Logo of Phnom Penh Post newspaper Phnom Penh Post - Malaysia project in trouble as PM targets Chinese links



Malaysia project in trouble as PM targets Chinese links

Content image - Phnom Penh Post
Visitors view a scale model of development at Forest City on one of the man-made islands on the Malaysian side of the Straits of Johor. Roslan RAHMAN/afp

Malaysia project in trouble as PM targets Chinese links

An ambitious $100 billion island city being built off Malaysia has found itself in troubled waters as the new government takes aim at the development, the latest in a series of China-linked megaprojects started under the scandal-plagued ex-premier to come under attack.

Forest City’s futuristic high-rises and waterfront villas are under construction on four man-made islands in southern Malaysia, just an hour from the affluent city-state of Singapore.

The project, which is meant to house up to 700,000 people once finished in 2035, is being developed by Hong Kong-listed real estate giant Country Garden and a firm partly owned by a powerful Malaysian sultan.

It has been aimed at mainland Chinese investors as an alternative to pricier property in Singapore, with reports saying Chinese buyers have snapped up about two-thirds of units already sold before construction is finished.

But the development, which boasts international schools, shopping malls, hotels and even an immigration centre, was troubled from the start.

A clampdown on capital outflows from China hit demand, while it became a lightning rod for public anger at growing Chinese influence in Malaysia under the government of Najib Razak.

Environmentalists have also warned that dumping sand to reclaim land for the city could destroy marine life.

Now Prime Minister Mahathir Mohamad has hit out at foreigners buying apartments at the vast development, which is threatening to add to a glut of new residential property in southern Malaysia.

Malaysians are unlikely to buy or stay there due to high prices and its relatively remote location, while foreigners do not automatically get long-stay visas by buying a property.

‘Built for foreigners’

With the shock defeat of Najib’s government in May and the election of Mahathir, who has long railed against the explosion of Chinese investment in Malaysia, speculation has intensified that Forest City could become a white elephant.

Mahathir, 93, has already shelved $22 billion of Chinese-financed projects struck under the former government during a visit last month to Beijing following criticism the deals were unfavourable to Malaysia, and now he has trained his sights on Forest City.

Last week, he made some of his strongest comments yet on the development, saying he objected to the project because it was “built for foreigners, not built for Malaysians. Most Malaysians are unable to buy those flats.”

He added that Forest City “cannot be sold to foreigners ... We are not going to give visas for people to come and live here.”

His nationalist rhetoric was not in line with Malaysia’s laws – it is legal for foreigners to buy houses and apartments in Malaysia – and his office later clarified that he only meant purchasing property does not automatically guarantee residency for a foreigner.

But observers said Mahathir was intending to undermine a project he has long detested. A subsequent announcement that the government was establishing a committee to review the terms agreed on to set up the development and foreign ownership there only added to the sense authorities may be trying to put a halt to it.

It is not yet clear what the committee might recommend. Analysts said the worst case scenario in the short term could be the state government in Johor, where the project is based, raising the minimum price for foreigners buying property or increasing levies.

Yeah Kim Leng, a professor of economics at Malaysia’s Sunway University Business School, said investors would be deterred and predicted the developer might have to delay or scale back the project.

“Perhaps they will put it on hold, or aim for something smaller,” he told AFP.

Only a fraction of work has been completed on the project and only a small number of people, mainly staff, are living there, according to reports.

MOST VIEWED

  • Hun Sen: Stop Russia sanctions

    Prime Minister Hun Sen said sanctions against Russia as a result of its military offensive in Ukraine should be stopped as they have produced no tangible results, and predicted that a global food crisis would ensue in 2023 as a consequence. Speaking to an audience at

  • Chinese tourists 2.0 – Coming anytime soon?

    Regional tourism is grappling with the absence of the prolific travellers and big spenders – the Chinese tourists. Cambodia, which has welcomed over two million Chinese tourists before Covid-19, is reeling from the economic loss despite being the first to fully open last November ‘To put

  • PM reflects on shoe throwing: Free speech or act of violence?

    Prime Minister Hun Sen on May 17 questioned whether a man who threw a shoe at him while he was in the US was exercising freedom of expression or if it was an act of hostility. Hun Sen was referring to an incident last week when

  • Siem Reap’s Angkor Botanical Garden opens

    The Angkor Botanical Garden was officially opened on May 19 with free entry for both local and international visitors for the first six weeks. The garden was established on a nearly 15ha plot of land in Siem Reap. “After the first six weeks, Angkor Botanical Garden

  • Pub Street on the cards for Battambang

    The Battambang Provincial Authority has announced that it is considering establishing a Pub Street in the area around the heritage buildings in Battambang town in a bid to attract more tourists. Battambang provincial governor Sok Lou told The Post that the establishment of a Pub

  • Hun Sen: Don’t react to hostility

    Prime Minister Hun Sen urged tolerance and thanked members of the Cambodian diaspora for not reacting to the hostility on display towards him by others while he was in the US to attend the May 12-13 ASEAN-US Special Summit in Washington, DC. In an audio