THE revived Bandar Malaysia project worth RM140 billion has been terminated as the Restated and Amended Share Sale Agreement (Rassa) had lapsed on May 6 this year.

Rassa is an agreement for the acquisition of 60% shares in Bandar Malaysia Sdn Bhd (BMSB) by IWH-CREC Sdn Bhd (ICSB), the joint-venture between Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corporation (M) Sdn Bhd (CREC). 

BMSB is wholly owned by TRX City Sdn Bhd, a fully-owned subsidiary under the Ministry of Finance. 

In a joint statement today, TRX City Sdn Bhd and ICSB said the deal had lapsed since the conditions precedent in the agreement were not fulfilled by the respective parties.

“TRX City and ICSB had been working together to find solutions to preserve the partnership to realise the common vision of unlocking Bandar Malaysia’s potential.

“Despite such efforts, to-date, the parties have not been able to mutually agree to the terms of the extension of the Condition Precedent Period. Thus, the Agreement is now deemed null and void,” the statement read.

TRX City said it remains committed to realise the Bandar Malaysia vision, and any future business and commercialisation plans will take into account market conditions and the national socio-economic agenda, to ensure that it continues to play its role as a significant contributor to the country’s economy. 

“China Railway Group Limited will continue to work closely with TRX City in respect (of) any future co-operation in Malaysia,” the statement said.

A source told The Malaysian Insight that the project had stalled due to funding problems as well as movement restrictions put in place to curb the Covid-19 pandemic.

The source, familiar with the project, recounted developments that have led to funding issues, including a delay in launching an initial public offering by IWH, one half of the master developer consortium.

IWH and CREC were in a joint-venture known as the IWH-CREC Sdn Bhd (ICSB) consortium, which in 2015 signed a sale share agreement with project landowner, TRX City Sdn Bhd, to buy a 60% stake in Bandar Malaysia.

The deal would have been worth RM7.41 billion.

The deal collapsed in 2017, although ICSB said it was still fulfilling its payment obligations.

In July last year, the finance ministry, at the consortium’s request, gave it an extension until Sept 15, 2020 to fulfil the conditions of the share sale, including a RM1.1 billion upfront deposit, citing the Covid-19 pandemic as the reason.

In a parliamentary written reply in July last year, Finance Minister Tengku Zafrul also said that TRX City had received RM148.2 million from ICSB so far, or 2% of the RM6.45 billion net proceeds, from the sale of the equity stake in the mega project.

“The balance of the sale proceeds will be received in stages up until 2023,” the minister added.

The consortium’s ability to raise funds to develop Bandar Malaysia was also hampered by delays in IWH’s public listing, which was originally targeted for 2020.

Bandar Malaysia was linked to the controversial state investor 1Malaysia Development Bhd (1MDB). The project was to have hosted the terminus of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project.

The HSR’s cancellation by Singapore and Malaysia, announced on January 1 this year, has also led to concerns about the drop in property value in the Bandar Malaysia area.

The Kuala Lumpur City Centre is 7km away from Bandar Malaysia.

Bandar Malaysia was initially set to become the next major transportation hub by providing connectivity to other parts of Greater KL via MRT lines 2 and 3, KTM Komuter, ERL, and future access to major highway networks. – July 14, 2021.