KUALA LUMPUR – As Malaysia seeks to move beyond the excesses associated with nearly a decade of rule under ex-Prime Minister Najib Razak, one of his pet projects continues to rise irreversibly skyward to become the tallest building in Southeast Asia.
Just months from completion, Exchange 106 — “Najib’s tower” — is one of only a few mega-projects cleared by a new government that has pledged to review deals struck by the previous administration.
Yet the 492-meter skyscraper remains an irritant as they try to dismantle Najib’s legacy after the May 9 election upset, which drove the National Front coalition out of power after it had run Malaysia for the six decades since independence from Britain.
They can order that his photos be removed from government offices and that posters carrying his “1Malaysia” slogan be taken down. One staff member at the library of a government agency said they had even received a directive to “hide Najib’s books” by not having them displayed on front desks.
But it doesn’t make sense to dismantle a giant skyscraper that is almost finished.
Symbolically, the building will rise above the famous Petronas Twin Towers built during the previous term of Prime Minister Mahathir Mohamad, Najib’s mentor-turned-foe.
But financially it could still hurt Malaysia. The new government has said that funds raised to finance the project by the scandal-plagued state fund 1MDB had not been used for that purpose, and that its Indonesian developer needs an “injection of funds” from the government to keep the project on track.
“The true picture was not told,” new Finance Minister Lim Guan Eng said in a video that was posted online. “It is better to get the building completed and owned by us than to let it be abandoned.”
Lim said he could not disclose how much money the government has put into the project.
In just his first few weeks back in office, Mahathir has canceled a planned high-speed rail project between Kuala Lumpur and Singapore, and pledged to renegotiate a deal with Chinese partners to build a 688-kilometer East Coast Rail Link.
He has said both projects are too expensive and have limited economic benefit.
Another big property development, Bandar Malaysia, hangs in the balance after a $1.7 billion deal to sell a majority stake to a Malaysian-Chinese consortium fell through in May 2017. A year on, the project has failed to attract any buyers.
Exchange 106 was conceived as the centerpiece of a financial district in Malaysia’s capital, Kuala Lumpur, that would rival the likes of London’s Canary Wharf.
The Tun Razak Exchange — named after Najib’s father and launched by Najib in 2012 — was expected to be a commercial, residential and leisure hub that would generate a gross development value (GDV) of more than 26 billion ringgit ($6.55 billion), create 500,000 jobs and lure more than 100 top global companies.
However, the plan proved to be a tough sell. Questions about the finances of project developer 1MDB, a state fund set up by Najib over a decade ago, started around 2013. By 2015, it had become the center of money laundering investigations worldwide.
In a statement last month, the Finance Ministry said some $3 billion of debt raised by 1MDB to fund the development of the complex in 2013 was not used for that purpose.
Today, the 70-acre (28-hectare) site remains largely undeveloped and is dominated by a gleaming tower of glass and steel — Exchange 106 — rising from its center.
Some big foreign firms have signed up. Banking group HSBC and insurer Prudential plan to move their country headquarters into other buildings on the site, and Australian property firm Lendlease penned a deal to develop a complex consisting of a hotel, residential blocks and a shopping center.
A number of plots remain unsold, though, and the government has yet to clarify publicly whether it will stick to the initial plans for the huge new financial district.
As for Exchange 106, the finance ministry in March confirmed it had bought back a 51 percent stake in the building, after initially selling all of it to Indonesian developer Mulia Group for 665 million ringgit ($168 million).
At the time, the ministry said its participation was pre-agreed and was necessary because of the building’s strategic location and iconic nature. Lim has since said that the development “needed an injection of funds.”
A spokeswoman for Mulia said around half the building has been leased since it was first marketed back in 2016. Local media reported that mainly local firms have signed up, with real estate agents saying some parts of the design may not appeal to multinational companies.
For example, Sarkunan Subramaniam, managing director at Knight Frank Malaysia, who has visited the site recently, said that unlike other modern office buildings, the floors in Exchange 106 are not raised to allow for wiring for workstations.
Market conditions also do not augur well for the project. Malaysia’s capital has been experiencing an oversupply of office space in recent years.