Prime Minister Mahathir Mohamad, who is traveling to China next week to attend the second Belt and Road forum, said Friday the Cabinet agreed to reinstate the Bandar Malaysia project, which is expected to cost 140 billion ringgit ($33.8 billion).
It comes a week after Malaysia resumed a China-backed rail link project after the Chinese contractor agreed to cut the construction cost by one third to 44 billion ringgit ($10.6 billion). Mahathir said that both projects will boost ties with China and add economic value.
He said that Bandar Malaysia, which is 40% owned by the government, will be developed with the same consortium partners, Malaysian developer Iskandar Waterfront Holdings and China Railway Engineering Corp. The 500-acre (202-hectare) project will boost urban development and serve as a hub to woo global finance, technology and entrepreneurial firms, he added.
Bandar Malaysia was started by the indebted 1MDB state investment fund in 2011 but it later sold a 60% stake to the consortium. The government took over 1MDB's stake due to its debt problems, but the project was terminated by the previous government in May 2017 due to a payment dispute with the consortium.
The 1MDB scandal led to the election ouster last May of former Prime Minister Najib Razak, who is currently on trial for alleged corruption.
Chinese President Xi Jinping has made the Belt and Road initiative a signature policy. The estimated $1 trillion-plus plan aims to weave a network of ports, bridges and power plants linking China with Africa, Europe and beyond.
"These two major projects will also be a significant contribution to the Belt and Road Initiative, which Malaysia expects to be able to tap on and exploit its multiplier effects along the value chain," Mahathir said.
Mahathir said the revived project will include 10,000 affordable homes and a people's park and will prioritize the use of local construction material.
It was originally designed to house the main hub for a high-speed rail line connecting Singapore to Kuala Lumpur that would cut travel time to 90 minutes, but Mahathir's government suspended the rail project on the ground that it was too costly.
Mahathir said there will be "sufficient room for the station" if the government later decides to go ahead with the high-speed rail line.