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.
Showing posts with label Iskandar Waterfront Holdings. Show all posts
Showing posts with label Iskandar Waterfront Holdings. Show all posts
Wednesday, November 29, 2017
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.
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.
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