The cancellation of the Bandar Malaysia deal is final and news reports suggesting otherwise are “erroneous”, said Prime Minister Najib Abdul Razak.
The Star Online on Monday reported Chinese Prime Minister Li Keqiang nudged Najib to retain the deal with the consortium consisting of Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corporation (CREC).
“Contrary to some erroneous reports, the termination of the previous agreement is final, and it will not be reinstated.
“The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation and the final capability to deliver a project of this scale.
“The highest possible value will be sought to ensure that the best deal for the taxpayer is obtained,” he said.
Najib added that the Ministry of Finance will fully own Bandar Malaysia to “ensure that the nation and the people benefit to the greatest extent possible”.
TRX City Sdn Bhd, a Finance Ministry firm which owns the Bandar Malaysia project, said the deal was axed because IWH-CREC failed to meet payment obligations, but the consortium denied this.
TRX City chairperson, 1MDB chairperson, and Treasury secretary-general Mohd Irwan Siregar will also act as Bandar Malaysia chairperson, said Najib.
“He will head a team with overall responsibility for these projects and the monetisation of 1MDB’s remaining real estate assets,” he said.
“With these developments, the work of the Budiman Committee – which was established in 2015 to oversee the rationalisation exercise of 1MDB – will come to an end,” he said.
Key to KL’s development
Najib said Bandar Malaysia, located at the former Royal Malaysian Air Force base in Sungai Besi, is key in turning Kuala Lumpur into a leading capital in Asia.
It will be a thriving centre for young people and families, businesses and arts and culture, he said.
“Rather than just office and residential towers, we want Bandar Malaysia to be a catalyst for fast-track economic development and employment, including the new KL Internet Ciy – the key hub of the world’s first Digital Free Trade Zone. We want to create an iconic development to drive tourism,” he said.
Bandar Malaysia will also be a transport hub, he said, hosting the Kuala Lumpur-Singapore High Speed Rail station, an MRT station and connections to KTM Komuter, the Airport Express Rail link and 12 highways, he said.
The development has come under heavy scrutiny, including by the opposition who have cried foul since the land was sold to 1MDB for a relatively low price of RM47 per square feet, whereas developers would pay at least triple the price.
1MDB had then used the land as collateral to obtain a loan of RM2.4 billion, but according to the auditor-general, the funds were not reinvested into Bandar Malaysia.
As such, Petaling Jaya Utara MP Tony Pua said that by taking over the land, the Finance Ministry is left with liabilities of about RM5 billion including the deposit paid by IWH-CREC of RM741 million, and the remainder RM2 billion owed to an Armed Forces Fund (LTAT) firm for a contract to move the RMAF airbase.
However, it is unclear if TRX City Sdn Bhd is obliged to pay the deposit to IWH-CREC as it claimed the consortium breached payment terms.