THE joint venture that lost the Bandar Malaysia deal has sought Beijing’s help to salvage their purchase, prompting Putrajaya to review incentives given to the Malaysian partner, Iskandar Waterfront Holdings Sdn Bhd (IWH).

The Malaysian Insight understands that IWH boss Lim Kang Hoo has flown to the Chinese capital to personally appeal for Beijing’s assistance to restore the IWH-CREC Sdn Bhd’s (ICSB) RM7.42 billion purchase of 60% of Bandar Malaysia.

The Malaysian government got wind of the latest move and has threatened to rescind incentives given to IWH’s Danga Bay project in Iskandar Malaysia – the sprawling economic corridor north of Singapore.

“The government is not amused and will protect its sovereign decision,” a source told The Malaysian Insight.

Malaysian Prime Minister Najib Razak, who is also finance minister, is due to arrive in Beijing tomorrow to attend the Belt and Road Forum for International Cooperation from May 14 to 15. 

He is due to meet Chinese President Xi Jinping before the summit and announce the new master developer for the Bandar Malaysia project. The Singapore Straits Times reported yesterday that Chinese real estate giant Dalian Wanda is in the lead to be the master developer.

Putrajaya had announced it was looking for a new master developer after it terminated the deal with ICSB on May 3.

MoF unit TRX City Sdn Bhd, which owns Bandar Malaysia, said the December 31, 2015 share sale agreement with ICSB had lapsed after the joint venture failed to pay up despite 12 extensions. ICSB was to have paid the entire amount by June 2016.

ICSB immediately disputed TRX City’s decision to terminate the deal, saying it has fulfilled its part and reserved all rights to take further action. ICSB is 40% owned by IWH with the rest owned by China Railway Engineering Corporation (CREC), a state-owned enterprise.

Malaysia launched the Iskandar Malaysia economic area in November 2006 and is run by the Iskandar Region Development Authority (IRDA). Putrajaya has givens several tax incentives to push start business in the region.

The incentives include exemption from corporate income tax for 10 years from income in the region for businesses that start on or before December 31, 2020.

Also, exemption from compliance with withholding tax provisions on payment of royalty and services fee to non-residents for a period of 10 years from commencement of operations.

IWH’s Danga Bay, an international waterfront development starting from Lido Boulevard up to Skudai Kiri and the New Coastal Highway, was granted the incentives starting September 1, 2013 until December 31, 2020.

Putrajaya had also announced that starting May 2014, companies newly investing more than RM10 million, excluding land costs, in the services sector may qualify for corporate tax exemption for five years, as well as import and sales duty incentives for certain machinery and equipment. 

There will also be flexibility from full compliance with the central bank’s foreign exchange rules and recruitment of foreign knowledge workers. – May 10, 2017.