News: Did Putrajaya Pay 1MDB Debt From RM2bil Land Sale to BNM?

Feb 8, 2018

 
Bank Negara Malaysia (BNM) Governor Tan Sri Muhammad Ibrahim insisted that Putrajaya did not force it to buy a 22.5ha land in Kuala Lumpur at a high price of RM2 billion.

“It was purchased at market value and it was an arm’s length transaction,” he said on Friday (2 February). In such deals, the buyer and seller pursue their own interest and are not under any pressure to follow the other party’s demands.

“We are basically the one who requested the government to sell the land to us… (It was) not the government who wanted to sell the land to us. We had been trying to convince the government for many, many months (to sell us the land), and it so happened that last November or December, the negotiations between us came to fruition, (and) we are quite happy to acquire the land at that price.”

The Central Bank’s acquisition sparked controversy mainly because before it was announced on 4 January, 1Malaysia Development Bhd (1MDB) revealed on 27 December 2017 that it had repaid about US$600 million to Abu Dhabi’s International Petroleum Investment Co (IPIC). However, the Federal Government declined to disclose where it obtained the money for the huge payment.

As such, there are rumours circulating the Putrajaya managed to repay 1MDB’s US$600 million debt thanks to BNM’s generous offer for the land.

Asked to comment on this, Muhammad said: “That is the Federal Government’s business (on how it uses the proceeds). It’s best to ask them, not us. As far as we are concerned, we wanted to buy the land for our own development.”

“The acquiring of land is nothing new to us. We have acquired many (pieces of) land over many decades. It’s not as if it’s something that we have done for the first time. And when we acquire land, we acquire at market and hence, we make sure that it conforms to the best market practices and norms,” he explained.

Another reason for the controversy is that the land was sold at prevailing market rate at around RM823 psf based on its total area of 2.43 million sq ft.

There had already been many prior transactions between government agencies wherein land was sold at below market rate, especially for plots to be used for schools.

In fact, BNM said that land will be utilised for the International Shari’ah Research Academy for Islamic Finance and the relocation of Global Islamic Finance University (INCEIF). It will also serve as an educational hub for the financial services sector.

“If you look at the map of the land, it is actually contiguous to our Sasana Kijang complex. We promote a lot of training and development, and (part of that) is to turn INCEIF into a bigger and greater university for Islamic finance. They will use that new land as a campus for them,” added Muhammad.
 

Image sourced from NST

 
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
 

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Shaiful Safar
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