Second Finance Minister Datuk Seri Johari Abdul Ghani announced on November 17 that the government had sent a directive to halt all approvals for high-end residences, shopping complexes and office buildings priced over RM1 million.
The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.
The Second Finance Minister subsequently reaffirmed the blanket ban after his fellow Cabinet colleague, Works Minister Datuk Fadillah Yusof said that developments would be reviewed on a case by case basis.
The ‘blanket ban’ had smacked of being a ‘hare-brained’ policy prescription as the Government started granting exemptions to projects which the Government had a vested interested. In particular, the Minister of Federal Territories, Dato’ Seri Tengku Adnan Tengku Mansor said the 1MDB-linked projects – Tun Razak Exchange and Bandar Malaysia were “pre-approved”, and are hence exempted.
The fact that Bandar Malaysia has not even found a developer with a plan appears immaterial to the ban exemption.
The biased exemption of such projects by Government-linked companies (GLCs) created an uproar among the private sector, who then lobbied hard to ease the ban.
Yesterday, the Government did another double-twist somersault on its ‘blanket ban’. Two statements by Urban Wellbeing and Local Government Minister Tan Sri Noh Omar and Datuk Seri Johari, suggested that the Government will now allow developers to appeal the ban on a case by case basis.
For luxury residential properties, Tan Sri Noh Omar announced that a four-minister committee to review the project applications comprising of Datuk Seri Johari, Datuk Fadillah, Minister in the Prime Minister’s Department Datuk Abdul Rahman Dahlan and himself. The committee would apparently subject its approvals to criteria including the existing housing condition, the number of houses in that location and those priced above RM1 million, as well as the number of unsold houses.
Separately, Datuk Johari said that developers of office spaces and shopping malls could appeal to the relevant ministers if they find locations that lack those properties and can justify their developments. He even went on to say that “anyone can build an office provided you know how to market it”.
Does the Minister actually think that developers are going to build an office block or a mall that they are not confident in selling?
I was among the first who had criticised that the blanket ban would not do much to remedy the property market imbalance. However, now the Ministers have granted themselves full discretionary powers to grant approval to any developers who can sweet talk way to win the hearts of the Ministers.
Have we now become a communist regime where the Government dictates how many left shoes to manufacture? Two big mistakes here certainly don’t make a right.
The multiple twists and turns worthy of a world-class acrobatic act only goes to prove that the Najib administration is completely clueless in policy-making. How does the above, for example, even address the main issue of the lack of affordable housing in the country and the largest oversupply of residential properties were reported at the RM500 000 to RM1 million segment?
The worst type of Government for any investor, foreign or domestic, is the absolutely lack of predictability and consistency in its policies. The current fiasco will certainly have major short to long term negative implications for Malaysia’s economy. The Cabinet must remedy its knee-jerk policy-making mechanism and instead, conduct a thorough study with all stakeholders, Bank Negara and think-tanks to design a consistent, constructive and incentivised policies to ensure continued growth and sustainability for the property sector and our economy.
Showing posts with label Bandar Malaysia. Show all posts
Showing posts with label Bandar Malaysia. Show all posts
Thursday, December 07, 2017
Wednesday, November 29, 2017
Treasurer-General Tan Sri Irwan Serigar’s continued stalling over decision to appoint Bandar Malaysia master developer exposes that Ministry of Finance has not received any firm bids for the project
Ministry of Finance (MOF) Treasurer-General and Bandar Malaysia chairman Tan Sri Irwan Serigar continued to ask Malaysians to wait and see for the outcome of Bandar Malaysia’s call for a new master developer. When launching online radio station eFM yesterday, Irwan told reporters to “wait, the time will come,” when asked about the status of Bandar Malaysia’s call.
The call for a master developer followed the collapse of the RM7.41 billion deal with a consortium led by Iskandar Waterfront Holdings (IWH) to acquire a 60% stake in Bandar Malaysia. Following that collapse, Bandar Malaysia Sdn. Bhd., the wholly-owned MOF Inc. company and former 1MDB subsidiary, announced that it was going to be opening a tender for a master developer for the Bandar Malaysia project.
The new tender was going to include more stringent criteria including that the developer needed to be an affiliate of a Fortune 500 company and needed to have cumulatively generated RM50 billion in revenue in the last 3 consecutive years.
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.
On August 23, Tan Sri Irwan said that 6 companies had ‘expressed interest’ and had visited the site. “We took them for a site visit and they need to submit their proposal by the end of this month,” he said.
The Malaysian Reserve then reported on October 31 that Tan Sri Irwan said the announcement for the master developer would be “coming soon, coming soon”.
On November 8, I had asked the Minister of Finance to state how many companies had submitted finalised proposals for the re-tender of the Bandar Malaysia project, how many of those companies were Fortune 500 companies and when the tender decision would be announced.
He again merely responded that 8 companies which had met the criteria had “expressed their interest” in becoming the master developer.
It has now become quite obvious that since June this year, the only progress we have made is purportedly 6 to 8 companies have “expressed interest” in Bandar Malaysia despite a decision which was to be “made by July 14”.
We call upon Tan Sri Irwan Serigar to confirm if in fact, there have been no firm bids tabled by any so-called Fortune 500 company to acquire and develop Bandar Malaysia, especially not at the astronomical price demanded by the Ministry of Finance.
The call for a master developer followed the collapse of the RM7.41 billion deal with a consortium led by Iskandar Waterfront Holdings (IWH) to acquire a 60% stake in Bandar Malaysia. Following that collapse, Bandar Malaysia Sdn. Bhd., the wholly-owned MOF Inc. company and former 1MDB subsidiary, announced that it was going to be opening a tender for a master developer for the Bandar Malaysia project.
The new tender was going to include more stringent criteria including that the developer needed to be an affiliate of a Fortune 500 company and needed to have cumulatively generated RM50 billion in revenue in the last 3 consecutive years.
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.
On August 23, Tan Sri Irwan said that 6 companies had ‘expressed interest’ and had visited the site. “We took them for a site visit and they need to submit their proposal by the end of this month,” he said.
The Malaysian Reserve then reported on October 31 that Tan Sri Irwan said the announcement for the master developer would be “coming soon, coming soon”.
On November 8, I had asked the Minister of Finance to state how many companies had submitted finalised proposals for the re-tender of the Bandar Malaysia project, how many of those companies were Fortune 500 companies and when the tender decision would be announced.
He again merely responded that 8 companies which had met the criteria had “expressed their interest” in becoming the master developer.
It has now become quite obvious that since June this year, the only progress we have made is purportedly 6 to 8 companies have “expressed interest” in Bandar Malaysia despite a decision which was to be “made by July 14”.
We call upon Tan Sri Irwan Serigar to confirm if in fact, there have been no firm bids tabled by any so-called Fortune 500 company to acquire and develop Bandar Malaysia, especially not at the astronomical price demanded by the Ministry of Finance.
Friday, November 24, 2017
Ku Nan demonstrates “Malaysia Boleh” spirit by declaring Bandar Malaysia plans ‘approved’ even before master developer selection, to circumvent Cabinet luxury development ban.
Federal Territories Minister Datuk Seri Tengku Adnan Mansor has confirmed yesterday that the 1MDB-linked Bandar Malaysia and TRX would not be affected by the freeze on property approvals for condominiums, serviced apartments, offices and shopping complexes price above RM1 million.
He was responding to a question by PJ Selatan MP, Hee Loy Sian, when he said that the two projects had already received approval ‘in principle’ and could not be stopped from developing.
It is quite clear here that the government’s only principle here is to protect the interests of 1MDB. TRX and Bandar Malaysia are two of 1MDB’s largest assets that need to be developed if the fund wants any chance of staying afloat. They are also two of the biggest slated development projects in KL.
The amazing thing is, the Ministry of Finance has not even declared a winner to the tender for the master developer of Bandar Malaysia. The latest response from the Ministry of Finance last week is that there are 8 companies which have “expressed interest” in developing the massive 486-acres project. DBKL Mayor Tan Sri Mohd Amin had himself told Malaysiakini that they had yet to receive an application from Bandar Malaysia.
If exemptions from the freeze can be given just because of approvals had been given ‘in principle’, what worth is the freeze at all? Does this mean that other ‘planned’ high-end developments, which have yet to submit their planning applications, will also get exemptions?
These exemptions raise two worrying questions about the government’s planned freeze on high-end developments.
Firstly, it would mean that the effectiveness of the supposed ban on high-end project would be severely diluted. Bank Negara’s report showed just how grave the supply and demand imbalance was, projecting 1-in-3 office spaces being vacant in the Klang Valley by 2021, if measures aren’t taken to control it. If this freeze on high-end developments is to be taken seriously at all, the government has to make sure it is fairly enforced across the board.
