As recently as last month, government officials in the Malaysian state of Serawak, Borneo, told local media that their state needs to build a new film production facility like the Iskandar Malaysia Studios in the south of peninsular Malaysia. Serawak officials said that their state Premier had visited the studios and plans had been discussed with FINAS, Malaysia’s national film regulatory and financing body.

The illusion of glittering success was shattered last week by an undramatic regulatory filing across the border in Singapore.

IMS had been sold to a foreign TV company for a tiny fraction of its construction cost. The sale appears to crystallize more than $100 million of losses.

GHY Culture & Media, a Singaporean company specializing in Chinese-language content, announced that it had bought an 80% stake in SMS, an intermediary company, for $2 million (RM8.84 million). GHY and SMS must then spend a further $6 million (RM26.5 million) to buy 100% of IMS from state-backed investment vehicle Granatum Ventures. Total $8 million.

Among the usual verbiage and deflection associated with a deal announcement, GHY’s filing revealed that, “based on the audited accounts of IMS for the financial year ended 31 December 2022, the net asset value of IMS is approximately RM 32,000,000,” or $7.3 million.

The facility is scarcely insignificant: “IMS owns and operates integrated film and television facilities in Johor Bahru, Malaysia, which includes film stages, television studios, water filming tanks and production support facilities. These include five state-of-the-art stages which are versatile working spaces, which also have stage pits for water filming and dry use, as well as two 12,000 square feet television studios which are fully equipped and can accommodate large audience television shows. IMS also offers procurement and design services for feature films and television projects, in addition to technical equipment rentals,” GHY explains.

The end of December valuation compares very badly with the cost to the Malaysian taxpayer. When IMS opened in 2014, local and trade reports announced that the facility had required an investment of $120-$170 million. Even using the lower construction cost figure, the devaluation of an asset from $120 million to $7.3 million represents a more than 90% destruction of shareholders’ value in the eight years since IMS opened. The annual profit and loss accounts are not public information.

Variety contacted GHY and IMS for comment. They each declined to add anything to GHY’s regulatory filing. FINAS had not replied by press time.

Although it is 330 km from Malaysia’s film capital and biggest city Kuala Lumpur, IMS was promoted as both part of a larger infrastructure initiative and as a new creative hub for the Asia-Pacific region.

Built on the site of a former palm oil plantation and within eyesight of Singapore, the IMS project was spearheaded by the Malaysian government’s sovereign wealth fund, Khazanah Nasional Berhad. It was a key part of plans to form a creative industries ecosystem within Johor’s Iskandar development corridor which more widely sought to emulate China’s Shenzhen tech megalopolis and achieve GDP per capita of $31,000 by 2025. Granatum is a wholly owned Khazanah subsidiary.

Even before opening, the studio initiative seemed to be endowed with two significant advantages. The first, was the signing in 2009 of a partnership with the U.K.’s Pinewood Studios group. With roles officially spanning consultancy, brand and marketing services, Pinewood was involved in the design, construction and initial management of the Malaysian facility. Pinewood appeared to bring credibility and a network effect by presenting the new studio as part of its mesh of global filming facilities that stretched from the U.K. to the Caribbean.

By the time the facility opened in June 2014 – then branded as Pinewood Iskandar Malaysia Studios – inbound films and TV shows were told they would be able to take advantage of a new 30% production rebate scheme that was administered by FINAS and had backing from another branch of Khasanah. Having a location incentive is essential in the globally competitive studios market. This would put IMS on the map.

At the time of launch, IMS’s Australian CEO Mike Lake admitted that production costs in Malaysia were higher than those in neighboring Thailand and Indonesia. (And lower than immediately adjacent Singapore). He was also transparent about the Johor region’s lack of movie-making crew and infrastructure outside IMS’s perimeter fence.

Lake was, however, able to suggest that the location incentive would make IMS competitive in terms of price, and able to claim that, given the range of facilities within IMS, it would be possible to walk in with a script and walk out with a finished product ready for broadcast or theatrical release. The local skills would increase over time as more movies and series shot there.

The headline-grabbing launch customer was The Weinstein Company, shooting its “Marco Polo” TV series for Netflix. The show had a second season, but was canceled amid talk of difficult relations between the production partners.

Since then, the studios attracted water tank work on the Simon West-directed Chinese disaster action film “Skyfire,” which was a box office flop, and a portion of the work on SK Global’s “Crazy Rich Asians,” which was distributed by Warner Bros. and became a $238 million global hit.

TV shows using the facilities have included “Asia’s Got Talent,” the Singapore and Malaysia edition of “The Voice” and “Hi-5.” GHY has shot at least three shows there: “The Little Nyonya – New Edition,” “The Ferryman – Legends of Nanyang,” and “Sisterhood.”

So far, however, the studios have failed to persuade any major Hollywood film to use IMS as its core facility.

“Nobody in Hollywood wants to shoot in Malaysia,” an experienced location manager told Variety. The country may have developed a negative, intolerant image after banning U.S. movies including “Hustlers,” “Thor: Love and Thunder” and “Lightyear.”

Other reasons put forward by Asian industry sources include the studios’ location, which is perceived as isolated from major film production hubs, and its still underdeveloped local crews. Bringing crews in from Singapore may increase production costs, while importing Thai staff begs the question, why not shoot in well-equipped Bangkok.

Thailand has recently hosted Netflix’s “Extraction,” Apple TV+’s “Shantaram,” Spike Lee’s “Da 5 Bloods,” and Disney’s “Miss Marvel” and it succeeded in operating production facilities through much of the COVID pandemic.

The separation of the Iskandar studios from the Pinewood group in 2019 was both a setback and a surprise. Whether Pinewood failed to bring in as much business as Johor officials and Khazanah investors had hoped or whether the facilities giant, which itself had a change of management, encountered specific local issues is cloaked in omerta. Their jointly agreed statement at the end of their ten-year deal was terse.

“Effective July 10, Pinewood Iskandar Malaysia Studios will be known as Iskandar Malaysia Studios (IMS),” the statement said. “With the initial objectives of the collaboration achieved — including the development of the studios in Malaysia — both parties will now focus on the next phase of their respective businesses.”

Other sources have pointed to the Film In Malaysia Incentive (FIMI) as a weakness. The rebate scheme was slow to get going smoothly, though a change in Malaysia’s federal government seemed to help. And it has been criticized as too small.

The minimum total qualifying Malaysian production expenditure is MYR 5 million ($1.13 million) for production (inclusive of post-production), or MYR 1.5 million ($341,000) for post-production activity in Malaysia. (In 2020, Michael Bay action thriller “6 Underground” for Netflix became the first foreign production to earn the post-production rebate.) For television the amount offered is RM385,000, or about $87,500, per hour of TV.

In 2022, FIMI was enhanced with 5% bonus rebate, potentially making 35%, if projects also pass a cultural test.

Whether the boosted rebate, the end of COVID and an ownership change will combine to improve IMS’s prospects are all unknown. Several questions remain.

These include whether GHY wants to use the facility predominantly for its own productions and whether the Malaysian finance ministry will be so keen to plow money into subsidy when IMS is foreign-owned.