COMMENT | The collapse of a RM7.41 billion deal to develop Bandar Malaysia is a clear sign of bigger problems ahead for Prime Minister Najib Abdul Razak and the state investment fund, 1Malaysia Development Bhd (1MDB).

Even Moody’s said that 1MDB’s agreement to resolve a debt dispute with Abu Dhabi's International Petroleum Investment Co (IPIC) may not be the end of the tunnel, as market sentiment depends largely on how 1MDB will settle bond payments in the future.

Now, with the latest development on Bandar Malaysia, we know we are in deeper s**t as the debts would have to be paid by Malaysian taxpayers.

According to the Wall Street Journal, despite 12 extensions were given to the consortium, the Chinese government had refused to authorise the investment by the China Railway Engineering Corporation to acquire 60 percent stake in Bandar Malaysia on the basis that “the 1MDB fund hasn't published financial statements for 2015 or 2016, so its current financial situation is unclear”.

This is seen as a slap in the face of Najib, who had recently visited China and took home what he calls “big investments”.

The initial announcements included a RM55 billion East Coast Rail Link (ECRL) project which was revealed later as nothing but a 20-year low-interest soft loan by the Export-Import Bank of China (Exim) and the main contractor would be China Communications Construction Co.

While China may see it as taking money from the left pocket to put into the right pocket (at least in my opinion), Najib has incurred another major debt of RM55 billion...