And secondly, 1MDB gets the special treatment which discriminates against all private businesses.
As per my previous statements on this issue, I reiterate that the purported ‘blanket ban’ against high-end projects with unit values above RM1 million is a hare-brained knee-jerk reaction which is faulty due to the unfair and substantial exemptions granted above. In addition, the policy itself will not only fail to achieve its objectives because it is not properly targeted, it will create greater distortions in the market as well as turn away both domestic and foreign investors.
He was responding to a question by PJ Selatan MP, Hee Loy Sian, when he said that the two projects had already received approval ‘in principle’ and could not be stopped from developing.
It is quite clear here that the government’s only principle here is to protect the interests of 1MDB. TRX and Bandar Malaysia are two of 1MDB’s largest assets that need to be developed if the fund wants any chance of staying afloat. They are also two of the biggest slated development projects in KL.
The amazing thing is, the Ministry of Finance has not even declared a winner to the tender for the master developer of Bandar Malaysia. The latest response from the Ministry of Finance last week is that there are 8 companies which have “expressed interest” in developing the massive 486-acres project. DBKL Mayor Tan Sri Mohd Amin had himself told Malaysiakini that they had yet to receive an application from Bandar Malaysia.
If exemptions from the freeze can be given just because of approvals had been given ‘in principle’, what worth is the freeze at all? Does this mean that other ‘planned’ high-end developments, which have yet to submit their planning applications, will also get exemptions?
These exemptions raise two worrying questions about the government’s planned freeze on high-end developments.
Firstly, it would mean that the effectiveness of the supposed ban on high-end project would be severely diluted. Bank Negara’s report showed just how grave the supply and demand imbalance was, projecting 1-in-3 office spaces being vacant in the Klang Valley by 2021, if measures aren’t taken to control it. If this freeze on high-end developments is to be taken seriously at all, the government has to make sure it is fairly enforced across the board.
And secondly, 1MDB gets the special treatment which discriminates against all private businesses.
As per my previous statements on this issue, I reiterate that the purported ‘blanket ban’ against high-end projects with unit values above RM1 million is a hare-brained knee-jerk reaction which is faulty due to the unfair and substantial exemptions granted above. In addition, the policy itself will not only fail to achieve its objectives because it is not properly targeted, it will create greater distortions in the market as well as turn away both domestic and foreign investors.
Thursday, November 23, 2017
Why are 1MDB-related projects given special exemptions despite Cabinet blanket ban on luxury property projects above RM1 million in unit values?
Last week, Dato’ Seri Johari Abdul Ghani announced the Cabinet decision on a “temporary ban” approvals for shopping complexes, offices, serviced apartments and luxury condominiums priced over RM1 million effective November 1.
The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.
Particularly in the Klang Valley, the report found that office vacancy rates had increased from 20.9% in Q1 2015 to 23.6% in Q1 2017. The situation is only set to get worse as there is an incoming supply of 38 million square feet of office space.
It has also been confirmed in various news reports that the Kuala Lumpur City Hall (DBKL) has received the above directive.
However, we are not sure if we should be shocked that the Mayor, Tan Sri Mohd Amin Nordin Abd Aziz announced yesterday that the prospective single largest high-end property development project ever in Malaysia – Bandar Malaysia is exempted from the ban.
Malaysiakini reported that although the Kuala Lumpur City Hall (DBKL) had yet to receive any application regarding the project, Mohd Amin said the freeze on approvals for condominiums, serviced apartments, offices and shopping complexes priced at RM1 million and above is not a blanket ban.
“We haven’t received any application from Bandar Malaysia. No, because it is not a blanket (ban). On certain developments, it can be approved,” he told Malaysiakini.
At the same time, it was announced yesterday that IJM would be building a new RM500 million office tower at Tun Razak Exchange after acquiring TRX City subsidiary Fairview Valley Sdn Bhd. Will this new tower, which will have a gross floor area of 560,000 square feet also be exempted from the ban?
Due to the size of these 1MDB-related projects, they will certainly exacerbate the property over-supply situation in the Klang Valley and effectively blunt the effectiveness of the Cabinet decision to ban high-end development projects.
More critically, if the 486 acres Bandar Malaysia and the 70 acres Tun Razak Exchange projects receive automatic exemptions from the ban – how is that fair to the rest of the property development industry in the country?
Clearly the “temporary ban” is a hare-brained which will fail to actually solve the “supply-demand imbalances” in our property sector. Worse, the investment and business community will only see the inconsistency and unfair policies imposed by the Government. Can they be blamed if both the domestic and foreign investors take their money and invest in other countries?
The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.
Particularly in the Klang Valley, the report found that office vacancy rates had increased from 20.9% in Q1 2015 to 23.6% in Q1 2017. The situation is only set to get worse as there is an incoming supply of 38 million square feet of office space.
It has also been confirmed in various news reports that the Kuala Lumpur City Hall (DBKL) has received the above directive.
However, we are not sure if we should be shocked that the Mayor, Tan Sri Mohd Amin Nordin Abd Aziz announced yesterday that the prospective single largest high-end property development project ever in Malaysia – Bandar Malaysia is exempted from the ban.
Malaysiakini reported that although the Kuala Lumpur City Hall (DBKL) had yet to receive any application regarding the project, Mohd Amin said the freeze on approvals for condominiums, serviced apartments, offices and shopping complexes priced at RM1 million and above is not a blanket ban.
“We haven’t received any application from Bandar Malaysia. No, because it is not a blanket (ban). On certain developments, it can be approved,” he told Malaysiakini.
At the same time, it was announced yesterday that IJM would be building a new RM500 million office tower at Tun Razak Exchange after acquiring TRX City subsidiary Fairview Valley Sdn Bhd. Will this new tower, which will have a gross floor area of 560,000 square feet also be exempted from the ban?
Due to the size of these 1MDB-related projects, they will certainly exacerbate the property over-supply situation in the Klang Valley and effectively blunt the effectiveness of the Cabinet decision to ban high-end development projects.
More critically, if the 486 acres Bandar Malaysia and the 70 acres Tun Razak Exchange projects receive automatic exemptions from the ban – how is that fair to the rest of the property development industry in the country?
Clearly the “temporary ban” is a hare-brained which will fail to actually solve the “supply-demand imbalances” in our property sector. Worse, the investment and business community will only see the inconsistency and unfair policies imposed by the Government. Can they be blamed if both the domestic and foreign investors take their money and invest in other countries?
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.
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?
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?
Sunday, August 13, 2017
Arul Kanda’s disastrous record at 1MDB makes him the least qualified to take over the reigns of Khazanah Nasional
Malaysians were shocked to read the report by The Malaysian Insight on Thursday that Arul Kanda is one of the candidates being considered for the post of Managing Director of Khazanah Nasional.
The online portal reported that “a selection panel has been formed to look through the candidates who can take over from Azman (Mokhtar) whose contract expires in two years” and Arul Kanda is one of two outsiders being considered.
After the disastrous and disgraceful record at the debt-ridden 1MDB since his appointment in January 2015, Arul Kanda should be automatically disqualified from even consideration at the country’s sovereign wealth fund.
The latest catastrophe is the failure of 1MDB to fulfil its settlement obligations with Abu Dhabi’s International Petroleum Investment Corporation (IPIC) in a timely matter. Despite claiming since April 24 this year that its repayment to IPIC would be fulfilled via the “monetization” of 1MDB’s investment ‘units’ last known to be held in Singapore, IPIC had to twice extend the deadline for the first instalment payment scheduled on 31 July 2017.
1MDB has since managed to pay the “equivalent” of US$350 million on 11 August and would have up to 31 August to settle the balance of US$300 million. However, even the above partial payment of the first instalment is shrouded in mystery as it is clear that the 1MDB ‘units’ have not been monetized while the source of the 1MDB funds were unclear.
In addition, Arul Kanda has botched the so-called rationalisation with the original attempt to sell 60% of Bandar Malaysia to the Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium. Despite 1MDB having collected 10% of the sale amounting to RM741 million as “deposit”, the Ministry of Finance (MoF) had to terminate the contract due to IWH’s repeated failure to fulfil its obligations, it was MoF which had to refund the RM741 million “deposit” to the purchaser.
However, the worst deed of Arul Kanda has been to repeatedly lie to the Auditor-General, the Public Accounts Committee and Malaysians in general, to cover up the 1MDB scandal to ensure that those behind the multi-billion dollar misappropriation in the company would be let off scotfree.
For example, Arul Kanda is fully aware that 1MDB’s investment ‘units’ previously held at the now defunct BSI Bank, Singapore are fraudulent and more importantly are worth at best a tiny fraction of their purported US$2.318 billion in valuation. The fraud has been uncovered by the United States Department of Justice, as reported in the additional civil suit filed in June this year.
