KUALA LUMPUR, June 21 (Xinhua) -- Malaysia said Thursday it will continue the Tun Razak Exchange (TRX) project, a financial district development located in the country's capital city Kuala Lumpur, by injecting an additional funding of 2.8 billion ringgit (700 million U.S. dollars).
Malaysian Finance Minister Lim Guan Eng told a press conference that the Malaysian cabinet has decided to support the TRX project, as completing it will allow the government to realize the project's full value of at least 7.6 billion ringgit.
"This will help to recoup the 3 billion ringgit misappropriated funds from TRX City Sdn Bhd (TRXC) by 1 Malaysia Development Berhad (1MDB), repay all TRXC borrowings, recover all funding investments and opportunity costs as well as potentially achieve a small surplus return," he added.
TRXC is currently a wholly-owned subsidiary of the Ministry of Finance in Malaysia. The company was formerly known as 1MDB Real Estate Sdn Bhd, formerly a subsidiary of 1MDB.
TRXC was transferred to the Ministry of Finance on March 31 last year, as advised by the Parliamentary Public Accounts Committee, because TRXC was unable to secure land sales or bank financing, due to its association with 1MDB.
According to Lim, the decision to continue the project is to help allay concerns amongst the local and foreign investors, who have put in billions of ringgit, on the fate of TRXC.
As of to date, TRXC has sold parcels of land to local and foreign investors such as Mulia Property Development, HSBC, Affin Bank, Lembaga Tabung Haji, WCT and IJM (whose building would be tenanted by Prudential). The Mulia's Exchange 106 Tower and the Prudential building are expected to be ready by early next year.
Lim also said the additional 2.8 billion ringgit capital will be used to complete the infrastructure works in TRX, and will be utilized until 2024, when the whole project is completed.
He said the alternative of not coming up with the additional funding and not completing the project, is to pay 3.51 billion ringgit in compensation claims, as well as an eyesore of an abandoned mega-project in Kuala Lumpur. Besides, the government will also lose the 3.7 billion ringgit transferred earlier to TRXC if aborted the project.
"Injecting the additional 2.8 billion ringgit on top of the 3.7 billion ringgit transferred earlier to TRXC, it would make up total funding by the government to be 6.5 billion ringgit," he said. (1 U.S. dollar equals to 4 Malaysian ringgit)
