THE Najib administration has been spared major blushes – but only by Beijing’s reluctance to endorse Dalian Wanda’s proposed massive investment in Bandar Malaysia two months ago.
Otherwise, Prime Minister Najib Razak and his officials who enthusiastically talked up the deal would have been saddled with a partner with major cash problems that yesterday announced a major sell-off of its assets to another Chinese property giant, Sunac China Holdings.
Sunac plans to spend US$9.3 billion (RM40 billion) on 76 hotels and a majority stake in 13 other projects from Wanda, a Chinese conglomerate principally involved in property and leisure markets.
The Malaysian Insight understands that Najib and interested parties were pushing to sign a US$9 billion deal with Wanda but senior Chinese government officials did not show any enthusiasm as they were more comfortable with a state-owned enterprise leading the development in Bandar Malaysia.
The request for proposals (RFP) for the massive Bandar Malaysia development was issued in June and ends this Friday, two months after Putrajaya terminated the 2015 deal with the Iskandar Waterfront Holdings-China Rail Engineering Corporation consortium over unfulfilled payments despite deadline extensions.
It also understood that China Rail Engineering Corp (CREC) could be part of the new deal to develop Bandar Malaysia because of its expertise in building the Kuala Lumpur-Singapore High Speed Rail (HSR) terminal in Bandar Malaysia.
The Bandar Malaysia project is owned by 1Malaysia Development Bhd (1MDB) and the sale is part of deal to reduce its debts.
Yesterday, the AFP news agency reported that both Sunac and Wanda gave little explanation for the deal, but noted that Wanda was among companies that have been the target of official scrutiny into potentially risky loans stemming from a wave of overseas acquisitions by Chinese firms.
Wanda, headed by one of China’s richest men, Wang Jianlin, had been one of the most acquisitive companies abroad, spending billions on a range of US entertainment properties.
But Beijing began last year to roll out measures to stanch the flood of cash overseas, fearing capital flight, a weakening currency and expressing concerns over “irrational” investments.
Last month, Wanda acknowledged that China’s banking regulator ordered an inspection of potentially risky loans to it and other major Chinese companies which have invested heavily overseas.
Yesterday’s statement did not give details on the 76 hotels.
But the companies said Sunac would take a 91% stake in 13 other “cultural and tourism projects” owned by Wanda, a commercial property developer that has diversified into entertainment, theme parks, and sports, partly as a buffer against Chinese real-estate volatility.
The planned purchase is the latest aggressive move by fast-growing Sunac, which has struck a number of recent deals.
In January it invested US$2.2 billion in Chinese tech firm LeEco, which has acknowledged that it expanded too rapidly and was now facing a cash crunch.
tTHE MALAYSIAN INSIGHT