However, despite having access to all the material documents and information, Arul Kanda has continued the pretence that 1MDB had already redeemed some US$1.3 billion worth of the ‘units’. At one point Arul Kanda even told the 1MDB Directors that he has “seen the bank statements” that 1MDB had already received the proceeds in ‘cash’.
Today we know that the entire redemption exercise was a Ponzi-like round-tripping exercise using part of the proceeds from a Deutsche Bank loan to pretend that it’s the receipt from the ‘units’ redemption exercise.
Malaysians can only shiver in trepidation at the thought that a RM145 billion-Khazanah Nasional, which is relatively healthy today, would be helmed by the same person who hammered the final nail in 1MDB’s coffin.
The only thing more shocking I heard when I started sniffing around with regards to The Malaysian Insight report is the fact that Arul Kanda is also awaiting possible appointment as a Senator which comes with a Ministerial position. If that were true, then it would be proof that the Prime Minister, Dato’ Seri Najib Razak would only appoint those without a shred of honesty and integrity to the Cabinet.
The online portal reported that “a selection panel has been formed to look through the candidates who can take over from Azman (Mokhtar) whose contract expires in two years” and Arul Kanda is one of two outsiders being considered.
After the disastrous and disgraceful record at the debt-ridden 1MDB since his appointment in January 2015, Arul Kanda should be automatically disqualified from even consideration at the country’s sovereign wealth fund.
The latest catastrophe is the failure of 1MDB to fulfil its settlement obligations with Abu Dhabi’s International Petroleum Investment Corporation (IPIC) in a timely matter. Despite claiming since April 24 this year that its repayment to IPIC would be fulfilled via the “monetization” of 1MDB’s investment ‘units’ last known to be held in Singapore, IPIC had to twice extend the deadline for the first instalment payment scheduled on 31 July 2017.
1MDB has since managed to pay the “equivalent” of US$350 million on 11 August and would have up to 31 August to settle the balance of US$300 million. However, even the above partial payment of the first instalment is shrouded in mystery as it is clear that the 1MDB ‘units’ have not been monetized while the source of the 1MDB funds were unclear.
In addition, Arul Kanda has botched the so-called rationalisation with the original attempt to sell 60% of Bandar Malaysia to the Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium. Despite 1MDB having collected 10% of the sale amounting to RM741 million as “deposit”, the Ministry of Finance (MoF) had to terminate the contract due to IWH’s repeated failure to fulfil its obligations, it was MoF which had to refund the RM741 million “deposit” to the purchaser.
However, the worst deed of Arul Kanda has been to repeatedly lie to the Auditor-General, the Public Accounts Committee and Malaysians in general, to cover up the 1MDB scandal to ensure that those behind the multi-billion dollar misappropriation in the company would be let off scotfree.
For example, Arul Kanda is fully aware that 1MDB’s investment ‘units’ previously held at the now defunct BSI Bank, Singapore are fraudulent and more importantly are worth at best a tiny fraction of their purported US$2.318 billion in valuation. The fraud has been uncovered by the United States Department of Justice, as reported in the additional civil suit filed in June this year.
However, despite having access to all the material documents and information, Arul Kanda has continued the pretence that 1MDB had already redeemed some US$1.3 billion worth of the ‘units’. At one point Arul Kanda even told the 1MDB Directors that he has “seen the bank statements” that 1MDB had already received the proceeds in ‘cash’.
Today we know that the entire redemption exercise was a Ponzi-like round-tripping exercise using part of the proceeds from a Deutsche Bank loan to pretend that it’s the receipt from the ‘units’ redemption exercise.
Malaysians can only shiver in trepidation at the thought that a RM145 billion-Khazanah Nasional, which is relatively healthy today, would be helmed by the same person who hammered the final nail in 1MDB’s coffin.
The only thing more shocking I heard when I started sniffing around with regards to The Malaysian Insight report is the fact that Arul Kanda is also awaiting possible appointment as a Senator which comes with a Ministerial position. If that were true, then it would be proof that the Prime Minister, Dato’ Seri Najib Razak would only appoint those without a shred of honesty and integrity to the Cabinet.
Wednesday, August 09, 2017
Finance Minister II Dato’ Seri Johari Abdul Ghani should not bluff Malaysians by stating that the Government “has never given public funds to 1MDB to settle its debts”
According to Bernama yesterday, Second Finance Minister, Dato’ Seri Johari Abdul Ghani said that “the Finance Ministry (MoF) has never given any public funds to 1Malaysia Development Bhd (1MDB) to help settle its debt”.
The Minister must think that Malaysians are complete and utter idiots to be served what is one of biggest piece of cow dung amongst all the attempts to cover up the 1MDB scandal.
The Ministry of Finance has on so many occasions come to the rescue of 1MDB over the past 2 years involving billions of ringgit of tax-payers’ monies, and yet Dato’ Seri Johari has the cheek to tell us that the MoF “has never given any public funds to 1MDB”.
Among the most clear-cut examples are the RM800 million loan from SOCSO and another RM2.4 billion Bandar Malaysia sukuk bond which the MoF have assumed as a result of taking over TRX City Sdn Bhd and Bandar Malaysia Sdn Bhd.
The Auditor-General has reported that nearly all of the above proceeds of the 1MDB borrowings were never used for the development of the 2 property projects above. Hence when MoF agreed to take over the property projects and assumed the liabilities, MoF has effectively “settled” 1MDB’s RM3.2 billion debt problem.
What’s more, when 1MDB had originally sold a 60% stake in Bandar Malaysia to an Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium, they had collected, and presumably spent the RM741 million deposit which has been paid upon the signing of the sale and purchase agreement in December 2015.
However, when MoF terminated the sale due to IWH payment defaults, it was MoF who coughed up the RM741 million to refund the deposit paid by the consortium. If the deposit, should have been refunded at all, it should have been by 1MDB, and not by the Malaysian tax-payers.
The above doesn’t yet include MoF subsidiary or subsidiaries which actually acquired properties from 1MDB in TRX at inflated prices. The irony is, it was MoF who sold the land to 1MDB in the first place at dirt cheap prices.
We understand the conundrum Dato’ Seri Johari Abdul Ghani is facing as the 2nd Finance Minister who has fallen out of favour and having to defend the indefensible regain the Prime Minister’s favour. It is now clear that he has been dropped by Dato’ Seri Najib Razak from handling the 1MDB imbroglio, particularly in the company’s multi-billion dollar dispute with Abu Dhabi’s IPIC.
However, the Second Finance Minister should not go to the extent to telling outright lies to pull the wool over the people’s eyes. Dato’ Seri Johari should not forget his role and responsibility to the people of Malaysia by sacrificing his own integrity and honour.
The Minister must think that Malaysians are complete and utter idiots to be served what is one of biggest piece of cow dung amongst all the attempts to cover up the 1MDB scandal.
The Ministry of Finance has on so many occasions come to the rescue of 1MDB over the past 2 years involving billions of ringgit of tax-payers’ monies, and yet Dato’ Seri Johari has the cheek to tell us that the MoF “has never given any public funds to 1MDB”.
Among the most clear-cut examples are the RM800 million loan from SOCSO and another RM2.4 billion Bandar Malaysia sukuk bond which the MoF have assumed as a result of taking over TRX City Sdn Bhd and Bandar Malaysia Sdn Bhd.
The Auditor-General has reported that nearly all of the above proceeds of the 1MDB borrowings were never used for the development of the 2 property projects above. Hence when MoF agreed to take over the property projects and assumed the liabilities, MoF has effectively “settled” 1MDB’s RM3.2 billion debt problem.
What’s more, when 1MDB had originally sold a 60% stake in Bandar Malaysia to an Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium, they had collected, and presumably spent the RM741 million deposit which has been paid upon the signing of the sale and purchase agreement in December 2015.
However, when MoF terminated the sale due to IWH payment defaults, it was MoF who coughed up the RM741 million to refund the deposit paid by the consortium. If the deposit, should have been refunded at all, it should have been by 1MDB, and not by the Malaysian tax-payers.
The above doesn’t yet include MoF subsidiary or subsidiaries which actually acquired properties from 1MDB in TRX at inflated prices. The irony is, it was MoF who sold the land to 1MDB in the first place at dirt cheap prices.
We understand the conundrum Dato’ Seri Johari Abdul Ghani is facing as the 2nd Finance Minister who has fallen out of favour and having to defend the indefensible regain the Prime Minister’s favour. It is now clear that he has been dropped by Dato’ Seri Najib Razak from handling the 1MDB imbroglio, particularly in the company’s multi-billion dollar dispute with Abu Dhabi’s IPIC.
