Malaysia’s $1.8 billion rail project with China falls through

A $1.8 billion mega-joint venture involving Chinese railroads in Malaysia has collapsed after failing to meet the terms of an agreement.

A joint statement issued by the two partners on Wednesday (July 14) said an agreement involving the government, the developer and its Chinese partner in a major joint venture equity deal had lapsed on May 6 this year after the conditions were not met.

Leading Malaysian developer Iskandar Waterfront Holdings (IWH) and its Chinese partner China Railway Engineering Corporation (CREC) had planned to acquire a 60 percent stake in the Bandar Malaysia mixed-use commercial project in the Malaysian capital of Kuala Lumpur for 7.41 billion ringgit ($1.77 billion). The mixed-use project is owned by TRX City, a subsidiary of the Malaysian Ministry of Finance.

“Bandar Malaysia was originally located at the proposed terminus of a high-speed rail link between Kuala Lumpur and Singapore, but the project was later halted.

“TRX City’s plan to build a large mixed-use commercial project at the abandoned high-speed rail terminal with Iskandar Waterfront Holdings and its partner China Railway Corporation has had its ups and downs.

The two sides announced the start of the project in 2011, but then announced its cancellation in 2017; they resumed cooperation in 2019.

According to Reuters, the parties have struggled to find a solution to maintain the partnership.

A joint statement released by the parties on Wednesday noted, “Despite such efforts, to date, the parties have been unable to agree on the terms of the extension.”

To participate in the joint venture, Iskandar Waterfront Holdings and China Railway have paid a deposit and advance payment of 1.24 billion ringgit to the Malaysian government. The plan also led to Iskandar Waterfront Holdings’ plan to go public in the first half of this year to raise at least 5 billion ringgit. Now that the project has been cancelled, the Malaysian government will refund the deposits and advance payments already made by Iskandar Waterfront Holdings and China Central Railway.

A statement issued by both sides said TRX City would continue to work on the project and that “any future commercial and commercialization plans will take into account market conditions and the country’s socio-economic agenda”.

The statement also said that China Railway Corporation will also continue to work closely with TRX City on any project in Malaysia.

“The Malaysia City mixed commercial project was first launched by former Malaysian Prime Minister Najib Razak to ease the debt burden of scandal-ridden state fund 1Malaysia Development Berhad (1MDB), but collapsed in May 2017 due to a payment dispute.