Kuala Lumpur’s new financial district “can be profitable”: Ex-PM Najib
Tun Razak Exchange (TRX) City, the new financial district in Kuala Lumpur launched by the government of former Malaysian prime minister Najib Razak, will be completed using fresh government funds of almost $700 million.
TRX was a favourite project of Najib, who named it after his father and Malaysia’s second prime minister Razak Hussein.
“The Cabinet has met and decided the TRX project shall be completed with government funding,” finance minister Lim Guan Eng of the country’s new administration under Prime Minister Mahathir Mohamad announced on June 21, adding that the funds will be used to complete infrastructure works and will be paid in tranches until 2024.
“The alternative would be to pay 3.51 billion ringgit [$921 million] in compensation claims, as well as having an eyesore of an abandoned mega project in the heart of Kuala Lumpur,” he said.
The additional funding brings the government’s total outlay in TRX City to $1.7 billion. When the project is completed, the government hopes to realise its full value, estimated to be at least close to $2 billion.
The government also hopes to recoup allegedly misappropriated funds of about $790 million which it believes were taken from the TRX project to pay off debts of scandal state fund 1Malaysia Development Berhad (1MDB). With the money, it wants to repay all borrowings, recover all funding investments and opportunity costs as well as potentially achieve a small surplus return.
The press quickly called the cash injection into the project a “bailout,” but the government’s strategy indicates that the TRX City could be profitable, a view that it shares with Najib.
First of all, Najib on June 21 in a Facebook post denied that state fund 1MDB had misappropriated money from TRX City, and went on stating that finance minister Lim himself would admit that even with a further cash injection by the government, the TRX project would eventually be worth at least close to $2 billion and “show a profit.”
“Surely it cannot be called a bailout if the money is to be used to generate a profit?” Najib said in the post.
Meanwhile, Lim assured Malaysians that his ministry will ensure that the injection of funds is spent “prudently” to protect the interest of tax-payers, as well as the existing foreign and local investors of TRX City.
However, the government’s help for TRX City does not include Bandar Malaysia, a mixed-use real estate and infrastructure project in southern Kuala Lumpur which is owned by TRX City. Since the key purpose of Bandar Malaysia was to be a transport hub and the terminus for the scrapped high-speed rail link from Singapore, it is unclear what will happen to it in the future. Property valuation already took a dive, much to the dislike of domestic and foreign (mainly Chinese) investors.
Tun Razak Exchange (TRX) City, the new financial district in Kuala Lumpur launched by the government of former Malaysian prime minister Najib Razak, will be completed using fresh government funds of almost $700 million. TRX was a favourite project of Najib, who named it after his father and Malaysia's second prime minister Razak Hussein. "The Cabinet has met and decided the TRX project shall be completed with government funding,” finance minister Lim Guan Eng of the country's new administration under Prime Minister Mahathir Mohamad announced on June 21, adding that the funds will be used to complete infrastructure works and...
Tun Razak Exchange (TRX) City, the new financial district in Kuala Lumpur launched by the government of former Malaysian prime minister Najib Razak, will be completed using fresh government funds of almost $700 million.
TRX was a favourite project of Najib, who named it after his father and Malaysia’s second prime minister Razak Hussein.
“The Cabinet has met and decided the TRX project shall be completed with government funding,” finance minister Lim Guan Eng of the country’s new administration under Prime Minister Mahathir Mohamad announced on June 21, adding that the funds will be used to complete infrastructure works and will be paid in tranches until 2024.
“The alternative would be to pay 3.51 billion ringgit [$921 million] in compensation claims, as well as having an eyesore of an abandoned mega project in the heart of Kuala Lumpur,” he said.
The additional funding brings the government’s total outlay in TRX City to $1.7 billion. When the project is completed, the government hopes to realise its full value, estimated to be at least close to $2 billion.
The government also hopes to recoup allegedly misappropriated funds of about $790 million which it believes were taken from the TRX project to pay off debts of scandal state fund 1Malaysia Development Berhad (1MDB). With the money, it wants to repay all borrowings, recover all funding investments and opportunity costs as well as potentially achieve a small surplus return.
The press quickly called the cash injection into the project a “bailout,” but the government’s strategy indicates that the TRX City could be profitable, a view that it shares with Najib.
First of all, Najib on June 21 in a Facebook post denied that state fund 1MDB had misappropriated money from TRX City, and went on stating that finance minister Lim himself would admit that even with a further cash injection by the government, the TRX project would eventually be worth at least close to $2 billion and “show a profit.”
“Surely it cannot be called a bailout if the money is to be used to generate a profit?” Najib said in the post.
Meanwhile, Lim assured Malaysians that his ministry will ensure that the injection of funds is spent “prudently” to protect the interest of tax-payers, as well as the existing foreign and local investors of TRX City.
However, the government’s help for TRX City does not include Bandar Malaysia, a mixed-use real estate and infrastructure project in southern Kuala Lumpur which is owned by TRX City. Since the key purpose of Bandar Malaysia was to be a transport hub and the terminus for the scrapped high-speed rail link from Singapore, it is unclear what will happen to it in the future. Property valuation already took a dive, much to the dislike of domestic and foreign (mainly Chinese) investors.