However, the Second Finance Minister should not go to the extent to telling outright lies to pull the wool over the people’s eyes. Dato’ Seri Johari should not forget his role and responsibility to the people of Malaysia by sacrificing his own integrity and honour.
Thursday, May 18, 2017
Did Proton just get asset-stripped with the tax-payers ultimately carrying the overgrown baby once again?
Over the past 2 weeks, the Prime Minister and the Ministry of Finance have been making a whole series of announcements, varying them along the way.
First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion. According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.
However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.
Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign and agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia. The expected agreement was purportedly worth more than US$8 billion.
However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia. The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.
Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”
It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone. “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.
However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.
"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.
It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along. And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.
Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project. Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.
We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements. Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.
The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table. Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.
First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion. According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.
However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.
Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign and agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia. The expected agreement was purportedly worth more than US$8 billion.
However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia. The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.
Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”
It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone. “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.
However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.
"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.
It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along. And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.
Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project. Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.
We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements. Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.
The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table. Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.
Why is Dato’ Seri Najib Razak making up the plans for Bandar Malaysia as he goes along?
Over the past 2 weeks, the Prime Minister and the Ministry of Finance have been making a whole series of announcements, varying them along the way.
First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion. According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.
However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.
Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign an agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia. The expected agreement was purportedly worth more than US$8 billion.
However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia. The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.
Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”
It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone. “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.
However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.
"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.
It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along. And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.
Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project. Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.
We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements. Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.
The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table. Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.
First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion. According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.
However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.
Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign an agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia. The expected agreement was purportedly worth more than US$8 billion.
However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia. The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.
Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”
It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone. “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.
However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.
"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.
It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along. And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.
Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project. Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.
We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements. Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.
The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table. Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.
Monday, May 15, 2017
Malaysia has some of the top property development companies in the world – why is Dato’ Seri Najib Razak practically begging for Chinese developers to develop Bandar Malaysia?
The failure by Dato’ Seri Najib Razak to secure even any form of non-binding commitment from Dalian Wanda to acquire Bandar Malaysia brings the Ministry of Finance plans for the 495 acres of prime land back to square one.
The Prime Minister needs perhaps a lesson in sales strategy. An evidently desperate salesman trying to sell his family heirlooms is never going to succeed in closing a deal at inflated prices. While these Chinese developers may be cash rich, they are not stupid.
They know that the previous buyer – the Iskandar Waterfront Holdings (IWH) Consortium who had put it the purportedly best bid in December 2015 could not pay up the full RM7.41 billion it agreed to pay for a 60% stake in Bandar Malaysia.
And if Wanda knew that, why would they be so silly as to offer more than what was previously already the best bid Bandar Malaysia could solicit? What can Bandar Malaysia offer – other than being a sizeable piece of prime land in the middle of Kuala Lumpur, that would make it such an ‘irresistable buy’ for a foreign Chinese developer?
The answer which isn’t music to Dato’ Seri Najib Razak’s ears, is really “not much”. Hence the only reason why these Chinese developers would acquire Bandar Malaysia is if, they got a bargain price or if they are able to extract all sorts of financial incentives and tax exemptions from the Malaysian government to make their venture worth the while.
This then begs the question – what makes these Chinese developers so special that we should bend over backwards to grant them exclusive financial incentives and generous tax exemptions?
We are not talking about Huawei setting up a reseach and design centre in Malaysia. Or for that matter setting up a manufacturing plant to produce world-class electronic gadgets. We would bend over backwards for Huawei in this case because we have no expertise in the sector.
On the other hand, our experience with Chinese developers have left a bad taste in the mouth. They have not only single-handedly placed the Johor property development industry on life-support, they have brought with them their entire supply chain of contractors and sub-contractors from China.
Worse, investigations by Malaysiakini recently have proven the Chinese construction projects to have engaged thousands of illegal workers from China. They have demonstrated utter contempt for our laws.
Therefore, as the Ministry of Finance re-think the entire Bandar Malaysia development – the most important question to ask is, “why can’t Malaysian developers do the job?”
For example, a consortium comprising of SP Setia, Sime Darby and EPF stunned the global property markets with a winning bid for the London icon, Battersea Power Station in 2012. It is now a project with gross development value in excess of GBP8 billion and have won the prestigious London “Developer of the Year Award” in 2015. Last year, the development also won the London “Deal of the Year Award” after successfully snagging Apple as the largest office tenant which will take up 5,000 sq ft of space.
Malaysian developers are also regular winners at the International Real Estate Federation (FIABCI) World Prix D’Excellence Awards. They have included Sunway, IJM, YTL, UEM-Sunrise and many more. These developers are now expanding their portfolios not only in the regional countries such as Vietnam, China and Indonesia, but also to developed cities such London and Melbourne.
Why are our own developers not given a chance? Even if in the event that there is no one developer who is able to digest the entire 495 acres of land in Bandar Malaysia – the Ministry of Finance could always parcel out the development into multiple parts and phases. This will provide the perfect opportunity for the local players to compete to create the best value and designs for the respective carved segments.
The projects will be a massive boost to our local property development industry, stimulate demand for local construction and related-services and most importantly provide thousands of new job opportunities for ordinary Malaysians.
Sometimes we think too hard, travel far and wide in the pursuit for solutions, when really, the
answer is right in front of our very eyes.
The Prime Minister needs perhaps a lesson in sales strategy. An evidently desperate salesman trying to sell his family heirlooms is never going to succeed in closing a deal at inflated prices. While these Chinese developers may be cash rich, they are not stupid.
They know that the previous buyer – the Iskandar Waterfront Holdings (IWH) Consortium who had put it the purportedly best bid in December 2015 could not pay up the full RM7.41 billion it agreed to pay for a 60% stake in Bandar Malaysia.
And if Wanda knew that, why would they be so silly as to offer more than what was previously already the best bid Bandar Malaysia could solicit? What can Bandar Malaysia offer – other than being a sizeable piece of prime land in the middle of Kuala Lumpur, that would make it such an ‘irresistable buy’ for a foreign Chinese developer?
The answer which isn’t music to Dato’ Seri Najib Razak’s ears, is really “not much”. Hence the only reason why these Chinese developers would acquire Bandar Malaysia is if, they got a bargain price or if they are able to extract all sorts of financial incentives and tax exemptions from the Malaysian government to make their venture worth the while.
This then begs the question – what makes these Chinese developers so special that we should bend over backwards to grant them exclusive financial incentives and generous tax exemptions?
We are not talking about Huawei setting up a reseach and design centre in Malaysia. Or for that matter setting up a manufacturing plant to produce world-class electronic gadgets. We would bend over backwards for Huawei in this case because we have no expertise in the sector.
On the other hand, our experience with Chinese developers have left a bad taste in the mouth. They have not only single-handedly placed the Johor property development industry on life-support, they have brought with them their entire supply chain of contractors and sub-contractors from China.
Worse, investigations by Malaysiakini recently have proven the Chinese construction projects to have engaged thousands of illegal workers from China. They have demonstrated utter contempt for our laws.
Therefore, as the Ministry of Finance re-think the entire Bandar Malaysia development – the most important question to ask is, “why can’t Malaysian developers do the job?”
For example, a consortium comprising of SP Setia, Sime Darby and EPF stunned the global property markets with a winning bid for the London icon, Battersea Power Station in 2012. It is now a project with gross development value in excess of GBP8 billion and have won the prestigious London “Developer of the Year Award” in 2015. Last year, the development also won the London “Deal of the Year Award” after successfully snagging Apple as the largest office tenant which will take up 5,000 sq ft of space.
Malaysian developers are also regular winners at the International Real Estate Federation (FIABCI) World Prix D’Excellence Awards. They have included Sunway, IJM, YTL, UEM-Sunrise and many more. These developers are now expanding their portfolios not only in the regional countries such as Vietnam, China and Indonesia, but also to developed cities such London and Melbourne.
Why are our own developers not given a chance? Even if in the event that there is no one developer who is able to digest the entire 495 acres of land in Bandar Malaysia – the Ministry of Finance could always parcel out the development into multiple parts and phases. This will provide the perfect opportunity for the local players to compete to create the best value and designs for the respective carved segments.
The projects will be a massive boost to our local property development industry, stimulate demand for local construction and related-services and most importantly provide thousands of new job opportunities for ordinary Malaysians.
Sometimes we think too hard, travel far and wide in the pursuit for solutions, when really, the
answer is right in front of our very eyes.
