KUALA LUMPUR – Nearly six years after it was supposed to be completed, the 16.8km MEX II highway remains unfinished, leaving bondholders exposed and the government grappling with difficult decisions.
The highway extension, meant to link Putrajaya to KLIA, was undertaken by Maju Group’s subsidiary, MEX II Sdn Bhd. In 2016, the company raised RM1.3 billion through bonds, but by 2019, the project was halted. As of 2024, the highway is reportedly 89% complete – a figure yet to be independently verified, the Edge reported.
The project has since come under scrutiny, particularly after the Malaysian Anti-Corruption Commission (MACC) launched an investigation into alleged false claims amounting to RM416 million.
On May 1, four individuals were detained – including a former Maju Holdings CEO – and released days later. A remand order was obtained on May 3.
Sources familiar with the matter told Edge that investigators are tracing how drawdowns from the bonds were approved and whether the reported progress aligns with actual work on the ground.
“MEX II has current liabilities of close to RM1.7 billion and the ability of the company as a going concern depends on its amicable settlement on its financial obligations by R&M,” auditors warned in the company’s 2022 financial statement.
By May 2022, with the project stalled and payments to bondholders in arrears since late 2020, MEX II was placed under receivership. Ernst & Young initially served as receivers and managers (R&M) before being replaced by BDO Consulting in 2023. The reasons for the change remain unclear.
MEX II now has only RM30 million remaining – with RM29 million already pledged – while bondholders await a resolution.
“Bondholders can recover money only if the highway is completed,” said a source.
“So far, there is no solution in sight.”
The functioning 26km Maju Expressway (MEX), linking Kuala Lumpur to Putrajaya, saw peak traffic of 172,433 vehicles in the first half of 2024 – nearing its 200,000 daily capacity.
Nearly 18 years since its launch, MEX is now a vital route to the administrative capital and a key asset of Maju Group, owned by Tan Sri Abu Sahid Mohamed.
However, Abu Sahid has come under scrutiny for failing to complete the 16.8km MEX II extension to KLIA.
Discussions with potential suitors have taken place. PLUS Malaysia Bhd was reportedly among the parties approached, but its interest hinged on bondholders accepting a haircut of over 50%.
“The offer on the table required bondholders to take a haircut of more than 50%. This did not go down well with the bondholders,” one bondholder was quoted as saying.
“They felt that taking a ‘haircut’ on their debts would not solve the problems as long as there was no change in the people responsible for completing the highway.”
A proposal is said to be under consideration involving a request for proposal (RFP) from the government to take over the project.
Officials from the Works Ministry, the Malaysian Highway Authority, and the Finance Ministry met recently to weigh possible solutions.
One consultant estimates that at least RM560 million would be needed to finish the remaining 11% of the project, factoring in alleged fund leakages.
“MEX II liabilities could easily breach RM2 billion. How much toll can any white knight charge motorists to recover the amount spent?” the consultant asked.
A bond issued at RM2 billion with a 7% coupon would require RM140 million annually in interest payments. Assuming 50,000 vehicles a day paying RM10 each, annual revenue would stand at RM180 million – before costs.
“The rule of thumb is less than 40 sen per kilometre. So, a toll rate of RM5 to RM6 will be reasonable,” the consultant said.
Traffic studies project that by 2030, daily usage may exceed 70,000 vehicles. But there is uncertainty, as most major highways do not surpass 120,000 daily users even today.
Crucially, any takeover is expected to involve both MEX and MEX II, as the extension’s viability hinges on traffic flow from the main MEX highway.
“MEX II cannot be a stand-alone entity. It has to come with MEX,” a highway consultant told Edge.
“Nobody in their right mind would consider MEX II without taking control of MEX.” – May 27, 2025