The China Railway Group Limited (CREC), one of the largest state-owned firms, will invest US$2 billion (S$2.72 billion) to develop a regional centre in Bandar Malaysia, a project owned by the scandal-plagued 1Malaysia Development Berhad (1MDB).

CREC president Zhang Zongyan yesterday announced plans to build an integrated office complex at Bandar Malaysia to serve as a hub for multinational companies.

However, the company did not reveal any further details about its investment, with CREC managing director Cai Zemin attributing it to a work-in-progress. Bandar Malaysia will be built on the site of the former Sungei Besi military airfield located 3km south-west of the city's golden triangle.

At the launch in Kuala Lumpur, Prime Minister Najib Razak applauded the Chinese for moving quickly three months after first signing the agreement to develop the land.

"We envisage Bandar Malaysia becoming an Asean centre for multinationals from around the world," said Mr Najib. "This is an open endorsement by global companies of their continued confidence in Malaysia and a testimony of their faith in the Malaysian economy which remains fundamentally strong. Bandar Malaysia will also serve as Malaysia's gateway to the world through the high-speed rail (HSR) to Singapore with direct links to the KLIA and Changi Airport, and the proposed Pan Asean Rail Transit to Bangkok and beyond."

Mr Cai said the company is interested in bidding for the HSR but is waiting for both the Singapore and Malaysian governments to call for a tender.

Bandar Malaysia's development blueprint also includes an underground city which is modelled after a similar one in Montreal, Canada, with its mixed development which includes financial and commercial centres, tourism and shopping facilities, an indoor theme park, a cultural village and themed theatres.

Bandar Malaysia is expected to attain RM160 billion (S$54 billion) in gross development value when all three phases of construction are completed, said developer Iskandar Waterfront Holdings' (IWH) executive vice-chairman Tan Sri Lim Kang Ho.

In December, 1MDB sold 60 per cent of Bandar Malaysia to a consortium comprising CREC and Johor-based IWH as part of the state-run firm's rationalisation plan to cut its debt. The other 40 per cent stake is held by 1MDB, an entity owned by the Ministry of Finance.

"We target to begin development next year, but it all depends on the speed of (army base) relocation," said Mr Lim.