Sunday, May 14, 2017
After more than a week of hyped-up brouhaha, Dato’ Seri Najib Razak’s magic Wanda failed to cast its spell
For more than a week after the Ministry of Finance the sale of a 60% Bandar Malaysia interest to a consortium led by Iskandar Waterfront Holdings (IWH) collapsed, the Prime Minister’s Department media strategists worked overtime to limit the damage caused by the negative publicity.
They fed unnamed and uncorroborated stories to key correspondents with news leaks that the real reason why the IWH deal will terminated was because a much bigger deal was to be signed.
It was The Star who first picked up the “rumour” quoting “some sources” saying “that entity could be Dalian Wanda Group Co Ltd, a Chinese multinational conglomerate corporation and the world’s biggest private property developer” on 6 May 2017.
But it was The Singapore Straits Times who was the first to flesh out the story on 9 May 2017 and created an unreal buzz that Dato’ Seri Najib Razak has all but tied up the deal with Dalian Wanda, hence the urgency to dump IWH.
The Singapore Straits Times wrote that “Government officials and financial executives close to the situation told The Straits Times that negotiations with the Dalian Wanda Group to take a central role as master developer have reached an advanced stage…”
“Malaysian government officials noted that the new deal would be substantially higher than the previous RM12.3 billion valuation tag for the entire project. According to financial executives familiar with ongoing talks, Wanda has proposed to use half of the development for tourism and entertainment-related ventures valued at roughly US$8 billion,” the Singapore paper added.
All media outlets, online and print, including The Star, quoted the Singapore report with expectations of an agreement to be signed with Wanda in Beijing this week hitting a feverish pitch.
However, with expectations set so high, the stage was set for a spectacular flop. The press conference announcement yesterday afternoon between Dato’ Seri Najib Razak and Wanda’s Chairman Wang Jianlin in Beijing turned up a damp squib.
Despite the Prime Minister’s over-the-top praise for Wanda, Wang’s brief response was measured in pure diplomatic speak.
"Today, I also talked to the Prime Minister about this project. It is a large project worth over US$10 billion and we have not finalised a deal yet. We are very optimistic about Malaysia's investment and commercial climate. We are willing and ready to contribute our share to Malaysia's economic development and to create the one and only unique commercial centre in Malaysia," he said.
Not even a face-saving, typically broadly-worded, non-committal Memorandum of Understanding was signed.
The reason is likely quite simple. Dalian Wanda might be one of the richest private companies in China, making them an attractive target to sell perhaps, a grossly overpriced piece of real estate. But in all likelihood, Dalian Wanda became one of the most profitable companies in the world precisely because it doesn’t pay over-the-top prices of real estate – even if it is indeed prime real estate, especially if the seller is way more desperate than Wanda is interested.
With the IWH deal dead and no super-wealthy knight-in-shining-armour in sight, the Ministry of Finance needs to go back to the drawing board on its plans for Bandar Malaysia. The priority must not be to sell the land at the highest possible price with the intended purpose for the funds to bailout 1MDB. The priority to the land must be a economically sustainable development which will not only empower the Malaysian business community, but also in turn create meaningful job opportunities for ordinary Malaysians.
They fed unnamed and uncorroborated stories to key correspondents with news leaks that the real reason why the IWH deal will terminated was because a much bigger deal was to be signed.
It was The Star who first picked up the “rumour” quoting “some sources” saying “that entity could be Dalian Wanda Group Co Ltd, a Chinese multinational conglomerate corporation and the world’s biggest private property developer” on 6 May 2017.
But it was The Singapore Straits Times who was the first to flesh out the story on 9 May 2017 and created an unreal buzz that Dato’ Seri Najib Razak has all but tied up the deal with Dalian Wanda, hence the urgency to dump IWH.
The Singapore Straits Times wrote that “Government officials and financial executives close to the situation told The Straits Times that negotiations with the Dalian Wanda Group to take a central role as master developer have reached an advanced stage…”
“Malaysian government officials noted that the new deal would be substantially higher than the previous RM12.3 billion valuation tag for the entire project. According to financial executives familiar with ongoing talks, Wanda has proposed to use half of the development for tourism and entertainment-related ventures valued at roughly US$8 billion,” the Singapore paper added.
All media outlets, online and print, including The Star, quoted the Singapore report with expectations of an agreement to be signed with Wanda in Beijing this week hitting a feverish pitch.
However, with expectations set so high, the stage was set for a spectacular flop. The press conference announcement yesterday afternoon between Dato’ Seri Najib Razak and Wanda’s Chairman Wang Jianlin in Beijing turned up a damp squib.
Despite the Prime Minister’s over-the-top praise for Wanda, Wang’s brief response was measured in pure diplomatic speak.
"Today, I also talked to the Prime Minister about this project. It is a large project worth over US$10 billion and we have not finalised a deal yet. We are very optimistic about Malaysia's investment and commercial climate. We are willing and ready to contribute our share to Malaysia's economic development and to create the one and only unique commercial centre in Malaysia," he said.
Not even a face-saving, typically broadly-worded, non-committal Memorandum of Understanding was signed.
The reason is likely quite simple. Dalian Wanda might be one of the richest private companies in China, making them an attractive target to sell perhaps, a grossly overpriced piece of real estate. But in all likelihood, Dalian Wanda became one of the most profitable companies in the world precisely because it doesn’t pay over-the-top prices of real estate – even if it is indeed prime real estate, especially if the seller is way more desperate than Wanda is interested.
With the IWH deal dead and no super-wealthy knight-in-shining-armour in sight, the Ministry of Finance needs to go back to the drawing board on its plans for Bandar Malaysia. The priority must not be to sell the land at the highest possible price with the intended purpose for the funds to bailout 1MDB. The priority to the land must be a economically sustainable development which will not only empower the Malaysian business community, but also in turn create meaningful job opportunities for ordinary Malaysians.
Friday, May 12, 2017
The Ministry of Finance confirmed our worst fears – that tax-payers continue to bear the cost of 1MDB’s multi-billion ringgit losses
Both The Malaysian Insight yesterday and the Edge Financial Daily today confirmed that the Ministry of Finance (MoF) has fully refunded the RM741 million deposit paid by the Iskandar Waterfront Holdings (IWH) consortium for the latter’s 60% acquisition of Bandar Malaysia.
This follows the official announcement last week by TRX City Sdn Bhd, now a wholly-owned subsidiary of MoF, that the above sale was been terminated due to the failure of the consortium to meet their financial obligations despite a dozen extensions having been granted.
Malaysians can only weep in despair as the refund marks another milestone in the continued bailout of the debt-stricken scandal-ridden 1MDB.
When the above acquisition agreement was first signed in December 2015, it was the ‘final’ chapter of the proposed 1MDB rationalisation exercise. The sale of Bandar Malaysia, then a wholly-owned subsidiary of 1MDB, was crucial to ease 1MDB’s immediate debt problems.
Hence the 10% deposit or RM741 million paid by the IWH consortium went a long way towards paying down 1MDB’s debt service obligations.
Interestingly, and most coincidentally from a timing perspective, 1MDB transferred the ownership of TRX City, which in turn owns Bandar Malaysia, to the MoF on 31 March 2017. This was barely 5 weeks before the above ‘surprise’ termination was announced and deposit refunded.
The question now isn’t only why the MoF refunded the deposit, at the further expense of the tax-payers, instead of 1MDB who were the recipients of the RM741 million.
The more important question now is whether the entire takeover of TRX City and Bandar Malaysia by the MoF was a pre-meditated exercise designed to relieve 1MDB of any financial obligations with respect to the then impending termination.
In other words, the timing of the transactions raises the suspicion that MoF took over Bandar Malaysia with a specific intent to bailout 1MDB with tax-payers’ funds.
The re-payment of the deposit is on top of the RM2.4 billion of 1MDB sukuk secured with the Bandar Malaysia land which the MoF has unconditionally assumed. This was despite, as verified by the Auditor-General, not a single sen of the above sukuk borrowing was utilised for the Bandar Malaysia project. The funds were instead siphoned for 1MDB’s “other corporate purposes”.
In addition, the MoF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
When the 495 acres of prime land was given to 1MDB in 2012, the MoF received nothing in return. However, when it was ultimately returned to MoF, Malaysians are now burdened with combined liabilities of approximately RM5.1 billion.
Hence, Dato’ Seri Najib Razak must explain why even more billions of tax-payers’ funds are being used to bailout his brainchild, 1MDB. More importantly, the Finance and Prime Minister must abide by his brother’s advice, Dato’ Seri Nazir Razak, that the Government must be more honest and transparent with 1MDB, particularly in letting Malaysians know how many more billions are being earmarked to bailout the 1MDB disaster in the months and years to come.
This follows the official announcement last week by TRX City Sdn Bhd, now a wholly-owned subsidiary of MoF, that the above sale was been terminated due to the failure of the consortium to meet their financial obligations despite a dozen extensions having been granted.
