Glimmer of hope for IWH-CREC

PETALING JAYA: Bandar Malaysia may see more changes to its equity structure – which may include the return of its original master developer IWH-CREC – after Prime Minister Datuk Seri Najib Tun Razak met with Chinese leaders in Beijing.

“Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration,” said a government source in Beijing.

The Finance Ministry announced on May 3 that it had called off a deal to sell a 60% equity stake in Bandar Malaysia to a consortium comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China state-owned China Railway Engineering Corporation (CREC).

The reason given was that IWH-CREC had defaulted on payments.

Describing the unilateral deal cancellation was “unacceptable”, the consortium said the move “runs contrary to the conduct of the parties in progressing the share sales agreement (SSA) towards its completion”.

The SSA, inked in December 2015, was worth RM7.41bil then.

The consortium was to be the master developer of Bandar Malaysia that will house the main terminus of a planned high-speed rail linking Kuala Lumpur to Singapore. The China Railway group has said it will bid for the RM60bil project.

Though IWH-CREC has indicated it is still keen on Bandar Malaysia, news reports have emerged that Malaysia is courting Dalian Wanda Group, China’s largest property and entertainment group.

Najib, who is in China to attend the Belt and Road Forum for International Cooperation, visited Wanda headquarters on Saturday morning and then called for a joint press conference where he heaped praises on Wanda.

It seemed then that IWH-CREC could write off Bandar Malaysia.

Meeting the Malaysian press at Sofitel Wanda Beijing Hotel, China’s richest man and Wanda chairman Wang Jianlin said the investment in Bandar Malaysia would be huge as it is now worth US$10bil (RM43.4bil).

“While we have not reached an agreement ... Wanda has confidence in Malaysia and its future prospects. We are willing to share our experience with Malaysia to build a one-of-its-kind mega integrated cultural and tourism project,” he said.

Najib voiced confidence that Wanda would take up the offer to participate in Bandar Malaysia and that he would announce the details “when the time comes”.

“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,” Najib said.

But later in the evening after Najib held meetings with Li and President Xi Jinping, it seemed there was a glimmer of hope for IWH-CREC to be in Bandar Malaysia.

Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone.

“We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.

According to one Malaysian official who is in the Prime Minister’s entourage to Beijing, the change in Najib’s stance came after a meeting with Li.

“They met after the Wanda event. In his speech, Li made clear China’s wishes on Bandar Malaysia.

“Now the possible scenario is: IWH-CREC, Wanda and the Malaysian Government will jointly develop Bandar Malaysia.

“But the equity stake of IWH-CREC could be smaller,” said the official.

Li and Xi had reiterated China’s interest in the KL-Singapore High-Speed Rail, Najib said.

The Saturday evening statement by Najib is seen as telling the Chinese leaders their wishes are being taken into consideration in the revised formula for Bandar Malaysia.

China, which has often said it treats Malaysia as a close friend, has responded to Najib’s call for help many times.

In 2015, when the local economy was battered by the outflow of foreign funds, China came in to buy up energy assets of 1MDB and the Bandar Malaysia stake – both seen to be above market price.

It also supported the ringgit by buying Malaysian government bonds.

Last November, when Najib asked China to import more Malaysian palm oil, Xi agreed.

Palm oil prices rose after China’s pledge. In the first three months of this year, its purchase of palm oil doubled.

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