PUTRAJAYA: The Government lifted the uncertainties hanging over the Tun Razak Exchange (TRX) development by promising to inject more funds to see through its completion.
The decision would help investors who have sunk in billions into the 70-acre development at the heart of Kuala Lumpur, yet are unable to get financing from banks due to it being part of scandal-riddled 1Malaysia Development Bhd (1MDB).
TRXC was originally a subsidiary of 1MDB and set up specifically to undertake the development. When 1MDB could not meet its debt obligations, TRXC was transferred to the Finance Ministry in March 2017.
When Barisan Nasional lost the Federal Government to Pakatan Harapan on May 9, the situation became worse for investors.
Lim said the present government’s commitment would help allay concerns among local and foreign investors.
“There are wide ramifications if the project is not completed. We must make sure that investors are reassured that their investments will not just disappear,” said Lim during a press conference at the Treasury building here.
Lim also disclosed that more than RM3bil had been “misappropriated” from TRXC by 1MDB and were mainly used for its loan repayments.
Because of this, Lim said TRXC did not have the necessary funds to complete the project and sought the Government’s assistance.
The Government, he said, had extended advances, provided transfers and even bought land from TRXC for a total RM3.69bil since 2012.
Injecting RM2.8bil into the project, said Lim, was a better alternative to paying compensation claims.
“The alternative is to pay RM3.51bil in compensation claims, as well as an eyesore of an abandoned mega-project in the heart of Kuala Lumpur,” he said.
In addition, the Government will also lose the RM3.7bil that has already been sunk into TRXC so far.
TRXC is the master developer of two projects – the TRX financial district and the 486-acre Bandar Malaysia development.
Including the RM2.8bil injection into TRXC, the Government’s total funding outlay into the company is RM6.5bil.
Lim said that by completing TRX, the Government expected to realise at least RM7.6bil, which would go towards repaying the TRXC borrowings, including the sums misappropriated by 1MDB, recover all funding investments and opportunity costs, as well as potentially achieve a small surplus return.
TRXC has, to date, sold parcels of land to local and foreign investors including Mulia Property Development, HSBC and Affin Bank.
On whether the name Tun Razak Exchange would remain, Lim said it was the prerogative of Prime Minister Tun Dr Mahathir Mohamad, although he was of the opinion it need not change.
“It is called Tun Razak, not Najib Razak.”
Meanwhile, Datuk Seri Najib Tun Razak has cautioned Lim for making factually incorrect statements about TRXC, saying the take-over of TRXC by MOF Inc for a nominal sum of RM1 effective March 31, 2017, was a key step in the broader 1MDB rationalisation plan.
“Lim himself admits that even with a further ‘up to’ RM2.8bil injection by MOF Inc, the TRX project will be worth at least RM7.8bil and show a profit.
“Surely it cannot be called a bailout if the money is to be used to generate a profit?” Najib said in a Facebook posting last night.
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