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May 23, 2017

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Chinese dealings in Malaysia under scrutiny

KUALA LUMPUR -- China's growing involvement in Malaysia has been praised and panned in recent years.

The slew of projects and investments by China's state-owned enterprises and their soft loans have been a major talking point in Malaysia since 2015, when they helped prop up state fund 1Malaysia Development Berhad (1MDB), which was burdened by huge debts.

China's deep financial involvement in Malaysia came under fresh scrutiny last week with the collapse of the Bandar Malaysia township deal.

TRX City, formerly a unit of 1MDB but now taken over by the Ministry of Finance, aborted the 7.41-billion-ringgit (US$1.7 billion) agreement with a Malaysia-China joint venture firm.

Prime Minister Najib Razak was slated to make a landmark visit to the Bandar Malaysia site, at the edge of downtown Kuala Lumpur, last Wednesday — the same day the deal was aborted.

Signs of trouble came just hours before Datuk Seri Najib was expected to arrive, when the owners of the 150-billion-ringgit project began receiving calls from VIPs asking if the 5 p.m. event was canceled.

This was the first time even senior executives at TRX City had heard about such a possibility that would see hundreds of thousands of ringgits wasted on a lavish non-event. A TRX City staff member told The Sunday Times: "We heard about it only from external parties. My colleagues were at a loss for words."

Later that evening, the firm announced that the sale of 60 percent of Malaysia's signature 197-hectare township had been scrapped.

The joint venture firm, made up of Malaysia's Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corp (CREC), is contesting the government claim that it failed to pay up according to an agreed schedule, despite getting more than 10 extensions.

This is amid reports that the deal soured due to other demands by the Chinese side, including alleged preferential treatment in the Kuala Lumpur-Singapore High-Speed Rail, which is set to have a terminus in Bandar Malaysia.

There are numerous theories as to why Mr. Najib decided to cancel the deal. But the main thread has been that China wanted more than Malaysia could give.

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