Malaysians can only weep in despair as the refund marks another milestone in the continued bailout of the debt-stricken scandal-ridden 1MDB.
When the above acquisition agreement was first signed in December 2015, it was the ‘final’ chapter of the proposed 1MDB rationalisation exercise. The sale of Bandar Malaysia, then a wholly-owned subsidiary of 1MDB, was crucial to ease 1MDB’s immediate debt problems.
Hence the 10% deposit or RM741 million paid by the IWH consortium went a long way towards paying down 1MDB’s debt service obligations.
Interestingly, and most coincidentally from a timing perspective, 1MDB transferred the ownership of TRX City, which in turn owns Bandar Malaysia, to the MoF on 31 March 2017. This was barely 5 weeks before the above ‘surprise’ termination was announced and deposit refunded.
The question now isn’t only why the MoF refunded the deposit, at the further expense of the tax-payers, instead of 1MDB who were the recipients of the RM741 million.
The more important question now is whether the entire takeover of TRX City and Bandar Malaysia by the MoF was a pre-meditated exercise designed to relieve 1MDB of any financial obligations with respect to the then impending termination.
In other words, the timing of the transactions raises the suspicion that MoF took over Bandar Malaysia with a specific intent to bailout 1MDB with tax-payers’ funds.
The re-payment of the deposit is on top of the RM2.4 billion of 1MDB sukuk secured with the Bandar Malaysia land which the MoF has unconditionally assumed. This was despite, as verified by the Auditor-General, not a single sen of the above sukuk borrowing was utilised for the Bandar Malaysia project. The funds were instead siphoned for 1MDB’s “other corporate purposes”.
In addition, the MoF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
When the 495 acres of prime land was given to 1MDB in 2012, the MoF received nothing in return. However, when it was ultimately returned to MoF, Malaysians are now burdened with combined liabilities of approximately RM5.1 billion.
Hence, Dato’ Seri Najib Razak must explain why even more billions of tax-payers’ funds are being used to bailout his brainchild, 1MDB. More importantly, the Finance and Prime Minister must abide by his brother’s advice, Dato’ Seri Nazir Razak, that the Government must be more honest and transparent with 1MDB, particularly in letting Malaysians know how many more billions are being earmarked to bailout the 1MDB disaster in the months and years to come.
Thursday, May 11, 2017
Who made the decision to terminate the agreement for the sale of Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings?
The new season of the blockbuster 1MDB political drama thriller could not have kicked off on a more suspenseful note. Just when everyone thought (and some were hoping) that the show has run its course and the audience have lost interest, the producers of the show have returned with some impeccable scriptwriting to keep Malaysians glued to the ever-evolving scandal.
Soon after the IPIC-1MDB debt “settlement” agreement where the Ministry of Finance (MoF) agreed to assume the guarantee provided by IPIC for 1MDB’s US$3.5 billion worth of bonds, MoF announced that the agreement to sell a 60% interest in Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH) has been terminated.
The world was stunned when MoF’s wholly-owned subsidiary, TRX City Sdn Bhd, which owns Bandar Malaysia announced that the deal with the IWH consortium had collapsed because the latter did not meet payment obligations for its 60 percent stake. The consortium had disputed this claim.
While clarity on the above dispute remains unclear – with neither TRX City or IWH providing any evidence to substantiate their claims, there is now a new mystery as to who authorised the decision to terminate the agreement.
Based on Malaysiakini’s report entitled “Arul is against termination of Bandar M'sia deal”, government sources told the news portal that the RM7.41 billion deal was terminated without notifying Arul Kanda, the President and CEO of 1MDB.
However, at the material times, Arul Kanda was also the Chairman of Bandar Malaysia Sdn Bhd as well as a Board of Director of TRX City, before he was unceremoniously dumped by MoF four days after the termination announcement. The Malaysian Insight had reported sources from MoF citing a “conflict of interest” on the part of Arul Kanda.
While we are keen to find out what exactly is the “conflict of interest” which necessitated Arul’s immediate sacking, we are even more interested to know who actually made the decision to terminate the agreement.
Since Arul Kanda was oblivious to the entire termination exercise, it meant that the Board of Directors of both TRX City and Bandar Malaysia never deliberated and made a decision on the matter involving a whopping RM7.41 billion transaction.
The Malaysian Insight reported that the decision to remove Arul was made by Finance Minister Dato’ Seri Najib Razak and Treasury Secretary-General Tan Sri Irwan Serigar Abdullah. The question then arises as to whether Dato’ Seri Najib Razak made the unilateral decision to terminate the agreement.
If so, it should be clarified as to what powers does the Finance Minister have to make material and critical decisions of Government companies unilaterally, by-passing the companies’ board of directors? Did Dato’ Seri Najib Razak abused his powers as the Finance and Prime Minister to terminate the IWH agreement?
It should be recalled that one of the biggest controversies over the 1MDB scandal was the powers granted to the Prime Minister to make all final key decisions in the investment company. Clause 117 of 1MDB’s Memorandum of Articles and Association dictates that the Prime Minister must give his “written approval” for any of 1MDB’s deals, including the firm’s investments or any bid for restructuring.
It was Dato’ Seri Najib Razak who gave the ultimate approval for all the billions of ringgit of lost investments carried out by 1MDB with Petrosaudi International Limited and Aabar Investment PJS Limited.
The controversial clause has since been deleted upon recommendation by the Public Accounts Committee. However, it appears that Dato’ Seri Najib Razak is still calling the shots behind the scene, bypassing key Treasury guidelines, as well as all forms of corporate governance and accountability which we have demanded to avoid a repeat of the 1MDB imbroglio.
We await the next episode with bated breath.
Soon after the IPIC-1MDB debt “settlement” agreement where the Ministry of Finance (MoF) agreed to assume the guarantee provided by IPIC for 1MDB’s US$3.5 billion worth of bonds, MoF announced that the agreement to sell a 60% interest in Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH) has been terminated.
The world was stunned when MoF’s wholly-owned subsidiary, TRX City Sdn Bhd, which owns Bandar Malaysia announced that the deal with the IWH consortium had collapsed because the latter did not meet payment obligations for its 60 percent stake. The consortium had disputed this claim.
While clarity on the above dispute remains unclear – with neither TRX City or IWH providing any evidence to substantiate their claims, there is now a new mystery as to who authorised the decision to terminate the agreement.
Based on Malaysiakini’s report entitled “Arul is against termination of Bandar M'sia deal”, government sources told the news portal that the RM7.41 billion deal was terminated without notifying Arul Kanda, the President and CEO of 1MDB.
However, at the material times, Arul Kanda was also the Chairman of Bandar Malaysia Sdn Bhd as well as a Board of Director of TRX City, before he was unceremoniously dumped by MoF four days after the termination announcement. The Malaysian Insight had reported sources from MoF citing a “conflict of interest” on the part of Arul Kanda.
While we are keen to find out what exactly is the “conflict of interest” which necessitated Arul’s immediate sacking, we are even more interested to know who actually made the decision to terminate the agreement.
Since Arul Kanda was oblivious to the entire termination exercise, it meant that the Board of Directors of both TRX City and Bandar Malaysia never deliberated and made a decision on the matter involving a whopping RM7.41 billion transaction.
The Malaysian Insight reported that the decision to remove Arul was made by Finance Minister Dato’ Seri Najib Razak and Treasury Secretary-General Tan Sri Irwan Serigar Abdullah. The question then arises as to whether Dato’ Seri Najib Razak made the unilateral decision to terminate the agreement.
If so, it should be clarified as to what powers does the Finance Minister have to make material and critical decisions of Government companies unilaterally, by-passing the companies’ board of directors? Did Dato’ Seri Najib Razak abused his powers as the Finance and Prime Minister to terminate the IWH agreement?
It should be recalled that one of the biggest controversies over the 1MDB scandal was the powers granted to the Prime Minister to make all final key decisions in the investment company. Clause 117 of 1MDB’s Memorandum of Articles and Association dictates that the Prime Minister must give his “written approval” for any of 1MDB’s deals, including the firm’s investments or any bid for restructuring.
It was Dato’ Seri Najib Razak who gave the ultimate approval for all the billions of ringgit of lost investments carried out by 1MDB with Petrosaudi International Limited and Aabar Investment PJS Limited.
The controversial clause has since been deleted upon recommendation by the Public Accounts Committee. However, it appears that Dato’ Seri Najib Razak is still calling the shots behind the scene, bypassing key Treasury guidelines, as well as all forms of corporate governance and accountability which we have demanded to avoid a repeat of the 1MDB imbroglio.
We await the next episode with bated breath.
