By Pauline Ng

Malaysia's Prime Minister Najib Razak (above) launched a new financial district in Kuala Lumpur yesterday which the government has ambitiously projected will attract more than 250 "world leading companies" to locate in the 70-acre site.

Renamed the Tun Razak Exchange (TRX) after his father and Malaysia's second premier Abdul Razak, Mr Najib revealed that the RM26 billion (S$10.3 billion) Kuala Lumpur International Financial District had secured over RM3.5 billion for the entire first phase.

However, the international "strategic partner" will only be disclosed in September.

"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 Mr Najib, who is chairman of the board of advisers of 1Malaysia Development Bhd (1MDB).

State-owned 1MDB is the master developer of the TRX in collaboration with Abu Dhabi's Mubadala Development Corporation.

To ensure the exchange receives the entire support of the government, a special taskforce led by the Economic Planning Unit and comprising officers from the Finance Ministry, Bank Negara and the Securities Commission would be established to begin a comprehensive review of business regulations.

"Our logic behind this review is simple: anything that contributes to future progress stays, anything that is outdated goes."

He assured investors that there would be further incentives to add to those already announced, including full income tax exemption for 10 years, industrial building allowance and accelerated capital allowance, and an income-tax exemption of 70 per cent for five years for eligible property developers.

One sector TRX is particularly keen to leverage is Islamic finance, described by Mr Najib as "a sector of unlimited potential", and one which he plans do his utmost to ensure investors can readily participate in.

Although the country tops in sukuk origination, its aspirations in Islamic finance have not been without bumps.

A plan to issue two mega Islamic bank licences to qualified institutions that have a minimum capital of US$1 billion has not progressed as hoped.

Some bankers say the amount is daunting, while others feel that such an institution may not be necessary.

On another front, realtors are wary about the amount of additional commercial space that could arise from TRX.

To be built over the next 15-20 years along the lines of a fully integrated smart city at an estimated gross development value of RM26 billion, it will compete with other "iconic" projects including the nearby mooted Wawasan Merdeka and a planned 100-storey tower.

This article was first published in The Business Times.