KUALA LUMPUR, June 21 (Bernama) -- The Tun Razak Exchange (TRX) project will be completed, despite an additional funding of RM2.8 billion to be injected and atop the more than RM3 billion in government funds misappropriated from TRX City Sdn Bhd (TRXC) by 1Malaysia Development Bhd (1MDB), Finance Minister Lim Guan Eng said.
"Injecting the additional RM2.8 billion, in addition to the RM3.7 billion transferred earlier to TRXC, will bring the total funding by the government to RM6.5 billion," he said.
Lim also revealed that TRXC did not have the funds for infrastructure works to complete the project and is seeking government financial assistance.
"The alternative of not coming up with funding of RM2.8 billion and not completing the project is to pay RM3.51 billion in compensation, as well as an eyesore abandoned mega-project in the heart of Kuala Lumpur," he told a press conference in Putrajaya today.
In that event, apart from having to pay compensation of RM3.51 billion, the government will also lose the RM3.7 billion transferred earlier to TRXC.
"Yesterday, the Cabinet met and decided the TRX project would be completed, with government funding of up to RM 2.8 billion. This decision will help allay concerns amongst local and foreign investors, who have put in billions of ringgit, on the fate of the TRXC."
"The project will also help recoup all misappropriated funds, repay all borrowings, recover all funding investments and opportunity costs, as well as potentially achieve a small surplus return. Completing the TRX will allow the full value of the project, of at least RM7.6 billion, to be realised."
"I have instructed the management of TRXC, represented by its Chief Executive Officer Datuk Azmar Talib and Executive Director Tan Hwa Min, to lodge a report with the investigative panel of 1MDB and the police on the RM3 billion misappropriated funds by 1MDB," Lim said
He added that the Ministry of Finance (MoF) would ensure that the injection of funds is spent prudently to protect the interest of Malaysian tax-payers, the existing foreign and local investors of TRXC.
TRXC, the developer of TRX is currently a wholly-owned subsidiary of the Ministry of Finance (MoF). The company was formerly known as 1MDB Real Estate Sdn Bhd, formerly a subsidiary of 1Malaysia Development Bhd (1MDB).
TRXC was transferred to the MoF on Mar 31 last year as advised by the Parliamentary Public Accounts Committee, because it was unable to secure land sales or bank financing, due to its association with 1MDB.
To recap, TRXC is the owner of the two key real estate projects under the 1MDB umbrella, comprising the 70-acre Tun Razak Exchange (TRX) and the 486-acre Bandar Malaysia development in Kuala Lumpur.
Since 2012, the Federal government had guaranteed borrowings, extended advances and provided transfers to, as well as purchased land from TRXC, amounting to RM 3.688 billion.
Of this RM3.688 billion transfer, a total of RM 3.067 billion was misappropriated by 1MDB, mainly for 1MDB loan repayments.
As a result of the misappropriation, TRXC did not have enough money to fulfill its obligations as the Master Developer for the TRX.
TRX City has to date 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 Exchange's 106 Tower and the Prudential building are expected to be ready by early next year.