Business

Thursday August 9, 2012

RM2bil more for Tun Razak Exchange?

By B. K. SIDHU and YVONNE TAN
starbiz@thestar.com.my


1MDB says investor’s initial response ‘very positive’

KUALA LUMPUR: The key strategic investor that has pledged to invest RM3.5bil for the first phase of the Tun Razak Exchange (TRX) is considering investing an additional RM2bil to fund the entire infrastructure development cost for the TRX project.

“For phase 1 the cost is about RM3.5bil and we have locked in a strategic investor. We are also talking to them to fund the entire infrastructure (for TRX) which will be an additional RM2bil,'' said 1Malaysia Development Bhd (1MDB) chief executive officer Datuk Shahrol Halmi in an interview yesterday.

Declining to name the investor, he said “the initial response has been very positive.''

TRX, formerly known as the Kuala Lumpur International Financial District (KLIFD), is a 70-acre strategic real estate development off Jalan Tun Razak and 1MDB is its master developer.

<B>Shahrol:</B> ‘It is not nice to name the parties (as yet).’’ Shahrol: ‘It is not nice to name the parties (as yet).’’

The project, comprising 28 buildings, is expected to bring in RM26bil in gross development revenue, and will be completed over a 15-year period. The first phase will comprise three buildings on top of a mall.

Recently the Prime Minister announced that 1MDB had locked in a key strategic investor that secured foreign direct investment flows of RM3.5bil for the project but the identity and details of the investor would only be announced in September.

But the market has begun speculating that the strategic investor is a Middle Eastern group.

To this Shahrol said: “We are in the midst of ironing out the finer details and it is not nice to name the parties (as yet).''

With the additional RM2bil, the foreign direst investment would swell to RM5.5bil, and though the investment could be staggered over a period of time, it does lock up an investor for the entire infrastructure, which is a critical component of the development of such a scale.

Since the announcement, 1MDB has also been receiving enquiries from several parties and Shahrol said: “The enquiries are from investors, potential tenants and even technology providers ... all are coming.''

Some Japanese investors are keen to be part of the development and to this Shahrol said: “The Japanese are definitely interested as they feel they have the technology that they can bring in. Fortunately for us, once the momentum builds up with phase one, and hopefully we will have a mix of partners, we will be in a position to open more plots up and even open for international bidding.

“There are parties that are keen to invest in the TRX but it is (important) to lock in the strategic investors first. We have one investor currently and we hope to lock in another one (soon).''

The exchange is one of the Entry Point Projects under the Economic Transformation Programme and is poised to be a catalyst for Kuala Lumpur to be a leading global centre for international finance, trade and services.

TRX is expected to house 250 international companies, creating 500,000 jobs and 40,000 knowledge workers, specifically for financial services, by the time it is fully completed.

  • E-mail this story
  • Print this story
  • Bookmark and Share