Who decided to sell Bumi land to 1MDB, asks PAS

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(May 14): With the controversy over the sale of 1Malaysia Development Berhad's (1MDB) land in the Tun Razak Exchange (TRX) financial district to Lembaga Tabung Haji still raging, a PAS leader has upped the ante by asking who made the decision to sell the land, originally earmarked for Bumiputera, to the state investment vehicle.

PAS central committee member Dr Dzulkefly Ahmad also asked what was the original price of the land in the Kuala Lumpur city centre, which was previously owned by Pelaburan Hartanah Berhad (PHBB).

The land along Jalan Tun Razak was earmarked for Bumiputeras to increase their property ownership during the administration of Prime Minister Datuk Seri Najib Razak's predecessor Tun Abdullah Ahmad Badawi.

"Who was the one who directed and ensured the agenda to sell PHBB trophy asset to 1MDB?" asked the former Kuala Selangor federal lawmaker in an interview with The Malaysian Insider.

"It was said the land was allocated to PHBB during Tun Abdullah's era with the aim of developing it so that Bumiputeras still have an opportunity to invest in prime real estate by way of shares, investments and shariah-compliant Real Estate Investment Trust," he said.

It was reported that 1MDB only paid RM64 psf when it bought the 30ha from Putrajaya four years ago.

Dzulkefly also asked what other compensation or lands Putrajaya gave to PHBB in return for selling its land to 1MDB.

"If I am not mistaken, Umno Youth chief Khairy Jamaluddin had raised this issue before but it fizzled out halfway. Is it because he was muzzled?

"I am giving the opportunity to Najib to answer and explain first, before I give my views and criticism.”

At the height of the controversy last week, Khairy had demanded answers from both the Finance Ministry and Tabung Haji.

TRX, formerly known as the Kuala Lumpur International Financial District, was first announced in 2010, and had a false start when a ground-breaking the same year was postponed.

1MDB's major partner for the project was supposed to be the Abu Dhabi-based Mubadala Development Company, but to date, there has been no official confirmation of the amount of investment made by the Middle-Eastern consortium in TRX.

In 2012, Najib established a task force to oversee the completion of TRX over 15 years.

It wasn't until three years later, in 2015, that 1MDB's real estate arm, 1MDB RE, finally announced a joint venture to develop the Lifestyle Quarter of TRX, after striking a deal with Australian construction giants Lend Lease.

Lend Lease, as per the deal announced in March this year, owns a 60% stake in the joint venture, while 1MDB RE holds the rest.

Even so, no details of the financial arrangements with Land Lease have been released – whether Land Lease is injecting cash into the joint venture, what is the price per square foot and 1MDB RE’s contribution. Until and unless those details are revealed, it is impossible to assess if this was a good deal for 1MDB.

Though TRX was touted as a financial hub, the current development entails a retail mall, a hotel, and several residential towers.

The estimated completion date for this initial phase has been set at between 2017 and 2018.

The gross development value (GDV) of this quarter is RM8 billion, a small portion of the initial estimate of RM40 billion GDV for the entire TRX project.

Construction of the country's biggest Mass Rapid Transit (MRT) station is also due for completion in 2017.

TRX was supposed to host 25 buildings with 3,800 residential units, with Najib previously claiming some 250 of the world's best companies would set up shop in the financial district.

But to date, there had been no official announcement of global conglomerates joining in TRX, except for Lend Lease – which had previously developed the Kuala Lumpur City Centre (KLCC) and other key developments in Malaysia.

Over the years, 1MDB had progressively raised more questions than answers about its dealings.

It currently sits on debts of around RM42 billion, after going on a global bond-raising exercise, and even keeping funds in the Cayman Islands.

It has admitted to cash-flow problems and is undergoing a strategic review, which could include disposing of some of its assets.

Formerly the site of civil servants’ quarters, 1MDB's recent sale of 0.63ha of TRX land to Tabung Haji is 43 times higher than the price 1MDB paid for it, while the sale of another plot to KWAP is more than 30 times the initial purchase cost.

Tabung Haji, when it bought the land which it now intends to sell off amid public pressure, only intended to build a residential tower. – The Malaysian Insider