The Finance Ministry's (MoF) decision to call off a deal to sell a 60 percent stake in Bandar Malaysia could be attributed to the "huge discrepancies in expectations" from both sides, in part due to Malaysia’s inability to fulfil its Chinese counterpart’s “shopping list”, according to The Star.
The terms proposed by the Chinese included the expectation that Malaysia would “try its best” to help China win the high-speed rail (HSR) project linking Kuala Lumpur and Singapore.
“There were many differences in the detailed terms between the Chinese and MoF officers. The Chinese side has come out with a shopping list for Malaysia to fulfil, but Malaysian officers cannot commit to many of the proposed terms due to national interest and social reasons,” said the source.
“China said it had done its part in 2015 to help Malaysia overcome its financial problems during critical times. Now Malaysia must play its part to ensure the Chinese investment in Bandar Malaysia gets maximum returns,” added the source.
The buyers for the RM7.41 billion deal were Johor-based Iskandar Waterfront Holdings (IWH) and China Railway Engineering Cooperation (CREC), which is controlled by the Chinese government.
TRX City Sdn Bhd, which is owned by the MoF, said in a statement on Wednesday that the share sale agreement (SSA) entered into on Dec 31, 2015 with the consortium had lapsed.
Prime Minister Najib Abdul Razak was supposed to visit the Bandar Malaysia site on May 3 but the event was abruptly cancelled.
The Bandar Malaysia deal was previously touted as part of the 1MDB rationalisation plan to pare down its debt.
The 486-acre prime land in Sungai Besi had been transferred and placed under the MoF.
The deal had been seen as leverage for CREC to get the HSR contract, as Bandar Malaysia hosts the HSR terminus on the Malaysian side, reported The Star.
"The HSR project is only one of the elements. The other disagreements centred on the ownership and operation of the HSR terminus, and the macro design and concept for the development of Bandar Malaysia.
“Malaysian officers could not agree to proposals that the HSR be owned by China, as it will be against national interest to allow strategic assets to be owned by foreigners. But to the Chinese, you would have to sort these things out yourself,” said the source.
Najib is scheduled to meet with Chinese Premier Li Keqiang on May 13 to sign some deals and will attend the Belt and Road Summit in Beijing on May 14 and 15.
If the deal cannot be rescued, it will cast doubt on the viability of Bandar Malaysia as a development project, reported the daily.
Chinese negotiations
Meanwhile, Nanyang Siang Pau quoted a source as saying that Chinese officials will arrive in Malaysia today to negotiate with their Malaysian counterparts on the Bandar Malaysia deal.
The source told the Chinese business daily that China is not willing to lose the opportunity to supply construction material and techniques to Malaysia, as this will boost China's downstream industries in a foreign country.
This is in spite of the Chinese government’s alleged refusal to authorise CREC's deal with IWH to acquire the stake in Bandar Malaysia, as reported by the Wall Street Journal yesterday.
