BY Roznah Abdul Jabbar
With all the uncertainties surrounding 1Malaysia Development Bhd (1MDB), many are concerned about the future of Bandar Malaysia, a key project under 1MDB, which is envisioned to be the catalyst for the transformation of Greater Kuala Lumpur.
The 486-acre Bandar Malaysia, to be built on the plot of former Sungei Besi Royal Malaysian Airforce base, elicited many questions about its necessity in the face of the current economic state.
The project, which was announced in 2011, was expected to see residential project launches within two years, but the fulfilment of the promise is now long overdue.
To ease its financial burden, 1MDB had to recently sell 60 per cent of the project through a deal with the consortium of Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Group Ltd (CREC) for RM7.41 billion, with the remaining 40 per cent held by the Ministry of Finance.
The IWH-CREC consortium later announced that they were actively sourcing for local and international investors to develop Phase 1 of Bandar Malaysia.
Many Malaysians, including property experts, have been left in perplexity over the years on the state the project.
A property buyer said affordable housing was promised during the announcement of the mega project but until today, nothing has been launched.
“We are only seeing announcements that it will be built, but nothing seems to be moving,” he said.
Amidst this, it was reported recently that the first phase of Bandar Malaysia, which has a gross development value (GDV) of RM50 billion to RM60 billion to be developed over five years, will start next year.
Executive vice chairman of IWH, Tan Sri Lim Kang Hoo, said the first phase of the Bandar Malaysia development will include the construction of 5,000 units of affordable homes, and a mass rapid transit and light rail transit facilities, among others.
“The total project, which consists of three to four phases, will take up to 25 years and will have a total GDV of around RM200 billion,” he said.
It was also reported that Bandar Malaysia will be backed by eight banks to finance the project, with an asset base of more than RM53.39 trillion.
The local banks funding the development and construction works are Affin Bank, RHB, Maybank and CIMB, while the international banks include HSBC, Industrial and Commercial Bank of China (ICBC), the Bank of China and China Construction Bank (CCB).
In addition, Prime Minister Datuk Seri Najib Tun Razak announced several incentives to be given to the master developer of Bandar Malaysia and its subsidiaries, including 10 years of income tax exemption; eight years of stamp duty, real property gains tax and withholding tax exemptions; as well as import duty exemptions on selected construction materials which are not manufactured in Malaysia.
Besides that, the government is also considering granting tax incentives to the firms and financial institutions which take part in the project. Other incentives such as industrial building allowance, accelerated capital allowance, deduction of rental payments, stamp duty exemption for service agreements or pre-package incentives for other investors and tourism operators are also under consideration.
According to Najib, this move is to attract more companies and individuals around the world to Bandar Malaysia.
Although the move received criticism from the rakyat, the project seems to be moving without any hindrance.
According to AmResearch Sdn Bhd, CREC’s involvement in Bandar Malaysia, which is to be the planned terminus for the proposed KL-Singapore High-Speed Rail (KL HSR) project, would certainly give the construction giant a head start when bidding for this massive rail project.
AmResearch said the deal could bring about significant positive implications on the property market and the actual development of Bandar Malaysia is only expected to take off in 2018.
To be developed over 15 to 25 years, Bandar Malaysia is projected to generate a GDV of RM150 billion.
“Future linkages have also been mooted for the MRT lines 2 and 3, KTM Komuter, Express Rail Link (ERL) to KLIA and KLIA2, Bas Rapid Transport (BRT), as well as connections to 12 major highway networks. The latter may include the proposed DUKE 3, we believe,” said AmResearch.