News: Did MoF Spend RM2bil For 51pc Stake in Malaysia’s Future Tallest Building?

Mar 8, 2018

 
Malaysia’s Ministry of Finance (MoF) has finally corroborated that it purchased a 51 percent stake in the developer building The Exchange 106 tower in a 3.42-acre site at Tun Razak Exchange (TRX) after news broke out on 8 January.

However, the MoF still did not reveal the amount paid by its subsidiary MKD Signature for the controlling stake in Mulia Property from Mulia International, a unit of Indonesia’s Mulia Group.

According to a written parliamentary reply on Tuesday (6 March) to a query by PKR Pandan MP Rafizi Ramli, MKD Signature and its parent firm Sentuhan Budiman were created as the ministry’s special purpose vehicles (SPVs) to undertake strategic investments.

Another objective is for these SPVs to “help MoF undertake its function more effectively and efficiently, as well as to ensure government involvement in various high-impact development are completed within the stipulated time frame.”

“Therefore, a SPV has been incorporated to take over the 51 percent shareholding in Mulia Property at the original price, to jointly develop The Exchange 106,” it explained.

“Once completed, The Exchange 106 will be the third iconic structure in Malaysia, along with the Petronas Twin Tower and Permodalan Nasional Bhd’s Merdeka 118. It will also be the tallest building in Malaysia and the 15th tallest in the world, at a height of 492m,” added the MoF.

But due to the Ministry’s failure to disclose the consideration for the controlling stake in such a large-scale project, Rafizi asked it to reveal the overall amount that has been given and will be paid by the government as well as the payment schedule as this was funded by taxpayers’ money.

At a press conference on Wednesday, Rafizi said that based on two documents submitted to the Companies Commission of Malaysia (SSM) last September, MKD Signature spent a minimum of RM2 billion for the stake thanks to a debt facility from HSBC Bank Malaysia.

Another document revealed that Mulia Property had charged all of its assets, including properties, from same RM2 billon loan from MKD Signature.

“1Malaysia Development Bhd (1MDB) had bought these lands at a discounted price from the government, raised debt to develop it, then sold it to Mulia Group in its restructuring. And now the government is buying it back by raising new debt from HSBC Bank.”

“Injection of the RM2 billion 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,” noted Rafizi.

Furthermore, he wants the Ministry to confirm that MKD Signature and Sentuhan Budiman are entirely owned by the government.
 

Image sourced from TRX

 
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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