Bandar Malaysia – a Fortune 500 project

PETALING JAYA: The request for proposal (RFP) for the estimated RM200 billion Bandar Malaysia project which makes it compulsory for interested bidders to be affiliated to a Fortune 500 company is viewed as a way to rebuild the reputation and credibility of this mega deal.

Analysts contacted by SunBiz opined that it might be the first time such a standard has been set for an RFP by the government.

One analyst who declined to be named said he sees this as an important effort to regain market confidence after going through a lot of controversies. “It’s very critical to ensure that the project will take off, to avoid being another white elephant project,” he told SunBiz.

Another analyst believes the requirement is aimed at drawing interest from foreign investors.

“The Fortune 500 criterion tells you one thing: you need a foreign party. It hints at the direction for the investor selection. I think Fortune 500 is a branding, but there is not much chance for a local company to be selected on its own.”

He went on to say that the winner could be another Chinese firm, if not China Railway Engineering Corp (CREC). CREC is a Fortune 500 company.

“Not many Western companies have strong cash flow. Looking at this, it would probably be a Chinese firm,” he opined.

Meanwhile, PublicInvest Research analyst Tan Siang Hing is of the view that a big company is needed considering the huge size of the development.

“If they can bring in a good partner, it’s not difficult for them to catch up on the progress because the topography of the land is flat and fantastic,” he said when asked if there are any concerns over the Bandar Malaysia project.

Last Friday, the Finance Ministry issued the RFP for the role of master developer for Bandar Malaysia, a project that has been rife with controversy of late.

To ensure financial strength, an interested company or consortium must be an affiliate of a Fortune 500 company; an affiliate of a company which has generated cumulatively in the last three years no less than RM50 billion in revenue from the entire value chain of real estate and associated business; and has experience in international quality real estate development projects.

The sale of a 60% stake in Bandar Malaysia to China’s CREC and Iskandar Waterfront Holdings Bhd (IWH-CREC) and appointment as master developer in 2015 for RM7.41 billion, was one of a three-prong plan to under a debt rationalisation programme for embattled 1Malaysia Development Bhd.

The deal between IWH-CREC and TRX City Sdn Bhd, however collapsed after 17 months, when TRX City terminated the sale due to the consortium’s failure to meet payment obligations. What ensued was a tit-for-tat, with IWH-CREC denying that it defaulted on payments and considering potential legal recourse. The matter was only settled when Prime Minister Datuk Seri Najib Abdul Razak issued a statement announcing that the decision to terminate IWH-CREC’s deal was final.

CREC was in 57th spot on the Forbes 500 List for 2016. The only Malaysian company on the list was Petroliam Nasional Bhd (Petronas) at 125th, down from 68th in the previous year. China’s Wanda Group, which reportedly expressed interest in participating in the Bandar Malaysia project, was ranked 385th.