The giant Bandar Malaysia development that will house the Malaysian terminus for the Kuala Lumpur-Singapore High Speed Rail (HSR) will enjoy wide-ranging tax breaks to boost its attractiveness.
Prime Minister Najib Razak announced yesterday that the projected RM160 billion (S$52.8 billion) development would be exempted from income tax for a decade, as well as receive an eight-year waiver on stamp duties, property gains tax and withholding tax.
Exemption of import duties on construction materials not available in Malaysia and tax breaks to "high-ranked global companies" that base their operations in Bandar Malaysia are also part of the incentive package for the 196ha township just south of Kuala Lumpur.
The project was formerly owned by troubled state investor 1Malaysia Development Berhad (1MDB).
To pare its debts, 1MDB last year sold 60 per cent of the project to Malaysia's Iskandar Waterfront Holdings (IWH) and and China Railway Group Limited (CREC) for RM7.41 billion, with the remaining 40 per cent stake now held by Malaysia's Finance Ministry.
The ministry took over the stake from 1MDB, which was its wholly owned unit, as recommended by a parliamentary probe into the state investor's business dealings.
CREC is investing US$2 billion (S$2.7 billion) to build its Asia-Pacific headquarters in Bandar Malaysia, which is set to be Kuala Lumpur's new transport hub, incorporating other rail and bus services.
"This commitment by CREC is a clear endorsement by China of its continued confidence in the strength and resilience of the Malaysian economy," Datuk Seri Najib said, referring to the Chinese group that now owns an effective 24 per cent of Bandar Malaysia.
He was speaking at the signing ceremony of the IWH-CREC shareholders' agreement in Kuala Lumpur.
The land for the development now houses a military airport. It was used as Kuala Lumpur's main airport until the facilities were moved to Subang township, and then to the Kuala Lumpur International Airport.
IWH executive chairman Lim Kang Hoo said in a statement that "it is the vision of the shareholders that Bandar Malaysia will serve as the terminus not just for the KL-to-Singapore HSR but also for the future KL-to-Bangkok HSR, which will ultimately link to Kunming, China".
"We are talking about the Pan-Asian rail line. This will be the centre," he told reporters after the signing ceremony, which was also attended by Chinese Ambassador to Malaysia Huang Huikang.
Malaysia and Singapore leaders are expected to sign a memorandum of understanding on the HSR next month. The rail line will link Singapore and Kuala Lumpur in less than two hours at an expected cost of S$15 billion. Several countries have expressed interest in building the 350km line, including China, which has been making huge investments in Malaysia in recent years.