KUALA LUMPUR, May 27 — The Tun Razak Exchange (TRX) and Bandar Malaysia projects will be spun off from 1Malaysia Development Bhd (1MDB) and formed into independent companies, according to Datuk Seri Ahmad Husni Hanadzlah.

The move to take the two high-profile projects out from under the troubled 1MDB is part of the second finance minister’s rationalisation plan for the state-owned investment firm that is reportedly RM42 billion in debt.

“As has already been achieved with Edra Energy, this will see TRX and Bandar Malaysia established as standalone companies, with full autonomy and accountability for their operational and financial performance.

“Whilst options are being pursued with respect to the monetisation of Edra Energy, the Ministry of Finance will remain a key shareholder in TRX and Bandar Malaysia, which will raise equity via third party investors. Proceeds raised will be used for capital expenditure and to reduce 1MDB’s debt,” Husni said in a statement today.

The TRX was planned as a 70-acre financial centre within the capital while Bandar Malaysia is a 500-acre development in Sungei Besi that Prime Minister Datuk Seri Najib Razak previously described as a “goldmine”.

The extraction of the two high-profile projects from under 1MDB is likely aimed at removing the taint of the suspicions surrounding the indebted strategic investment firm and any of its deals.

Claims of a bailout forced Lembaga Tabung Haji to try and dispose of a 1.5-acre plot in the TRX it purchased from 1MDB in March for RM188.5 million and may have also foiled a second planned transaction.

A realignment of the Klang Valley Mass Rapid Transit (MRT) line in order to include Bandar Malaysia and bypass densely-populated parts of Cheras and Pandan in Kuala Lumpur also prompted similar suspicions.

The TRX will be built on 70 acres of land sold to 1MDB four years ago for just RM4.5 million or RM64 per square foot.

The yet-to-be-built Bandar Malaysia is located in nearly 500 acres of land in Sungei Besi that was previously occupied by the Royal Malaysian Air Force airbase.

Edra Energy is the 1MDB firm that holds its power assets in Malaysia and which it plans to list on Bursa Malaysia, but whose initial public offering has been delayed repeatedly owing to the negative attention weighing on its parent.

1MDB, a brainchild of Prime Minister Datuk Seri Najib Razak, is currently the subject of investigations by the Auditor General’s Department and Parliament’s Public Accounts Committee.