Tun Razak Exchange a bid to boost ambitions as regional financial hub
By Teo Cheng Wee, The Straits Times, 31 Jul 2012
KUALA LUMPUR - Malaysia has launched a new financial centre in its capital, in a bid to boost its ambitions as a regional financial hub and attract talent to Kuala Lumpur.
Located 1km from the Petronas Twin Towers, Tun Razak Exchange (TRX) - named after Prime Minister Najib Razak's father, a former premier - spans 28ha, about half the size of the sprawling Bay South Garden that recently opened in Singapore.
The government has promised financial incentives and tax breaks to its target tenants, which include top multinational firms, financial institutions, support service firms as well as commercial, retail and hospitality tenants.
"The government will go out of its way to ensure the exchange is a success and, as a first step, I can announce to you today we will begin a comprehensive review of business regulations," said Datuk Seri Najib at the launch yesterday.
"Our logic behind this review is simple: Anything that contributes to future progress stays, anything that is outdated goes."
He added that TRX has already secured a foreign "strategic investor" that has pledged RM3.5 billion (S$1.38 billion) to the project. The identity of the investor and further details will be announced in September.
The government expects TRX, which boasts a pedestrian-friendly green environment, to attract more than 100 top global companies and create half a million jobs when it is completed in 2016.
Indeed, unlike other top financial centres like Hong Kong or Singapore, Kuala Lumpur does not have a financial district, although it currently has the world's largest Islamic bond market and is a global leader in Islamic finance.
Analysts have pointed out that having such a district is useful because it focuses activities, while making it easier for communication and travel.
"We want to have a new business and financial hub that brings the East and West together. One that can grow both Islamic and conventional finance," said Tan Sri Lodin Wok Kamaruddin, chairman of the board of directors at state-owned strategic development firm 1Malaysia Development, which will spearhead TRX's development.
The financial district is one of the projects that had been cited under Mr Najib's Economic Transformation Programme, aimed at making the country a high-income nation by 2020.
The launch of TRX also comes after a series of high-profile initial public offerings, including that of palm oil giant Felda Global, that have made Kuala Lumpur the most active Asian centre for stock debuts this year.
Mr Chris Eng, head of research at the investment management division of Etiqa Insurance & Takaful, feels that banks and institutions can be persuaded to move into TRX and make it a success, given the incentives that are being dangled by the government.
"But one concern we'll have is whether this will create a glut of commercial spaces elsewhere," Mr Eng said.
He also thinks it is too soon to expect Kuala Lumpur to compete realistically with other regional financial centres like Singapore, which have had years of a head start and are already well established. "TRX seems more likely to position itself as an Islamic financial centre for now," he said.
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