Tuesday, May 09, 2017
The Ministry of Finance must explain the alleged “conflict of interest” which was the basis Arul Kanda was sacked from the Boards of TRX City and Bandar Malaysia
Last week, I had asked the Ministry of Finance (MoF) to sack Arul Kanda, if he failed to offer his resignation for his role in the entire collapse of the 1MDB rationalisation exercise.
Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.
Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.
Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.
Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.
In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.
The Malaysian Insight quoted sources that “there are potential conflicts of interest”. This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia. What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?
Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards. He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017. Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.
Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another. If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour? Why didn’t the switch take place in March itself, when the transfer was executed?
Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.
The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?
Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.
Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.
Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.
Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.
In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.
The Malaysian Insight quoted sources that “there are potential conflicts of interest”. This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia. What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?
Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards. He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017. Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.
Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another. If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour? Why didn’t the switch take place in March itself, when the transfer was executed?
Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.
The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?
Friday, May 05, 2017
Iskandar Waterfront Holdings Consortium should be forthcoming with the facts and figures in TRX City dispute instead of being cryptic and wishy-washy in statements
The conflicting statements issued by TRX City, a wholly owned subsidiary of the Ministry of Finance, and the consortium led by Iskandar Waterfront Holdings (IWH) have become a complete farce.
In December 2015, 1MDB had announced that it has sold 60 per cent of its Bandar Malaysia interest to the consortium's vehicle, IWH CREC Sdn Bhd (ICSB) for RM7.41 billion.
TRX City Sdn Bhd, which owns Bandar Malaysia and has been taken over by the Ministry of Finance, claimed the agreement had lapsed because the consortium failed to make the necessary payments despite repeated extensions.
In disputing TRX, ICSB said it has made all necessary payments thus far, as outlined in the share sale agreement (SSA), and is also capable of meeting future payments.
"To date, ICSB has fulfilled all the required payment obligations under the SSA on its part towards TRX. ICSB has sufficient financial resources and capabilities to ensure the smooth and successful execution and implementation of the development of Bandar Malaysia," it said in a statement yesterday.
So who is telling the truth? To quote the cryptic ICSB, whose “factual matrix does not fully and accurately reflect the circumstances and conduct of the parties in the matter”?
Thankfully, the matter should be easily clarified resolved. TRX claimed money isn't paid, while ICSB claimed it has, despite providing no evidence of payment.
Therefore, to put the matter to rest, instead of a verbal spat, all ICSB has to do is to provide specific details of (i) what they have paid, (ii) when they made the payments and (iii) what were the agreed payment terms.
Otherwise, there will be no credibility to the counter-claims made by ICSB. On the other hand, if ICSB is able to provide proof of payment in accordance with the agreed terms of the Bandar Malaysia sale, proving unreasonable termination by TRX, I will certainly be demanding a response by TRX.
However, if ICSB fails to substantiate its claims, then Malaysians can see clearly that ICSB is only trying to desperately salvage the broken deal and its heavily damaged reputation, which have caused heavy losses to the share price of all companies related to IWH.
In December 2015, 1MDB had announced that it has sold 60 per cent of its Bandar Malaysia interest to the consortium's vehicle, IWH CREC Sdn Bhd (ICSB) for RM7.41 billion.
TRX City Sdn Bhd, which owns Bandar Malaysia and has been taken over by the Ministry of Finance, claimed the agreement had lapsed because the consortium failed to make the necessary payments despite repeated extensions.
In disputing TRX, ICSB said it has made all necessary payments thus far, as outlined in the share sale agreement (SSA), and is also capable of meeting future payments.
"To date, ICSB has fulfilled all the required payment obligations under the SSA on its part towards TRX. ICSB has sufficient financial resources and capabilities to ensure the smooth and successful execution and implementation of the development of Bandar Malaysia," it said in a statement yesterday.
So who is telling the truth? To quote the cryptic ICSB, whose “factual matrix does not fully and accurately reflect the circumstances and conduct of the parties in the matter”?
Thankfully, the matter should be easily clarified resolved. TRX claimed money isn't paid, while ICSB claimed it has, despite providing no evidence of payment.
Therefore, to put the matter to rest, instead of a verbal spat, all ICSB has to do is to provide specific details of (i) what they have paid, (ii) when they made the payments and (iii) what were the agreed payment terms.
Otherwise, there will be no credibility to the counter-claims made by ICSB. On the other hand, if ICSB is able to provide proof of payment in accordance with the agreed terms of the Bandar Malaysia sale, proving unreasonable termination by TRX, I will certainly be demanding a response by TRX.
However, if ICSB fails to substantiate its claims, then Malaysians can see clearly that ICSB is only trying to desperately salvage the broken deal and its heavily damaged reputation, which have caused heavy losses to the share price of all companies related to IWH.
Incoming RM42 billion taxpayers' bailout: Bandar Malaysia deal collapse, sale of Edra Energy at a loss and 1MDB-IPIC “settlement” mark total failure of 1MDB “rationalisation exercise”
The entire 1MDB “rationalisation exercise” announced as “completed” by the Prime Minister on 2016 New Year’s Day has been completely unravelled with the latest announcement that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed.
The Government of Malaysia, together with its debt-stricken wholly-owned subsidiary, 1MDB has embarked on the above exercise to shed itself of its mountain of borrowings, which at its peak, exceeded RM50 billion.
The rationalisation exercise commenced with the sale of 1MDB’s wholly-owned subsidiary, Edra Energy Sdn Bhd, which held all of 1MDB’s energy assets. Edra Energy had acquired the power plants for a total of RM12.1 billion. In addition, the Government of Malaysia had subsequently extended of concession period of the above plants, as well as awarded several new power plant concessions to 1MDB.
However, despite a global open tender, 1MDB could only secure the best bid of RM9.83 billion which resulted in a direct loss of RM2.27 billion. The losses did not yet include the interest cost of funds borrowed to finance the above acquisitions which amounted to more than RM3 billion over the period.
Worse, the proceeds of the above sale of Edra Energy did not go towards the repayment of the US$3.5 billion worth of bonds which were raised for the power plant acquistion in 2012.
As a result, in a recently announced “settlement” agreement with International Petroleum Investment Corporation (IPIC), who guaranteed the US$3.5 billion worth of bonds, the Ministry of Finance (MOF) had agreed to assume the liability of the US$3.5 billion bonds and relieve IPIC of their obligations.
This had come as a complete shock to Malaysians as 1MDB and the Finance Ministers had previously insisted that 1MDB had already made payments amounting to US$3.51 billion to IPIC and/or its subsidiaries between 2012 and 2014.
Hence the outcome of the “settlement agreement” was that Malaysians will have to foot US$7.01 billion to discharge ourselves from the US$3.5 billion of 1MDB borrowings which 1MDB took to acquire the above power plants. The power plants, in turn have already been disposed of, but without the proceeds from the sale being used to settle the US$3.5 billion bonds.
Now with the latest collapse of the proposed sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings Bhd (IWH), the entire “rationalisation” exercise architected by Arul Kanda and hailed by the Prime Minister and Cabinet has been completely unravelled.
The devastating implication of the rationalisation failure staring at our faces is staggering. Because 1MDB simply does not have any more substantial tangible assets or cash in its books, the Malaysians tax-payer will have to pay for most of 1MDB’s still-outstanding debts including:
(i) RM5 billion 30-year bond guaranteed by the Federal Government issued in 2009;
(ii) US$3.5 billion 10-year bonds issued in 2012, now guaranteed by MOF Inc.;
(iii) US$3 billion 10-year bond issued in 2013, guaranteed with a ‘Letter of Support’ issued by the Minister of Finance, Dato’ Seri Najib Razak;
(iv) US$1.23 billion borrowed from IPIC in 2015, guaranteed by MOF Inc,;
(v) RM800 million loan from SOCSO in 2010, guaranteed by the Federal Government; and
(vi) RM2.4 billion sukuk issued in 2013, which have already been assumed by MOF
The above sums up to RM8.2 billion and US$7.73 billion, or a combined total of RM41.7 billion
While I have called for Arul Kanda, the 1MDB President and CEO to resign or be sacked yesterday, it is the Prime Minister, Dato’ Seri Najib Razak who must be ultimately accountable.
He is not only the official with the ultimate decision-making authority in 1MDB as specified in the company’s Memorandum and Articles of Association, his promises of resolution of the above scandal without a bailout by the Malaysian Government have been irredeemably broken.
What’s more, banking documents exposed by the United States Department of Justice (US DOJ) have shown Dato’ Seri Najib Razak to have received in his personal bank account in Malaysia, the sums of US$731 million originating from 1MDB. He has never denied the US DOJ allegations and steadfastly refused to provide any explanations to the Parliament or the Malaysian public.
