Two Johor DAP assemblyperson have called on the Johor government to renegotiate with the federal government-owned TRX City Sdn Bhd’s cancellation of the IWH CREC Sdn Bhd (ICSB) consortium’s plan to develop Bandar Malaysia.

Skudai assemblyperson Dr Boo Cheng Hau, in his debate speech of thanks for the royal address in opening the state assembly session, said the cancellation as announced by TRX City will have a great impact on the Johor government-linked company Kumpulan Prasana Rakyat Johor Sdn Bhd (KPRJSB), and may cause potential losses.

Boo pointed out that Iskandar Waterfront Holdings (IWH) owns a 60 percent equity in ICSB, while China Railway Engineering Corporation (CREC) owns the remaining 40 percent. KPRJSB, through its 40 percent equity in IWH, would have a 14.4 percent interest in the Bandar Malaysia project if the deal materialises.

“It is expected that KPRJSB will shoulder a RM 1.7 billion fund in Bandar Malaysia’s investment of the total RM7.41 billion shouldered by ICSB. It is estimated that KPRJSB has shouldered RM 178 million of the RM 741 million deposit paid by ICSB,” he said.

“If ICSB fails to fulfil the contractual obligations as announced by TRX City, KPRJSB’s deposit of RM 178 million could be forfeited, and it will lose future returns from the long-term investment, which is estimated at RM 28.8 billion if the deal materialises,” Boo  argued.

The Skudai assemblyperson said that TRX City’s announcement would impact Johor’s reputation, especially that of KPRJSB. Therefore, the state government should not be reluctant to re-negotiate the cancellation of the project with the federal government to defend the interests of the state.

‘Audit report cited need to review KPRJSB’

He also said that the 2015 Auditor-General’s Report on KPRJSB showed a need to review its management of 18 subsidiary companies, in which it has investment funds of RM432 million, besides RM144 million in nine joint ventures.

“Six out of the 18 subsidiaries are active, and 12 are dormant. Only one out of the 18 subsidiaries is making profit, and the remaining 17 are suffering losses. The Johor state government should consider winding up the dormant KPRJSB subsidiaries to prevent further losses,” Boo said.

In his speech, Jementah assemblyperson Tan Chen Choon urged the Johor government to state its stand following the cancellation of the the Bandar Malaysia’s agreement by the federal government.

Tan said media reports said the ICSB had fulfilled the conditions imposed in the agreement by the federal government, where 60 percent of the equity of Bandar Malaysia had been sold to the consortium at a cost of RM7.41 billion.
He noted that KPRJSB has a stake in ICSB, through its 40 percent stake in IWH, and that KPRJSB gave out dividends of RM30 million and RM20 million to the Johor government in 2014 and 2015 respectively.

“This clearly shows the Johor government has a stake in IWH and Johoreans have a right to know what really happened that led to cancellation of the agreement, which would greatly impact the Johor government,” Tan said.

The 10 percent deposit had been made and if the agreement is scrapped, will the deposit be returned to the consortium and the Johor government,” he asked.

Last week, TRX City said the Bandar Malaysia agreement had lapsed because the consortium failed to make the necessary payments despite repeated extensions.

However, on May 5, the ICSB claimed that it had made the necessary payments.

– M’kini