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New Malaysian financial district takes shape amid 1MDB tumult
[KUALA LUMPUR] Malaysia's newest financial district is taking shape and drawing investment after spending years mired in controversy for its links to an embattled state investment fund.
The Tun Razak Exchange has reached critical mass for its initial phase after HSBC Holdings Plc this month said it will invest US$250 million to build its local headquarters in the development, according to TRX City Sdn Chief Executive Officer Azmar Talib. The 70-acre site in downtown Kuala Lumpur has at times been the focus of domestic furor surrounding 1Malaysia Development Bhd, a government fund which has spurred criminal and regulatory investigations around the world. Named after Prime Minister Najib Razak's father and the country's second premier, the development has a projected sales value of 40 billion ringgit (S$12.9 billion).
"It did have an impact in the past," Azmar said in an interview at the project's gallery near the construction site, referring to the unwelcome spotlight as 1MDB made global headlines for possible money laundering and embezzlement. "We are, however, now in a better position." Construction at the Tun Razak Exchange is proceeding 22 hours a day and the first office building in the development is set to open by the end of 2018. A new mass rail transit may soon stop within the development at a station that will eventually house the only interchange for two train lines in the city center. The project which started around 2013 will be completed over the next 15 to 20 years, the company said.
The outlook is improving for Mr Azmar who has had arguably one of the toughest jobs in property development in Malaysia. Formerly the property arm of 1MDB, his team had to battle negative perceptions of the development as investors became increasingly wary of any project linked to the fund.
The purchase of a plot of land in the district by Lembaga Tabung Haji, the national Hajj pilgrims fund, sparked protests and a public outcry on social media in 2015, prompting Mr Najib to order the trust to sell it just days after the acquisition was disclosed. Second Finance Minister Johari Abdul Ghani said in May 2016 that troubles surrounding 1MDB had deterred banks from extending financing to Tun Razak Exchange's project partners.
TRX City is now under the finance ministry after an ownership transfer this year. About 70 percent of available land in the project has been commercialized and there's no hurry to sell the remaining four plots in the current phase, Mr Azmar said.
"The transfer has provided us more stability and has boosted confidence in the development," Mr Azmar said. "TRX is a national project and we are glad that we can now deliver the project unencumbered by unrelated matters."