Bandar Malaysia deal collapse: Johor MB must come clean

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PETALING JAYA: A Johor assemblyman says the state government must come clean on the impact of the collapse of the Bandar Malaysia deal between TRX City Sdn Bhd and a Malaysia-China consortium in which a Johor state government-linked company (GLC) has a stake.

DAP’s Skudai assemblyman Dr Boo Cheng Hau called for Johor Menteri Besar Khaled Nordin to give a full explanation on the issue because Kumpulan Prasarana Rakyat Johor (KPRJ) has a 24% stake in the consortium between Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corp (CREC), by virtue of its 40% share in IWH.

“Who will foot the loss of the deposit by KPRJ which could be valued as much as RM178 million, when it is the IWH-CREC consortium that could not fulfil the payments according to the contract?

“Also, if the consortium insists it has fulfilled its contractual obligations, Khaled should explain the reasons for the finance ministry calling off the deal.”

He also claimed the collapse of the deal would affect the state government as it could be tied with acquisition of land for the high-speed rail (HSR) linking Kuala Lumpur and Singapore.

“Because the issue involves a project that involves acquisition of lands in Johor in the future due to the HSR project, I will move an emergency motion in due time if the menteri besar fails to give an account to the state assembly as to the real situation of the deal,” Dr Boo said.

On May 3, TRX City, which is owned by the finance ministry, said the agreement signed in 2015 with IWH-CREC had lapsed because the buyers “failed to meet the payment obligations”. TRX City Sdn Bhd was previously known as 1MDB Real Estate Sdn Bhd.

IWH-CREC disputed the reasons given by TRX City, saying it was reviewing the content of the termination notice and press release by TRX City with its advisers and legal counsel.

With the government pulling the plug on the deal, IWH-CREC are no longer the master developers of the RM200 billion Bandar Malaysia project. The deal involved IWH-CREC paying US$1.7 billion (RM7.3 billion) for 60% of the major Kuala Lumpur property development project.

Yesterday, Dr Boo had estimated that through its 40% equity in IWH, KPRJ would have had a 14.4% interest in the overall Bandar Malaysia project if the deal had materialised.

He pointed out that KPRJ was expected to shoulder RM1.7 billion in Bandar Malaysia’s investment of the total RM7.41 billion undertaken by IWH-CREC.

“Therefore, the Johor state government’s investment arm was estimated to have taken on RM178 million of IWH-CREC’s RM740 million deposit.

“If it is IWH-CREC’s failure to fulfil the contractual obligations as announced by TRX City, KPRJ’s share of the deposit could be forfeited, and its losses in future returns from long-term investment is estimated at RM28.8 billion if the deal actually materialises,” he had said.

“This will have an impact on KPRJ’s financial status and reputation.”