Govt to spend RM2.8b to complete Tun Razak Exchange
PUTRAJAYA: The Tun Razak Exchange (TRX) project will be completed using an additional RM2.8 billion infusion from the government, Finance Minister Lim Guan Eng said yesterday.
Despite the development’s close links to the tainted 1Malaysia Development Bhd (1MDB) and suspicion it was used to misappropriate over RM3 billion, Lim said the government decided the best option was to finish the financial hub.
“The Malaysian Cabinet has decided to support the TRX project to recoup all misappropriated funds, repay all borrowings, recover all funding investments and opportunity costs as well as potentially achieve a small surplus return,” Lim said.
He said the payment will be made in tranches until the project’s completion in 2024.
This year will see an injection of RM344 million and Lim has promised to conduct a value engineering exercise and see where the government can reduce costs.
“Our choices of options have been taken away from us. For us, it’s about damage control and how to avoid paying the highest cost. RM3 billion has gone to 1MDB. If we cut losses now, we have to pay RM3.5 billion. What choice do we have?
“So we choose to put in RM2.8 billion to avoid paying RM3.5 billion compensation and at the same time, we have a bright prospect when the project is completed to fully realise its value of RM7.6 billion. Not just allow us to recoup but also repay TRXC’s borrowings,” he said.
In total, the federal government has issued a payment of RM6.5 billion to complete the project.
Lim also said that due to the project’s links with 1MDB, it could not source funding from other parties.
Regarding the previous Barisan Nasional (BN) government’s promise of tax incentives for those who have invested in TRX, Lim said his focus is on ensuring the project is not abandoned and will not shake investor confidence.
He also said the waiver of the Goods and Services Tax (GST) is now “academic” as the consumption tax has been removed.
“If TRX can be completed, it can generate more confidence. First, we want to reassure foreign investors. Yes, we are unhappy but we cannot afford to see a massive eyesore, abandoned mega project in the middle of Kuala Lumpur’s heart,” said Lim.
The entire project is currently 80 per cent completed. Its signature tower, known as The Exchange, is at 90 per cent completion.
Those who have purchased land in the development include HSBC, Affin Bank, Lembaga Tabung Haji, WCT, IJM, Prudential and Mulia Property Development.
Lim then recapped that TRX City Sdn Bhd (TRXC), which is a wholly-owned subsidiary of the Finance Ministry, is the owner and master developer of two key real-estate projects under the 1MDB umbrella.
It comprises the 70-acre TRX and the 486-acre Bandar Malaysia development in the nation’s capital.
The federal government, then under BN, guaranteed borrowings, extended advances and provided transfers to, as well as purchased land from master developer TRXC amounting to RM3.7 billion, where a total of RM3,067 million was misappropriated by 1MDB for its loan repayments.
“As a result of the misappropriation of funds, TRXC does not have enough money to fulfil its obligations of Master Developer for TRX,” said Lim on the Finance Ministry’s whollyowned subsidiary.
When asked who authorised the transfer of money to 1MDB, Lim said that he will let the investigative panel handle it as it involves individuals and told the press that the company’s CEO Datuk Azhar Talib will be informing the panel.
Prime Minister Tun Dr Mahathir Mohamad had previously announced, after chairing the first Pakatan Harapan Cabinet meeting, that TRX would be among the megaprojects which may be axed as part of the nation’s austerity measures.