World

Consortium rejects TRX City's Bandar Malaysia claim

Firms dropped from sale of country's largest property project insist they fulfilled payment obligations


A Malaysia-China joint venture that was dropped from buying a stake in Malaysia's largest property project yesterday rejected the government's unilateral claim that the agreement had lapsed because of failure to meet payment obligations.

The consortium of Malaysia's Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corp (CREC) refuted the allegation by Malaysia state-owned firm TRX City, calling the decision "unacceptable".

The consortium said it had "fulfilled all the required payment obligations under the share sale agreement".

Ministry of Finance company TRX City, which owns Bandar Malaysia, said on Wednesday that its deal with IWH and CREC has been terminated.

Under the agreement unveiled in December 2015, IWH and CREC would pay for a 60 per cent stake of the RM7.41 billion (S$2.39 billion) project, with the remaining 40 per cent to be held by TRX City.

TRX City said it is looking for a new master developer but will now opt for full ownership of the project.

The 197ha Bandar Malaysia land, located at the edge of downtown Kuala Lumpur, is to house the terminus station for the high-speed railway (HSR) from Singapore and become the country's biggest transport hub.

The Minister in the Prime Minister's Department tasked with economic planning, Mr Rahman Dahlan, told reporters that plans for Bandar Malaysia will still proceed.

"We were informed by the Prime Minister (Najib Razak) during the Cabinet meeting (on Wednesday) that a new company will be invited to be the master developer for Bandar Malaysia," said Mr Rahman, according to The Star.

TRX City is a former subsidiary of the troubled state fund 1Malaysia Development Berhad (1MDB) before it was placed under the Ministry of Finance last year as part of the government's plan to reduce 1MDB's debt.

Sources told The Straits Times that a myriad of factors led to the collapse of the deal, with CREC caught unawares by the announcement.

The factors include the government's unhappiness with IWH owner Lim Kang Hoo's over slow progress on the project and apparent promise to CREC that it would be awarded the HSR project.

"It is no secret that CREC wanted to invest in Bandar Malaysia mainly due to HSR," said Mr Loong Chee Wei, analyst for Affin Hwang Capital.

Mr Lim's competitors are also believed to have applied pressure to get a leg in and provided negative feedback on the project's progress, culminating in the aborted deal, which is believed to have been directly ordered by the Prime Minister's Office.

The announcement by TRX City to terminate the agreement came during a visit by high-ranking Japanese officials promoting their high-speed rail.

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