More investors for Bandar Malaysia

PM Najib hints at change in ownership structure after meeting Chinese leaders

Malaysian Prime Minister Najib Razak with Chinese President Xi Jinping. Mr Najib said the property project's formula for equity stakes would be changed.
Malaysian Prime Minister Najib Razak with Chinese President Xi Jinping. Mr Najib said the property project's formula for equity stakes would be changed. PHOTO: NAJIB RAZAK/FACEBOOK

PETALING JAYA • Bandar Malaysia, the multi-billion-ringgit property project in Kuala Lumpur, could see changes in its ownership structure that may include the return of its former master developer after Malaysian Prime Minister Najib Razak met Chinese leaders in Beijing last week.

"Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration," said a government source in Beijing.

Malaysia's Finance Ministry had on May 3 aborted a deal to sell a 60 per cent equity stake in Bandar Malaysia to a consortium comprising Iskandar Waterfront Holdings (IWH) and state-owned China Railway Engineering Corporation (CREC).

The reason given was that IWH-CREC had defaulted on its payments.

The consortium has described the deal cancellation as "unacceptable".

The agreement, inked in December 2015, was worth RM7.41 billion (S$2.39 billion) then.

The consortium was to be the master developer of Bandar Malaysia, an integrated township development covering 196.7ha, that will also house the main terminus of a planned high-speed railway linking Kuala Lumpur with Singapore.

After the deal was called off, news reports emerged that Malaysia is courting Dalian Wanda Group, China's largest property and entertainment group, as an investor.

Datuk Seri Najib, who is in China to attend the Belt and Road Forum for International Cooperation, hosted a joint press conference with the company.

Wanda's chairman and China's richest man, Mr Wang Jianlin, told Malaysian media in Beijing that the investment in Bandar Malaysia is now worth US$10 billion ($S14 billion).

"While we have not reached an agreement... Wanda has confidence in Malaysia and its future prospects. We are willing to share our experience with Malaysia to build a one-of-its-kind mega integrated cultural and tourism project," he said.

Mr Najib said: "We believe Wanda Group is in a position to deliver something extraordinary, something so imaginative that we can create Bandar Malaysia as something that all Malaysians and the region can be proud of."

However, after Mr Najib held meetings with Mr Li and President Xi Jinping, he said the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be limited to just the Dalian Wanda Group.

"We will take into account the position of CREC and other groups that are interested, including Wanda," he said.

According to one Malaysian official in the Prime Minister's entourage to Beijing, the change in Mr Najib's stance came after a meeting with Mr Li.

"They met after the Wanda event. In his speech, Li made clear China's wishes on Bandar Malaysia. Now the possible scenario is that IWH-CREC, Wanda and the Malaysian government will jointly develop Bandar Malaysia. But the equity stake of IWH-CREC could be smaller," said the official.

Meanwhile, Mr Najib also confirmed yesterday that Mr Arul Kanda Kandasamy remains the chief executive officer of state fund 1Malaysia Development Bhd (1MDB), which previously owned Bandar Malaysia.

Mr Arul Kanda was part of the team that negotiated the deal in 2015 to sell a stake in Bandar Malaysia to IWH-CREC as part of 1MDB's asset rationalisation exercise. "I have full confidence in him. He has provided good leadership for the rationalisation of 1MDB and he will continue to be there," Mr Najib told the Malaysian media yesterday.

The Prime Minister said Mr Arul Kanda will also be involved in the development of TRX City, which now owns the Bandar Malaysia land.

Treasury secretary-general Mohd Irwan Serigar Abdullah will be in charge of the Bandar Malaysia development and will be consulting Mr Arul Kanda closely on that, he said.

"I just want to clarify this because there are all kinds of rumours swirling in the market," Mr Najib added.


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A version of this article appeared in the print edition of The Straits Times on May 16, 2017, with the headline More investors for Bandar Malaysia. Subscribe