With Dato’ Seri Najib Razak’s iron-grip control over UMNO and Barisan Nasional, the country’s legislative, enforcement and prosecution institutions, it is now up to Malaysians to sack the Prime Minister in the coming general elections to ensure that he is made accountable for the single biggest financial scandal in the history of Malaysia.
The Government of Malaysia, together with its debt-stricken wholly-owned subsidiary, 1MDB has embarked on the above exercise to shed itself of its mountain of borrowings, which at its peak, exceeded RM50 billion.
The rationalisation exercise commenced with the sale of 1MDB’s wholly-owned subsidiary, Edra Energy Sdn Bhd, which held all of 1MDB’s energy assets. Edra Energy had acquired the power plants for a total of RM12.1 billion. In addition, the Government of Malaysia had subsequently extended of concession period of the above plants, as well as awarded several new power plant concessions to 1MDB.
However, despite a global open tender, 1MDB could only secure the best bid of RM9.83 billion which resulted in a direct loss of RM2.27 billion. The losses did not yet include the interest cost of funds borrowed to finance the above acquisitions which amounted to more than RM3 billion over the period.
Worse, the proceeds of the above sale of Edra Energy did not go towards the repayment of the US$3.5 billion worth of bonds which were raised for the power plant acquistion in 2012.
As a result, in a recently announced “settlement” agreement with International Petroleum Investment Corporation (IPIC), who guaranteed the US$3.5 billion worth of bonds, the Ministry of Finance (MOF) had agreed to assume the liability of the US$3.5 billion bonds and relieve IPIC of their obligations.
This had come as a complete shock to Malaysians as 1MDB and the Finance Ministers had previously insisted that 1MDB had already made payments amounting to US$3.51 billion to IPIC and/or its subsidiaries between 2012 and 2014.
Hence the outcome of the “settlement agreement” was that Malaysians will have to foot US$7.01 billion to discharge ourselves from the US$3.5 billion of 1MDB borrowings which 1MDB took to acquire the above power plants. The power plants, in turn have already been disposed of, but without the proceeds from the sale being used to settle the US$3.5 billion bonds.
Now with the latest collapse of the proposed sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings Bhd (IWH), the entire “rationalisation” exercise architected by Arul Kanda and hailed by the Prime Minister and Cabinet has been completely unravelled.
The devastating implication of the rationalisation failure staring at our faces is staggering. Because 1MDB simply does not have any more substantial tangible assets or cash in its books, the Malaysians tax-payer will have to pay for most of 1MDB’s still-outstanding debts including:
(i) RM5 billion 30-year bond guaranteed by the Federal Government issued in 2009;
(ii) US$3.5 billion 10-year bonds issued in 2012, now guaranteed by MOF Inc.;
(iii) US$3 billion 10-year bond issued in 2013, guaranteed with a ‘Letter of Support’ issued by the Minister of Finance, Dato’ Seri Najib Razak;
(iv) US$1.23 billion borrowed from IPIC in 2015, guaranteed by MOF Inc,;
(v) RM800 million loan from SOCSO in 2010, guaranteed by the Federal Government; and
(vi) RM2.4 billion sukuk issued in 2013, which have already been assumed by MOF
The above sums up to RM8.2 billion and US$7.73 billion, or a combined total of RM41.7 billion
While I have called for Arul Kanda, the 1MDB President and CEO to resign or be sacked yesterday, it is the Prime Minister, Dato’ Seri Najib Razak who must be ultimately accountable.
He is not only the official with the ultimate decision-making authority in 1MDB as specified in the company’s Memorandum and Articles of Association, his promises of resolution of the above scandal without a bailout by the Malaysian Government have been irredeemably broken.
What’s more, banking documents exposed by the United States Department of Justice (US DOJ) have shown Dato’ Seri Najib Razak to have received in his personal bank account in Malaysia, the sums of US$731 million originating from 1MDB. He has never denied the US DOJ allegations and steadfastly refused to provide any explanations to the Parliament or the Malaysian public.
With Dato’ Seri Najib Razak’s iron-grip control over UMNO and Barisan Nasional, the country’s legislative, enforcement and prosecution institutions, it is now up to Malaysians to sack the Prime Minister in the coming general elections to ensure that he is made accountable for the single biggest financial scandal in the history of Malaysia.
Thursday, May 04, 2017
Who will refund the RM741 million deposit paid by Iskandar Waterfront Holdings to acquire the now aborted Bandar Malaysia equity interest – 1MDB or the Ministry of Finance?
The announcement by TRX City Sdn Bhd, now a wholly-owned subsidiary of the Ministry of Finance (MOF), that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed did not come as a surprise at all.
I have previously questioned 1MDB and the MOF as to why the prized asset was sold to a consortium, led by Iskandar Waterfront Holdings Bhd (IWH), whose total net assets is worth barely RM3.8 billion, less than half the above transaction value. For the financial year ending 31 December 2015, the company’s net profit was before tax was only RM170.4 million.
Despite IWH clearly attempting to bite off more than it can chew, 1MDB had proudly announced on 31 December 2015 that IWH-Bandar Malaysia sale agreement “marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet of Malaysia on 29 May 2015”.
1MDB President and CEO, Arul Kanda had boasted that “the [IWH] Consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP, namely value maximisation, acceptable commercial terms and certainty of transaction execution.”
The deal was expected to be completed by June 2016 but was delayed clearly by IWH’s inability of meet the agreed payment terms and schedules. My questions in Parliament on the project status in November 2016 and April 2017 were met with cryptic replies from the Minister Finance, which revealed that the IWH consortium will pay a 6% interest on outstanding payments until the sums are fully-paid in 2023.
With the deal termination, the MOF have now got to independently service the RM2.4 billion of sukuk which 1MDB took for the purposes of the Bandar Malaysia project, but of which not a single sen was utilised for the property development.
MOF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
Then there is now the all-important question as to who will refund the RM741 million deposit paid to 1MDB vby the IWH Consortium?
Will 1MDB now refund the deposit, or will MOF have to once again bailout 1MDB by forking out the RM741 million as a result of the 1MDB real estate fiasco?
Arul Kanda must now resign as the President and CEO of 1MDB to take responsibility for the disastrous fiasco and embarrassment caused to the Government of Malaysia. If Arul Kanda does not take responsibility for his failure, then we call on the Ministry of Finance, whose Treasurer-General Tan Sri Irwan Serigar is also the Chairman of 1MDB to terminate Arul Kanda’s contract.
Arul Kanda has clearly failed to deliver on his promise and has displayed more hype than substance. His severe error of judgement, choosing the IWH Consortium for the purported “certainty of transaction execution” have now caused massive losses for the MOF.
I have previously questioned 1MDB and the MOF as to why the prized asset was sold to a consortium, led by Iskandar Waterfront Holdings Bhd (IWH), whose total net assets is worth barely RM3.8 billion, less than half the above transaction value. For the financial year ending 31 December 2015, the company’s net profit was before tax was only RM170.4 million.
Despite IWH clearly attempting to bite off more than it can chew, 1MDB had proudly announced on 31 December 2015 that IWH-Bandar Malaysia sale agreement “marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet of Malaysia on 29 May 2015”.
1MDB President and CEO, Arul Kanda had boasted that “the [IWH] Consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP, namely value maximisation, acceptable commercial terms and certainty of transaction execution.”
The deal was expected to be completed by June 2016 but was delayed clearly by IWH’s inability of meet the agreed payment terms and schedules. My questions in Parliament on the project status in November 2016 and April 2017 were met with cryptic replies from the Minister Finance, which revealed that the IWH consortium will pay a 6% interest on outstanding payments until the sums are fully-paid in 2023.
With the deal termination, the MOF have now got to independently service the RM2.4 billion of sukuk which 1MDB took for the purposes of the Bandar Malaysia project, but of which not a single sen was utilised for the property development.
MOF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
Then there is now the all-important question as to who will refund the RM741 million deposit paid to 1MDB vby the IWH Consortium?
Will 1MDB now refund the deposit, or will MOF have to once again bailout 1MDB by forking out the RM741 million as a result of the 1MDB real estate fiasco?
Arul Kanda must now resign as the President and CEO of 1MDB to take responsibility for the disastrous fiasco and embarrassment caused to the Government of Malaysia. If Arul Kanda does not take responsibility for his failure, then we call on the Ministry of Finance, whose Treasurer-General Tan Sri Irwan Serigar is also the Chairman of 1MDB to terminate Arul Kanda’s contract.
Arul Kanda has clearly failed to deliver on his promise and has displayed more hype than substance. His severe error of judgement, choosing the IWH Consortium for the purported “certainty of transaction execution” have now caused massive losses for the MOF.
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