THE government is regaining investor confidence following the 1Malaysia Development Bhd scandal, as evidenced by a RM2.15 billion financing from four banks to the developers of The Exchange TRX project, said Finance Minister Lim Guan Eng.

“The willingness of the four banks to provide financing facilities to the project demonstrates how far TRX City has gone and how much progress has been made by the government since taking office on May 9, 2018,” Lim said at the launch of the project and the development financing signing ceremony today.

“We are slowly, but surely exorcising the ghosts of 1MDB, which has tainted Malaysia and allow us, once again, to be touted as the destination for both business and investment.”

The Exchange TRX is a 6.9ha mixed-use development within the larger TRX development that is being developed by Australian company Lendlease in partnership with TRX City Sdn Bhd on a 60:40 joint venture basis.

A wholly owned subsidiary of the Finance Ministry, TRX City Sdn Bhd, was previously known as 1MDB Real Estate Sdn Bhd.

A consortium of four banks – HSBC, Standard Chartered, Sumitomo Mitsui Banking Corp and Maybank – have given the Lendlease-TRX joint venture a RM2.15 billion financial facility for a period of five years.

In June, Pakatan Harapan said it would be injecting RM2.8 billion into the Exchange TRX project which ran into funding woes after about RM3 billion out of the RM3.7 billion funds provided by the previous government – in the form of  guaranteed borrowings, extended advances and transfers as well as land purchase from TRX City – was misappropriated from 1MDB.

The RM2.8 billion will be disbursed in stages until 2024 and is to complete infrastructure works in TRX. 

The government said rescuing the project was the better option instead of paying compensation amounting to RM3.51 billion and losing the RM3.7 billion transferred earlier.

Lim said the decision to bail out the embattled project was taken after a review conducted by the government showed that it would be able to recover all of its opportunity cost and investments.

Lendlease Asia CEO Tony Lombardo, commenting on its earlier links to 1MDB over the project, said that as far as the Australian firm was concerned, its project partner has always been the Finance Ministry and not 1MDB.

He added that the transaction to complete the project was established with the ministry and the company is comfortable with the risk it has taken.

The lifestyle precinct of the project has a gross development value of RM9 billion and is expected to welcome its first tenants in the second quarter of the year.

The mall, office spaces and hotel are slated for completion in 2022 while the residential component is to be completed in 2023.

The completion value of the entire TRX development is estimated to exceed RM40 billion.

– February 12, 2019.