The Malaysian state investment firm 1Malaysia Development Berhad (1MDB) has announced that it has agreed to sell majority of its stakes in a Kuala Lumpur real estate project to a Chinese-owned consortium, for $1.7 billion, in an effort to reduce its accumulated debt.
According to the report of the International Business Times, 1MDB is set to offload 60 percent of its stakes in Bandar Malaysia, the site of an old air force base on the edge of Kuala Lumpur's city center, to have a joint venture with Malaysia's Iskandar Waterfront Holdings and China's state-run China Railway Construction Corporation. Bandar Malaysia was one of the two prime spots in Kuala Lumpur that the 1MDB bought from the government to be turned into a mixed shopping, residential and entertainment center. 1MDB will retain 40 percent of their stakes in the development project.
The transaction is expected to be completed and closed by the end of June this year.
In a report from the Wall Street Journal, 1MDB released a statement last Thursday saying that, "today's agreement marks the final major milestone in the 1MDB rationalization plan."
Malaysian Prime Minister Najib Razak, founder and head of the advisory board of 1MDB, said that all the challenges and allegations that the company has faced are now all in the past.
"Now it is time for us to await the outcomes of the inquiries into the company; to take note of any lessons that need to be learned; and to move on together in a constructive manner," the minister said during his New Year speech.
However, opposition leaders said that the sale of valuable state assets to pay off debt is the result of the reckless expansion of 1MDB throughout the years.
"Today's agreement has confirmed my earlier fears that 1MDB's financial troubles will drag the nation into selling off crucial national assets, to pay off the sovereign fund's massive debts," said Rafizi Ramli, secretary-general of the People's Justice Party.
