I was midway writing a follow-up to my earlier piece ‘Black hole of 1MDB’, when news broke that the Bandar Malaysia deal had fallen through.

In that earlier piece, I had estimated that very conservatively 1MDB stood to gain RM12bn in revaluation surpluses from its two main land banks (RM7.2bn from its 486-acre Bandar Malaysia/Sungai Besi land and RM5.1bn from the 70-acre TRX land) – without doing any work at all! Recall that 1MDB had acquired its two main land banks at dirt cheap prices – RM65psf for the TRX land and RM76psf for the Bandar Malaysia/Sungai Besi land.

That RM12bn in revaluation gain was a conservative figure. Perhaps 1MDB could have gained up to RM15bn, based on prevailing land market value back then. Bandar Malaysia alone accounted for about half this figure or more. As 1MDB had already booked in RM5.0bn into its account, this means it (and indirectly the Malaysian government) still had an additional RM7-10bn to cushion further 1MDB losses.

Indeed, the total of RM12-15bn in revaluation surpluses would have come in handy in papering over the black hole of 1MDB and settling the US$6.5bn Ipic mess. There were at least $4.2bn of questionable transactions by 1MDB, including a $2.1bn payment to a firm with a similar name, Aabar Investments PJS Ltd.

The Malaysian government had been counting on receiving RM7.4bn from the sale of a 60 per cent stake in the firm managing Bandar Malaysia as part of the 1MDB rationalisation plan. The plan was to sell it to a consortium comprising Iskandar Waterfront Holdings (IWH) (60 per cent) and China Railway Engineering Corp (CREC) (40 per cent).

As they say about the best-laid plans…. Even back then, the China-led consortium seemed to be disputing the value of the 60 per cent stake, reportedly claiming it was worth only US$1.2bn (RM5.3bn) instead of RM7.4bn.

Full article on Aliran website.

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24 COMMENTS

  1. I do not see rakyat can benefit from those mega projects of high rise high density development.
    Cannot understand why BN do not use the money to improve the infrastructure of small towns and villages where the people need the most help.

  2. Actually najib was singing how great with Wanda going to make as master builder of Bandar Malaysia until the China authority ordered him not to default on the previous IWH-CREC agreement and maintain it. The fact is Wanda did not sign any MOU on Bandar Malaysia, but the local BN media implied it to fool Malaysians to make najib looks good.

  3. Malaysiakini has estimated that if the government parcels out the Bandar Malaysia land and sells it, the revenue could amount to as much RM105 billion. Deduct the costs as enumerated, and the potential profit of as high as RM96 billion!

    http://m.malaysiakini.com/columns/382332

    Anil,
    Do you think Wanda Group would negotiate for a better package, given BN is desperate for money to cover up the debt of 1MDB with GE14 looming?

  4. Chinese investors be it WANDA or CREC are fully aware of the market conditions in Malaysia – they knew KL high end condominium are on fire sale, as the property market in KL is oversupplied, couple with factors such as flash flood & lime stone site that would cost a bomb in engineering & the fact that KL are not suitable for theme park due to hot weather.

    China companies are not that naive only Putrajaya are super greedy. China investment are more towards military strategies especially in Straits of Malacca. They badly wanted Labuan for Spratlys Island not watever your so call Bandar Malaysia.

    MO1 cannot achieve high income nation with frenzied and crazy building of Bandar Malaysia and 70-storey Umno tower. Education is the priority!

    • One advantage of being a Chinese puppet is Malaysia will not have to make difficult policy decisions. China will make these for us, (perhaps allegedly) offering hiding places in China … Great advantages of marrying a despotic dictatorship. They can show Malaysia how to do it!.. Malaysia can be the more compliant and obedient ally China really wants.

  5. Karma Law is working.
    Dad’s ill legacies … is now pay-back time footed by Pencuri#1 son.
    The more these racists mistreat other races, they more their future generations will have to court them for ‘help’.
    Karma is good & just.

  6. Financial Times reports Malaysian partner in JV buying 60% of KL property development project ‘faced difficulty in securing financing’.

    Prime Minister Najib had personally ordered the termination of the deal in the wake of the Bandar Malaysia development deal collapse.

    As previously reported, China Railway Engineering Corp (CREC) had apparently failed to get approval from the Chinese government nor the funding for the project. CREC is a unit of state-owned China Railway Group.

    However, CREC’s Malaysian partner, Iskandar Waterfront Holdings, were also believed to have faced difficulty in securing financing.

    “A crucial factor was the difficulty Iskandar Waterfront Holdings, the Malaysian partner, had in securing financing, according to two people with knowledge of the process.

    “Najib had lost patience and personally ordered the termination of the deal, one said,” FT said in its report.

    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.

    So, Najib who had been going up and down China, now finds “The collapse of the Bandar Malaysia deal has also raised broader concerns about the health of Malaysia’s relationship with China,” FT said.

    Previously, China were said to be expecting the KL-Singapore high-speed rail (HSR) project handed to them as part of the deal to develop Bandar Malaysia, where the main HSR stop will be located in the capital.

    Note that the collapsed deal was previously backed by both Chinese and Malaysian governments.

    The Malaysian government does not seem to be concerned about whether Bandar Malaysia will go on, Najib saying that a new buyer for the majority stake could be found. But note also that the parties concerned have said they are seeking legal advice. The question is whether they’ll throw some spanners into the Bandar Malaysia works.

  7. Wanda China may turn Bandar Malaysia vision into entertainment focus like theme parks, also rumour that China Greenland group also put out new bid.
    Najib to reveal more when in China, whether Malton the new Berjaya crony of his blueprint blue ocean strategy?
    http://m.thesundaily.my/node/444411

    • Prime Minister Najib has expressed confidence that China’s Wanda group can do wonders in Bandar Malaysia, although a deal has yet to be made.

      “We believe Wanda group is in a position to deliver something extraordinary, something so imaginative, that we can create Bandar Malaysia as something that all Malaysians and the region can be proud of.

      http://m.malaysiakini.com/news/382119

  8. Malton (Malaysia) + Wanda (China) will offer new deal to replace IWH-CREC, – (allegedly) to provide $$$ War Chest for BN in GE14?

    • KUALA LUMPUR (May 8): Iskandar Waterfront City Bhd (IWCity) shares plunged this morning with no firm signal of a reversal of the Bandar Malaysia sale termination emerging.

      At 9.02am, IWCity tumbled 29.87% or 92 sen to RM2.16 with 3.10 million shares traded.

      Last week, UOB Kay Hian in a note said it expects IWCity shares to be significantly impacted from the latest development.

    • Interesting to see how the Johor government would react as it has 40% stake in IWH, whose share value has been decimated almost 50% since last week.

      • Skudai state assemblyperson Dr Boo Cheng Hau has filed an emergency motion to the Johor legislative assembly for a debate on the collapse of the Bandar Malaysia deal.

        Boo said that the deal involved KPRJ Sdn Bhd, which is owned by the Johor government, and would have an impact on investors’ confidence in Iskandar Malaysia.

        KPRJ has 24 percent equity in the Iskandar Waterfront Holdings and China Real Engineering Corporation (IWH-CREC) consortium.

        http://m.malaysiakini.com/news/382181

  9. Rumor has it that there is a last minute back-off by a “secret party” to pay/chip-in the differential amount of RM2 billions. Jho Low ?

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