The Malaysian Insight

BANDAR Malaysia – Najib Razak’s controversial plan of hawking the choicest plot of land in Kuala Lumpur to foreign developers to pay off 1Malaysia Development Berhad (1MDB) debts – is practically dead.

‎The reason: the cancellation of the high-speed rail (HSR) link to Singapore renders the 197ha development  far less attractive for developers from China, Japan and the Middle East, who had been willing to pay billions to be the master developer of the project. 

The news that the Bandar Malaysia project is dead will be great news for its many critics unhappy over the opaque negotiations surrounding the project and the creeping feeling that it was yet another 1MDB rescue scheme.

One of the main factors China Railway Engineering Corporation and later Dalian Wanda were willing to commit between US$5 billion and US$10 billion ‎to develop the former Sungai Besi air force base into a world-class city within a city was that it would also be a central transport hub, with a high-speed train terminus.

Foreign developers, who were interested in the mammoth development, felt that the seamless connectivity with Singapore would make world-class tourism products and the idea of an international business hub more viable. 

These property developers believed that the connectivity would give them the opportunity to sell parcels of  land at Bandar Malaysia for a premium. 

Former prime minister Najib Razak had announced the Bandar Malaysia project in 2011. The land, once owned by the Defence Ministry, was sold to 1MDB’s real estate unit, 1MDB Re. 

The redevelopment plan called for 1MDB to relocate the Sungai Besi airbase to Sendayan for RM2.7 billion. 

But then the state investor defaulted on its loans and its whole operations came under scrutiny. Soon it became clear that the company was creaking under a mountain of debt as a result of wrongdoing and siphoning of funds.

The company had to sell off its assets.

On December 31, 2015, 1MDB signed a share-sale agreement for a 60% stake in Bandar Malaysia for RM7.41 billion with Sino-Malaysian consortium Iskandar Waterfront Holdings and China Railway Engineering Corporation.

But that deal came unstuck last year when the government announced that the consortium had defaulted on payments.

Following that, Putrajaya went shopping for another investor from China. Dalian Wanda indicated interest to commit up to US$10 billion as a master developer for the project but it soon ran into financial difficulties.

The Najib administration then went the route of an open tender.

The Malaysian Insight understands a listed company from China with headquarters in Hong Kong had all but inked an agreement to develop Bandar Malaysia. The original plan was to sign the master development agreement before GE14 but some details still needed to be nailed down.

Finance  Ministry officials led by former Treasury secretary-general Irwan Serigar Abdullah were confident that it was just a matter of weeks before the deal to develop Bandar Malaysia was concluded.

Not anymore. – June 3, 2018.