PRIME Minister Najib Razak’s big moment in Beijing next week could be disrupted by the refusal of prominent businessman Lim Kang Hoo and his partners in China to accept that their deal to develop Bandar Malaysia is off.

Sources have told The Malaysian Insight that there has been intense lobbying by the IWH-CREC consortium since the Najib administration announced that it had cancelled the share sale agreement inked on December 31, 2015 because the joint venture had failed to make periodic payments despite 12 extensions.

But Putrajaya appears to be in no mood to back down. Government officials expect the signing of a landmark deal in Beijing to take place for the new master developers of Bandar Malaysia, widely speculated to be the Dalian Wanda group.

Sources said there was zero chance of the government decision being reversed. The reason: the government wants to clear the 1Malaysia Development Bhd (1MDB) debt before the next general election.

And that ability to settle the debt hinges on a new deal for Bandar Malaysia being struck. Proceeds from the deal will reduce its former owner, 1MDB’s debts of US$3 billion and interest from 2016 totalling US$3.53 billion (RM15.3 billion), and RM2.4 billion bonds and interest from 2016 totalling RM2.45 billion.

Putrajaya was confident it would be able to contain any fallout following the May 3 announcement. Telephone calls were made to stakeholders and briefings were held for MPs and other influential individuals.

But the government didn’t expect Lim – the public face of the consortium – to dig his heels in and challenge the narrative put out by Putrajaya.

Firstly, the consortium issued a press release, saying it had fulfilled all its financial obligations and that as far as it was concerned, the share sale agreement with a Ministry of Finance-owned entity was still valid.

IWH-CREC added that it reserved all rights to take whatever action it deemed necessary to protect its interest.

Government officials were surprised at the tone of the statement but brushed it off as public relations strategy to save face.

But The Malaysian Insight understands that Lim and his partners have upped their offensive and leveraged on their links in Malaysia and China to get the deal back on the table.

This lobbying complicates what is expected to be a good week for Najib in Beijing. He has been invited by the Chinese President Xi Jinping, a visit Putrajaya believes will further elevate bilateral ties.

Other Asean leaders invited are Indonesian President Joko Widodo, Lao President Bounnhang Vorachit, Philippine President Rodrigo Duterte, Vietnamese President Tran Dai Quang, Cambodian Prime Minister Hun Sen, and Myanmar State Counsellor Aung San Suu Ky. 

Absent from the list is Singapore Prime Minister Lee Hsien Loong, a sign of the times given the downturn in ties. 

During the visit to Beijing, there was strong expectation that Najib would announce a new consortium led by a Chinese company would develop Bandar Malaysia.

But the refusal by Lim and the consortium to back down could scuttle the big announcement. 

People familiar with Lim, the businessman synonymous with the Danga Bay and Iskandar development in Johor, said it was not in his nature to be confrontational with the government.

But they suspect that Lim is concerned that his reputation as a businessman will take a hit with the business and financial community if he doesn’t challenge the official line that IWH-CREC does not have the financial capability to complete the Bandar Malaysia development. – May 7, 2017.