Malaysia signs deal to restart $34 billion ex-1MDB project

Bloomberg/Nadirah Zakariya

Malaysia signed a deal with developers to restart the $34 billion Bandar Malaysia project which languished for years after being conceived under the oversight of troubled state fund 1MDB, reported Bloomberg.

A consortium comprising Iskandar Waterfront Holdings and China Railway Engineering Corporation will acquire a 60 per cent stake in the venture for MYR 6.45 billion ($1.6 billion) that is based on Bandar Malaysia’s MYR 12.35 billion land value and accounts for its MYR 1.6 billion outstanding debt.

The joint venture known as IWH-CREC will make payments over three years instead of the earlier agreed seven.

Prime Minister Mahathir Mohamad said, “It is my fervent hope that the project will be successful, and our people will reap the benefits that it brings about.”

The project, which is part of the Belt and Road Initiative, has drawn the interest of Chinese tech giants Alibaba Group Holding and Huawei Technologies Company, it has an expected gross development value of MYR 140 billion and was intended to be the hub for the now-suspended high-speed rail that would connect Kuala Lumpur and Singapore.

The state fund attempted to sell a major stake to developers IWH and China Railway, but the deal fell through over a dispute relating to payments in 2017. Malaysia revived the project this year to bolster economic growth after a cut in public spending hurt consumption.

Lim Guan Eng, the Malaysian Finance Minister, said that under the new deal, the developers will be required to build 10,000 affordable homes as well as 85 acres of park and recreational area. While the developers own 60 per cent of the project, they’ll have to pay half the dividends received from the venture to the government, said Guan Eng.