Govt moves past 1MDB scandal with the rejuvenated TRX

Lendlease and TRX City have secured a RM2.15b financing to develop The Exchange TRX


The government has decided to lay the 1Malaysia Development Bhd (1MDB) issue to rest and moves to rejuvenate projects related to the sovereign wealth fund which was once tarnished by the scandal that caught the world’s attention.

After taking over the federal administration in May last year, the Pakatan Harapan government has reviewed all mega projects, including the controversial Tun Razak Exchange (TRX) which was previously spearheaded by 1MDB.

“So, rest assured that TRX is detoxified. It has now been cleaned up and is moving forward as a world-class, international, global project,” Finance Minister Lim Guan Eng said.

“This government is committed to rooting out corruption at all levels. This should be a signal that for those investors coming here, rest assured, your investments are protected by the rule of law.”

Lim said he had ordered the review of all government-related projects, including TRX, upon assuming his ministerial post last year.

“The review that we conducted on TRX showed that the government is able to recover all of its opportunity cost and investments made into TRX because of the global and best practices adopted by the present government.”

Upon thorough assessment, the government, he said, decided to resume the entire development with a bailout of RM2.8 billion, avoiding some RM3.51 billion of compensation to the related stakeholders.

“I would also like to stress that the continuation of this project also shows that this administration honours the previous government’s past agreements and welcomes bone-fide investment into Malaysia, as well as world-class investors such as Lendlease Group from Australia,” Lim said further.

Lendlease and TRX City Sdn Bhd have secured a RM2.15 billion financing to develop The Exchange TRX — a 6.9ha parcel that sits on the TRX land plot in the city centre.

The financing facility is secured from the consortium of Hongkong and Shanghai Banking Corp Ltd (HSBC), Malayan Banking Bhd (Maybank), Standard Chartered Bank and Sumitomo Mitsui Banking Corp for a period of five years.

“The arrangement between the joint venture (JV) and the banks is a unique financing structure for such a complicated project. It is only possible because of the faith these financial institutions have in the new government,” Lim said at the project launching and the development financing signing ceremony in Kuala Lumpur yesterday.

Commenting on this, Lim said the willingness of these four financial institutions to provide financing facilities to the project demonstrates how much progress has been made since the new government took office last May.

“We are slowly, but surely exorci- sing the ghosts of 1MDB which have tainted Malaysia and this allows us, once again, to be touted as the destination for both business and investment,” said Lim.

Expected to be completed by 2021, The Exchange TRX would include a lifestyle retail mall, restaurants, hospitality and leisure offerings, residential apartment and a 4ha rooftop city park above the shopping complex.

The gross development value (GDV) of The Exchange TRX, previously known as the Lifestyle Quarter, is estimated to be in excess of RM9 billion.

Besides the financing, TRX City, which holds 40% of the share in the JV, is also expected to fork out a net investment amount of RM1.2 billion, which will be funded by land injection into the JV.

Lendlease, the Australian-listed developer, currently employs 13,000 workers globally, with 18 major urbanisation projects in the pipeline across cities worldwide worth RM207 billion.

On the whole development of TRX, Lim said the RM500 million Prudential Tower is expected to be completed before April.

Additionally, The Exchange 106 skyscraper would be ready for launch by the second half of the year.

With an estimated GDV of RM40 billion, the entire TRX project is slated for completion by 2024.

Meanwhile, Lendlease Asia CEO Tony Lombardo said the company is not worried about TRX’s past reputation due to its links with 1MDB, as the Finance Ministry is its current strategic partner.

This, he said, has given Lendlease the confidence to undertake the mammoth project.

“When we did our due diligence of the project, we are very comfortable with the risk that we would be taking and the deal that we are negotiating with the Ministry of Finance,” he said.