THE collapse of the RM7.41 billion Bandar Malaysia deal is not a bad development in view of the Covid-19 pandemic, which is of greater urgency for the government, an economist said.

The government will need funds to fight the pandemic and for economic recovery, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said.

“It is not a bad thing that the Bandar Malaysia plan failed at this point in time and it will not severely affect investment sentiment,” he told The Malaysian Insight.

“Obviously, the current focus is on the pandemic and so the cancellation of big projects will not have a big impact on the country in the short term,” Lee said, referring to the Kuala Lumpur-Singapore High Speed Rail (HSR) project.

The Bandar Malaysia mega development was seen as contingent on the HSR project, because it was to be a major transport hub that would have hosted an HSR terminus. It would also have provided connectivity to other parts of Kuala Lumpur via MRT lines 2 and 3, KTM Komuter and ECRL.

The HSR was cancelled by Singapore and Malaysia earlier this year.

Lee said other infrastructure projects are still ongoing, such as the East Coast Rail Link (ECRL) and the Johor Baru–Singapore Rapid Transit System (RTS).

That said, the government needs to plan for post-pandemic development and the type of infrastructure that will be relevant in a new era where the virus is expected to become endemic.

For example, the demand for commercial buildings and shopping malls will change and a recovery plan needs to be formulated, said Lee.

This is because many people are getting used to online shopping and working from home. Some companies are even planning to reduce office space, resulting in lower demand for commercial buildings in the future, he added.

However, a project like Bandar Malaysia had been focused on urban development of smart cities and a transport hub.

Nevertheless, with the pandemic disrupting the country’s real estate development, the government will find it has to keep economic growth at 4%, Lee said.

Subang MP Wong Chen, the PKR spokesman for international trade and industry, said that the termination of the Bandar Malaysia project is a direct consequence of the cancellation of the HSR project, and will possibly dampen the property market.

“If the HSR plan has been postponed by three to five years, the ICSB consortium has no reason to close the deal now,” he said, referring to IWH-CREC Sdn Bhd, which is the joint-venture between Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corporation (M) Sdn Bhd (CREC).

ICSB was to have acquired 60% of shares in Bandar Malaysia Sdn Bhd (BMSB), which is wholly owned by TRX City Sdn Bhd, a 100% subsidiary of the Finance Ministry.

Starcity Global (MM2H) Sdn Bhd marketing manager Florence Ten said Bandar Malaysia had not been on the radar of many foreigners considering buying a property as part of the Malaysia My Second Home programme.

This was mainly because there had been no visible development, she said.

Mega projects still needed, builders say

However, the Master Builders Association Malaysia (MBAM) said the government must continue to look at implementing other mega development projects.

“The government together with government-linked companies must take the lead to increase project spending and inject capital to create and roll out projects that benefit the masses and general public,” MBAM president Sufri Hj Mhd Zin said.

This is because the construction industry is one of the main contributors to the country’s infrastructure and economic development. 

“The industry hopes that all the planned mega projects will kick-start or continue with construction and not be put on hold or terminated.

“This is crucial in providing jobs and sustaining the industry,” Sufri said.

The restated and amended share sale agreement (Rassa) was signed between ICSB and TRX City in December 2019, a revived deal after the initial 2015 agreement lapsed in 2017 and was given an extension.

With the decision not to proceed, it is understood that ICSB will receive a refund of RM1.54 billion from the Ministry of Finance. – July 18, 2021.