This article first appeared in The Edge Malaysia Weekly on December 25, 2017 - December 31, 2017

Bandar Malaysia

THE RM12.35 billion Bandar Malaysia project hogged the limelight in May as Iskandar Waterfront Holdings Sdn Bhd (IWH) and its partner China Railway Engineering Corp Sdn Bhd (CREC) were axed from the development plans.

To recap, IWH and CREC had formed a 60:40 joint venture, IWH CREC Sdn Bhd, which was issued “letter of a preferred bidder” in November 2015 for a 60% stake in Bandar Malaysia.

However, the share sale agreement, which was signed on Dec 31, 2015, was terminated as the joint venture failed to make requisite payments after as many as 12 extensions.

While that may sound a lot to the layman, some say it is common for such a large deal.

The government did not give any notice in terminating the contract.

The Chinese authorities were irked with talk of the consortium not being able to make payments as CREC is a state-owned enterprise.

Some Chinese officials even termed the termination of the deal as “ungrateful”, considering that IWH CREC had acquired the 60% stake in Bandar Malaysia from 1Malaysia Development Bhd (1MDB) for RM7.41 billion when the government was in dire straits as a result of 1MDB’s hefty debts.

The RM741 million cash deposit from IWH CREC in December 2015 was timely as debt-laden 1MDB was cash-tight and had debt obligations to meet.

According to sources, Chinese officials were reluctant to accept the refund of the RM741 million deposit and RM44.88 million interim payment for the relocation of the air force base, Pangkalan Udara Kuala Lumpur.

Another Chinese company, Dalian Wanda Group, owned by China’s richest man Wang Jianlin, was tipped to come into Bandar Malaysia to replace IWH CREC.

A key adviser on the IWH CREC debacle, it seems, was Treasury secretary general Tan Sri Mohd Irwan Serigar Abdullah.

Talk back then was that Irwan was at loggerheads with Arul Kanda Kandasamy, the CEO of 1MDB, who was removed from the board of Bandar Malaysia at about the same time the IWH CREC issue started.

Treasury Secretary General Ministry of Finance

Irwan came under the spotlight when he was appointed chairman of both Bandar Malaysia and TRX City in May, taking over from Arul Kanda.

He had highlighted “strict criteria” for parties that wanted to participate in the Bandar Malaysia project, and said in mid-May that a request for proposal process would be called soon, adding that proposals would be accepted until end-June and a final decision on the master developer would be made on July 14.

“We will put certain conditions this time around [in appointing the master developer]. For example, only renowned companies or those with great experience are allowed. There will be certain criteria and if they meet that criteria, only then can they participate,” he said.

In August, he highlighted that six companies had been taken for a site visit and were expected to submit their proposals by end-August.

More recently, at end-October, Irwan was quoted as saying that the government would announce the master developer of the multibillion Bandar Malaysia development “very soon”.

All eyes will be on him to see whether he will make any progress at Bandar Malaysia next year.

Arul Kanda Kandasamy

CEO
1Malaysia Development Bhd

Arul Kanda, the CEO of 1MDB, has been in the news lately on mounting speculation that he may take over Tan Sri Azman Mokhtar’s role at the helm of sovereign fund Khazanah Nasional Bhd.

While things are still uncertain, Arul and a few others are understood to have been shortlisted by a selection panel, formed to vet the candidates.

Khazanah as at end-2016 had some RM145 billion in assets and is one of the government’s main investment vehicles.

Arul has made a name for himself, taking on a hostile media, both local and foreign, as well as members of the opposition and just about anyone seeking answers on 1MDB.

While critics say his answers often were not convincing, and he skirted the issues by providing standard answers, he stood firm and took much of the heat off some of those involved in the 1MDB case.

Some quarters say he fell out of favour after the Bandar Malaysia issue, but he can still expect to be rewarded for his loyalty.

Datuk Johari Abdul Ghani

Finance Minister II

Since being appointed Finance Minister II in June 2016, Johari has regularly been in the news, usually explaining the government’s stance on issues or firefighting — explaining reasons for unpopular decisions taken by the government.

In a nutshell, he often makes important statements.

But truth be told, he is one of few in Barisan Nasional who have the capacity to understand economic matters and corporate finance, and explain them.

For a while, Johari was the point man, clarifying news on the many problems at 1Malaysia Development Bhd (1MDB). Clearly, his understanding of finance made him essential to the government, putting him a few notches above the rest.

However, for reasons known to him, he exited 1MDB, but took on other challenges and made some strong statements in the process.

In May, Johari said the government would reimburse Proton Holdings Bhd RM1.1 billion in grants for the carmaker’s research and development, but added that when 49% of the company was sold to China’s Zhejiang Geely Holding Group Co Ltd, subsidies to Proton would end.

More recently, he came out saying that the government was ceasing blanket subsidies and instead offering only targeted ones as the RM26 billion allocated for subsidies for food items and agricultural products now was unsustainable.

Nevertheless, sometimes, a change in tack by the government causes problems. For instance, in the middle of this month, Johari said the government might relax the freeze on luxury property projects in KLCC and Bukit Bintang where the land cost is high. This came on the back of a strong statement last month that there would be a blanket freeze on luxury property developments, with the exception of Bandar Malaysia and Tun Abdul Razak Exchange. While it may not always look good for Johari, his importance to the government is clear.

Tan Sri Lim Kang Hoo

CEO
Iskandar Waterfront Holdings Sdn Bhd

May 3 is a day the tycoon will not forget. He was caught off guard by the federal government’s surprise move to terminate the agreement to sell a 60% stake to IWH CREC Sdn Bhd, in which Lim’s vehicle Iskandar Waterfront Holdings Sdn Bhd (IWH) holds a 60% equity interest. Lim controls a 60% stake in IWH while Kumpulan Prasarana Rakyat Johor Sdn Bhd has the remaining 40%.

The abrupt termination of the deal gave Lim a rude jolt. He was unable to proceed with the merger between his companies, namely IWH and public-listed Iskandar Waterfront City Bhd (IWC). The main selling point of the merger was the potential of the Bandar Malaysia project, and not so much for the companies’ tracts in Johor. It meant Lim would not get to unlock the value of his assets.

Consequently, Ekovest Bhd, Lim’s other flagship that owns toll highways, came into the picture and plans to take IWC private.

Lim is said to have fallen out of favour with the powers after the Bandar Malaysia deal fell through.

Said to be a close associate of Datuk Seri Hishammuddin Hussein, will he be able to get back into the good books of the political elites?

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