Tuesday, November 14, 2017

Current Bandar Malaysia RFP likely to suffer same fate as its failed sale to Iskandar Waterfront Holdings and subsequent imaginary sale to Dalian Wanda Group

In my parliamentary question on 8 November I had asked the Ministry of Finance (MoF) for a simple update on the progress of Bandar Malaysia’s search for a new master developer.
Tony Pua minta Menteri Kewangan menyatakan berapa syarikat telah menyerahkan cadangan muktamad dalam tender semula projek Bandar Malaysia. Berapa antaranya adalah syarikat Fortune 500 dan bilakah keputusan tender tersebut akan diumumkan?

The new tender process for Bandar Malaysia’s developer comes following the spectacular collapse of the RM7.41 billion deal with the Iskandar Waterfront Holdings (IWH)-led consortium to acquire a 60% stake in Bandar Malaysia in May 2017.

Following that was another dramatic public relations disaster when the Prime Minister, Dato’ Seri Najib Razak failed to seal an improved multi-billion dollar Bandar Malaysia deal with China’s Dalian Wanda Group.

In attempt to save face and salvage the project, Bandar Malaysia’s owner, the MoF, launched a new request for proposals (RFP) to collect bids for a new master developer for the project.

The new RFP also included more stringent criteria including that the developer needed to be an affiliate of a Fortune 500 company and must have cumulatively generated RM50 billion in revenue in the last 3 consecutive years.

In the Finance Minister’s answer to my question, he only restated information which were already made known to the press for months. He said that the RFP process had been completed and listed out the same criteria that had been said before. He added that 8 companies had met these criteria and that a final decision will be announced soon.

The reply shows that all is clearly not going to plans with the re-bidding process of Bandar Malaysia.

When the RFP was first announced in May, the new Bandar Malaysia chairman and MoF Secretary-General Irwan Serigar Abdullah said that the RFP deadline would close on June 30 and the final decision would be made by July 14.

The RFP was finally launched on July 5, with a deadline on July 20.  The Singapore Straits Times had reported on July 25 that 7 Chinese state-controlled entities and two Japanese firms were in competition for the project. They included China State Construction Engineering Co Ltd, China Communications Construction Company (CCCC) from China and Daiwa House Industry Group and Mitsui Fudosan Co Ltd from Japan.

Then on August 23, Tan Sri Irwan Serigar updated Malaysians with his announcement that “6 companies have shown interest and visited the Bandar Malaysia project site”.

“We took them for a site visit and they need to submit their proposal by the end of this month,” he said.  However, Irwan said the government does not know how many companies, out of the six, will actually submit their proposals based on the RFP for the project.

Now, it is now 4 months after the RFP was announced and we have had no further updates as to who might become the master developer for the Bandar Malaysia.  All we have from the media and parliamentary responses is there are 6 to 8 companies who were perhaps interested in the project.

The delay and inconsistent announcements made however, points to a simple conclusion.  The Bandar Malaysia is no nearer to finding a new suitor than it did when it terminated the failed agreement with the IWH-led consortium.  The so-called interested parties were either not that interested, or were not willing to offer anything close to MoF’s over-priced valuation of Bandar Malaysia.

The MoF should stop daydreaming and start getting real.  The previous Bandar Malaysia “open tender” resulted only with the IWH-consortium winning the bid but failing to secure the necessary financing for the valuation to complete the transaction.   It follows to ask why would any global company in the right mind, offer anything more for Bandar Malaysia especially when they also know that MoF is rather desperate to make the sale?
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