SINGAPORE (Mar 7): Malaysia's Ministry of Finance has now regained control of The Exchange 106 skyscraper at the Tun Razak Exchange in Kuala Lumpur, The Edge Markets reported on Wednesday.
See: MoF buys 51% stake in TRX skyscraper
The move confirmed a report by The Edge Malaysia weekly in its Jan 8 issue that the Ministry of Finance -- via MKD Signature Sdn Bhd -- had acquired the 51% stake in Mulia Property Development Sdn Bhd which is developing the 3.42-acre TRX land. Mulia Property is an indirect subsidiary of Indonesia’s Mulia Group.
See: Has MoF Inc bought into Mulia Property?
According to the weekly, a Companies Commission of Malaysia (SSM) filing on MKD Signature revealed that it is a RM2 company with directors made up by officers of the ministry.
In its written parliamentary reply to Member of Parliament Mohd Rafizi Ramli of the opposition Parti Keadilan Rakyat (PKR), the finance ministry said that MKD Signature and its parent Sentuhan Budiman were incorporated as special purpose vehicles (SPVs) to conduct the ministry’s various strategic investments.
The ministry also said the government was involved in The Exchange 106 to ensure a faster and smoother development.
“Therefore, an SPV (MKD Signature) has been incorporated to take over the 51% shareholding in Mulia Property at the original price to jointly develop The Exchange 106,” says the ministry, without disclosing the consideration of the 51% stake.
Mohd Rafizi had requested the ministry reveal the amount that had been paid and to be paid by the government, as well as payment schedule through any of its agencies or subsidiaries for the acquisition.
He also wanted to verify if any of the SPVs are companies owned by the government through one of its ministries and agencies.
However, MoF did not give an answer to the questions, but instead listed the advantages of The Exchange 106, such that it is slated to be the biggest financial centre in Malaysia.
“1MDB had bought these land at a discounted price from the government, raised debt to develop it, of which the money is now lost [and] then sold [the land] to Mulia Group in its restructuring. And now the government is buying it back by raising new debt from HSBC Bank,” says Mohd Rafizi.
“Injection of the RM2 billion ($673 million) fund via bank borrowings by using the government’s interest in the project as collateral means that 1MDB continues to raise debt that is borne by Malaysians. This is opposed to Prime Minister Datuk Seri Najib Razak’s promises and 1MDB’s statements whereby it said its debt can be settled without dragging Malaysians in,” he adds.
On Feb 28, the government announced that scandal-plagued state investment fund, 1Malaysia Development Berhad (1MDB) would be shut down until its debt are cleared. The United States' Department of Justice alleges US$3.5 billion ($4.6 billion) was misappropriated from 1MDB.
Tan Sri Dr Mohd Irwan Serigar Abdullah, chairman and treasury-general of 1MDB, said he was confident the fund would be able to repay all its debts through the ongoing rationalisation plan.
The plan includes repaying debts through revenue generated from the government's mega projects, including the upcoming The Exchange 106 skyscraper.
"Once the debts are paid, there will be no need for 1MDB," says Irwan Serigar.
