Malaysia denies sale of Iskandar film complex, sells operator shares

The Malaysian Finance Ministry has refuted claims that a 49-acre film and television production complex in Iskandar Puteri, Johor Baru, has been sold. Deputy Finance Minister Steven Sim clarified that the land remains under the ownership of state investment firm Khazanah Nasional Bhd through special-purpose vehicle Tanjung Bidara Ventures Sdn Bhd. Instead, the shares of studio operator company Iskandar Malaysia Studios Sdn Bhd (IMS) were sold as part of Khazanah’s initiative to find a new partner to better manage studio operations.

Sim explained that since its inception in June 2014, IMS has contributed RM1.2 billion to the local economy and created over 8,000 job opportunities. However, the company faces financial sustainability challenges, exacerbated by the impact of the Covid-19 pandemic on the film industry. If Khazanah remained a shareholder of IMS, it would have to continue providing financial support at an estimated loss of up to RM14 million per year.

As a result, Khazanah decided to explore partnerships with parties capable of managing the studio more effectively. In March 2021, a Request for Proposal (RFP) process was initiated. In April 2022, Khazanah chose Studio Management Services Sdn Bhd (SMS) for the collaboration. SMS is a consortium led by the local management of IMS and regional partner GHY Culture & Media Holding Co Ltd and its subsidiary, GHY Culture & Media (Malaysia) Sdn Bhd. GHY Group is a leading media group company in the Asian entertainment industry, listed on the Singapore Stock Exchange.

Sim highlighted that GHY Group has been a major customer of IMS since 2018, having produced three large productions in Malaysia with estimated costs of RM150 million. The Share Purchase Agreement has been signed by both parties and is awaiting the conclusion of Conditions Precedent.

Following this transaction, Khazanah will receive sale proceeds from the shares of the company operating the studio’s operations amounting to RM32 million, as well as estimated rental payments up to 2036 at a total of RM26 million. SMS is also expected to bring new production to the studio worth over RM800 million within five years, providing more job opportunities and positively impacting the local economy.

In April, it was reported that Khazanah’s wholly-owned SPV, Granatum Ventures Sdn Bhd, would divest its 100% stake in IMS to SMS. The sovereign wealth fund stated that SMS is expected to enhance the services provided by IMS to the industry and facilitate future partnerships and production opportunities for Malaysia.