China’s Dalian Wanda Group is in talks with Malaysia to take a major stake in a multibillion dollar property project in Kuala Lumpur, sources say, with some suggesting the deal could be inked as early as this weekend, at the Belt and Road Forum in Beijing.

A Malaysian government source told This Week in Asia talks were ongoing between the property and entertainment conglomerate and the Malaysian government regarding the Bandar Malaysia development, but declined to provide further details.

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Singapore’s Straits Times newspaper on Tuesday said the Beijing-based company was the “front runner” to lead the development of the Bandar Malaysia township, a week after Malaysian officials abruptly cancelled a 2015 deal that would have seen state-owned China Railway Engineering Corporation (CREC) and its local partner Iskandar Waterfront Holdings (IWH) take on that role.

Malaysian government critics immediately seized on the announcement last Wednesday to call into question whether China’s big-ticket investments in the country would be realised.

But citing unnamed government officials and financial executives involved in the talks, the Singaporean daily said Prime Minister Najib Razak’s government was unperturbed and pressing ahead with inking a deal with the new Chinese partner. Dalian Wanda was awaiting approval from financial regulators in Beijing, it said.

“Should the proposed plan receive the green light from the Chinese government, an agreement will be signed during a trip by Malaysian Prime Minister Najib Razak to Beijing this week,” the newspaper said.

The Malaysian leader is among 28 world leaders attending the two-day Belt and Road Forum in Beijing starting Sunday, where plans for the vast global trade development strategy masterminded by President Xi Jinping ( 習近平 ) will be discussed.

The failed 2015 deal – which at the time was seen as a white knight move by Beijing to help Malaysia with swirling debts at the 1MDB state investment fund – would have seen CREC and IWH take a 60 per cent stake worth 7.4 billion ringgit (HK$13.2 billion) in Bandar Malaysia. Malaysia’s finance ministry said the deal had “lapsed” because the buyers “failed to meet the payment obligations”.

1MDB had owned Bandar Malaysia until last year, when it was transferred to TRX City, a holding company fully owned by the finance ministry.

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Bandar Malaysia is located in a former air base just outside Kuala Lumpur and is one of Malaysia’s biggest property development projects. It will house the Kuala Lumpur terminus of the yet-to-be-built high-speed rail between Malaysia and Singapore.

Asked about the prospects of the Dalian Wanda deal being inked this weekend, Abdul Majid Ahmad Khan, Malaysia’s former ambassador to China, said “what I can say [is in] the coming meeting, both leaders will confirm and reconfirm projects agreed to which are categorised under [the Belt and Road Initiative]”.

“There will be a joint communique issued which has been endorsed by participating countries,” said Majid, the current president of the Malaysia-China Friendship Association.

Malaysian foreign policy expert Shahriman Lockman meanwhile said the forum would “provide a good setting for concluding an agreement with a new master developer for Bandar Malaysia”.

But “we should be mindful that it’s a very complex deal and it might not be so easy to dot the I’s and cross the T’s before then,” said Shahriman, a senior analyst with the Institute of Strategic and International Studies in Kuala Lumpur.


The surprise cancellation of the deal with CREC last week raised questions on the future of the development, and whether 1MDB was back in the doldrums. After the 2015 deal, Najib had said the fund’s financial woes would soon be resolved. At the height of the crisis, 1MDB owed some US$11 billion in debt. The fund remains at the centre of multiple money laundering investigations around the world, including a civil suit launched last year by the US Justice Department involving a “Malaysian Official 1” widely believed to be Najib. Both the premier and 1MDB deny any wrongdoing.

The government as late as April this year said the Bandar Malaysia project was going ahead as planned along with several other Chinese-backed land development projects including the Forest City project in the country’s southern tip and the Melaka Gateway port project on its west coast.

The Straits Times said the IWH-CREC deal fell through because the two companies had failed to come up with proof of funding for 1.93 billion ringgit, the amount needed to carry out the relocation of the air base sited at Bandar Malaysia’s location.

Some observers had speculated that Najib pulled the plug on the deal because he was wary of the opposition using China as a political bogeyman ahead of a general election later in the year.

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Officials have so far avoided clarifying the disputed circumstances of the deal’s collapse. IWH and CREC said last week the government’s position did “not fully and accurately reflect the circumstances and conduct of the parties in this matter”. They added they were seeking legal advice.

Shahriman, the foreign policy expert, said there was “a lot of wild speculation about the reasons behind the cancellation of the agreement with IWH CREC,” said Shahriman.

“But the reasons are specific to the deal itself – particularly with regard to financing – and has nothing to do with purported anxieties about investments from China, which the Malaysian government continues to welcome,” he added.

Abdul Majid, the former Malaysian envoy to Beijing, said “one speculation is under the new ruling, state-owned enterprises are forbidden to invest in property overseas”. He was referring to Beijing’s intensifying capital controls.


For Dalian Wanda, controlled by China’s richest man Wang Jianlin, the deal could be “strategically reasonable”, one Shanghai-based industry watcher said.

“This is a project that Wanda has previously considered, and it shouldn’t be a surprise that they’re willing to reconsider it,” said Brock Slivers, managing director at the private equity investment firm Kaiyuan Capital.

Slivers said the strict capital controls put in place by China’s State Administration of Foreign Exchange would not be a hindrance to the deal.

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“China has recently responded with new currency controls relating to offshore M&A and investment, but these are significantly misunderstood,” he said.

The forex regulator “hasn’t decreed an end to deal making, just that the government wants a hand in deciding which deals are worthy of support. It’s about risk, not currency,” he added.

Dalian Wanda’s foreign holdings include the US cinema chain AMC Entertainment Holdings and the Swiss sports marketing company Infront Sports & Media. It also has property projects in Britain, Australia, Turkey and the United States. The company did not respond to This Week in Asia queries.