envelopment analysis (DEA). Again, government regulations and policies could be a key stumbling block here. In column (I), the explained variable is the total factor productivity of toll road industry (). And, the reasonable valuation at which the company acquired the highway signals strong support from CMG, he adds. Therefore, we believe Hypothesis 1 is verified and robust. 120-121, 2013. The historic high reliance on debt finance from State and commercial banks is risky given the likely volatility of interest rates and the large debt-carrying burden which results. 1623, 2019. The American company eventually was listed on the Continue Reading 1.7K 27 More answers below In that way, financial and other interests can be balanced and the most appropriate toll rates adopted. 22, pp. 6572, 2019. I tell them the share price is low because of lack of liquidity.. In addition, it is rare to find papers that analyze the inefficient operation of the toll road industry from the perspective of economies of scale. Y. Pu and H. F. Wang, Effect mechanism of ownership structure on technical efficiency of agricultural listed company, Technology Economics, vol. X. Wei, H. C. Xu, B. Q. Zhang, and J. L. Li, Infrastructure operation efficiency and influential factors in developing countries: evidence from China, Sustainability, vol. 1, pp. Because of lack of transparency in China, this problem is often not within the publics range of supervision. H. C. Xu, P. R. Bai, and J. K. Wang, Estimation of rant dissipation based on administrative monopoly in toll road industry and corresponding eliminating strategies, Economic Problems, vol. Cai Shenkun is a well-known Chinese economist and blogger. Mitch Daniels, Indiana's House narrowly approved his proposal to lease the 157-mile Indiana Toll Road, which spans the northern part of the state, for. 47-48, 2011. The administrative monopoly in the toll highway sector, which manifests itself through one authority for one province or one group company in one province, has caused various problems. Thank you for agreeing to provide feedback on the new version of worldbank.org; your response will help us to improve our website. Chinas decentralized institutional and funding mechanisms for delivery of the Expressway network have been instrumental. Based on provincial panel data, this paper then discusses the relationship between toll highway scale and economic performance through system-generalized method of moments estimation and verifies the status quo of the transformation of toll highways from scale to efficiency. Copyright 2021 Yan Xu et al. J. Huang and J. Q. Liu, Morality: a good way to solve the problem of X inefficiency in family business governance, Journal of Urban Studies, vol. They figured that the 4.45 trillion yuan loan debt requires annual interest payments of 267 billion yuan and principal payments of 300 billion yuan. 333, no. My advice to those 20 year old starting their Financial Independence journey, Beginners Guide How to Buy and Sell Stocks, Bonds, REITs and ETFs in Singapore, Eat Dream Love SG Premier Travel Food Review Blog. For the measurement of toll road operating efficiency, the more mature DEA series algorithm is proposed to consider the technological advancement or degradation leading to movement of the production frontier. 195203, 2012. H. C. Xu, Y. Wang, and R. N. Jia, Research on efficiency of toll road dual-track operation system based on three stage DEA and tobit regression model, China Journal of Highway and Transport, vol. Show publisher information Across different parameter estimation and statistical inference methods, the estimated values and significance levels of the main parameters are approximated to each other. The use of an administrative monopoly not only incurs transaction costs but also reaps corresponding revenue. Social costs incurred by the administrative monopoly include external efficiency loss (Harberger Triangle), internal efficiency loss (Leibenstein Quadrilateral), and rent dissipation (Tullock Rectangle) [46]. 2,000km superhighway could link millions of consumers in Russia and China via toll road at lower costs. Yu et al. With further decomposition of EC, the Scale Efficiency Change Index (SEC) is 1.0460 while the Pure Technical Efficiency Change Index (PTEC) is only 1.1638. statistic alerts) please log in with your personal account. Table 4 shows the parameter estimation results from formula (5), where (I), (II), and (III) are robust least squares estimation of heteroscedasticity using mixed cross-sectional data; (IV), (V), and (VI) are generalized method of moments (GMM) estimates of panel data. China has the highest percentage of toll roads in the world. Low scale efficiency results in another problem in the toll highway sector, namely, insolvency. The results of the robustness test show that we can still obtain parameter estimation results that are highly consistent with those based on the reference after toll highway density (a proxy variable) is replaced. The news caused a public outcry. 162, no. J. Tan and J. This is an abridged translation of Cai Shenkuns article posted on the authors. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.Kyith worked as an IT operations engineer from 2004 to 2019. Road transport forms a vital and fast growing sector of the transport sector, supporting trade and growth through the movement of goods and people, allowing economic specialization, spreading skills and enhancing productivity. Companies that build private toll roads are pressing states to assume more financial risk of traffic not meeting expectations, . Z. Dan, Research on the Reform of Comprehensive Transportation Management System in Shaanxi Province, Changan University, Beijing, China, 2018. The toll rates tend to range between 40 and 45 RMB cents per km. 73, pp. Its another strategy devised by the communist regime to siphon wealth from the public, says Cai Shenkun, a well-known Chinese economist and blogger. Some media did a hypothetical loan repayment calculation based on a 5 year or longer loan with an interest rate of 6 percent. When public resources become a public burden, the burden becomes heavier. 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