Indonesia’s Mulia Group buys RM665 million TRX land

KUALA LUMPUR (May 13): Debt-laden 1Malaysia Development Bhd (1MDB) today announced it has sold land for RM665 million to Indonesia's Mulia Group to build its Signature Tower in the Tun Razak Exchange (TRX), a week after news broke out of a controversial land purchase by Lembaga Tabung Haji.

The Signature Tower land was earlier rejected by Tabung Haji despite a RM578 million price tag. Instead, Tabung Haji bought 0.64ha for RM188.5 million that sparked outrage, prompting the pilgrim fund to announce it was selling the condominium land as soon as possible.

“As one of the biggest commercial property developers in Indonesia, we are excited to be embarking on this project to develop the Signature Tower to become the new landmark of Kuala Lumpur city. Our Mulia Group wishes to be an integral part of this iconic state-of-the-art development not only for Malaysia but for the region and beyond," Mulia Group president director and owner Eka Tjandranegara said in a statement issued by TRX.

"We see TRX’s potential to further develop the city’s role as a financial capital, and the Tun Razak Exchange aids our growth and expansion plans. I am committed to personally seeing this project through, drawing from our vast experience," he added.

TRX developer 1MDB Real Estate (RE) chief executive officer Datuk Azmar Talib said in the statement that it was pleased to have the Mulia Group invest in TRX.

"This significant investment underscores foreign investor confidence in Malaysia,” he said.

The only other confirmed deal in TRX now is a 1MDB RE joint venture with global developers Lend Lease for a RM8 billion Lifestyle Quarter to be developed over 6.9ha of the 28haTRX off Jalan Tun Razak.

Government pension fund Kumpulan Wang Amanah Pencen (KWAP) yesterday denied it has committed to TRX, which was touted as a international financial centre when it was formed in 2012.

TRX, formerly known as the Kuala Lumpur International Financial District, was first announced in 2010, and had a false start when a ground-breaking the same year was indefinitely postponed.

1MDB's major partner for the project was supposed to be the Abu Dhabi-based Mubadala Development Company, but to date, there has been no official confirmation on the amount of investment made by the Middle-East consortium in TRX.

In 2012, Prime Minister Datuk Seri Najib Razak established a task force to oversee the completion of TRX over 15 years.

Tabung Haji bought the land at a price 43 times higher than what 1MDB paid for it three years ago from the federal government, while KWAP was reportedly about to buy the land at 30 times the original purchase price.

Tabung Haji's purchase of the plot of land from 1MDB for RM188.5 million, or RM2,774 per sq ft, for the purpose of building a residential tower had created uproar among its depositors, some of whom withdrew their savings at its branch in Shah Alam last Thursday.

Opposition politicians were quick to note that Tabung Haji was paying far more per square foot than what 1MDB had paid at RM64 psf when it first bought the land from the government, leading some to call the deal a "bailout" given 1MDB's massive debts of RM42 billion.

On Saturday, the fund announced it was selling the land it purchased from 1MDB, following public outcry over the transaction.

Tabung Haji chairman Datuk Seri Abdul Azeez Abdul Rahim said Najib had advised him to dispose of the land so that the fund's reputation was not "tarnished" due to its business transaction with 1MDB, and in order to respect the "sensitivity" of depositors.