In a significant move, Malaysia has announced its plan to establish a “special financial zone” within the troubled development project of Chinese developer Country Garden in Johor. Prime Minister Datuk Seri Anwar Ibrahim revealed that this initiative will be accompanied by various incentives aimed at attracting investments to the project. The ambitious Forest City project, situated across four reclaimed islands in Johor, is intended to accommodate a staggering 700,000 residents by 2035. Its infrastructure will encompass not only residential buildings but also office complexes, shopping malls, schools, and more.
This strategic decision comes against the backdrop of Country Garden encountering severe financial challenges. Forest City, which represents the developer’s largest overseas endeavor, operates as a partnership with Esplanade Danga 88, a private Malaysian firm supported by the Johor government and Sultan Ibrahim Sultan Iskandar.
The introduction of the “special financial zone” is expected to significantly reduce the operational costs associated with conducting business within Forest City. This anticipated effect was highlighted by Bernama, a Malaysian news agency, which quoted Prime Minister Anwar’s insights on the matter.
The context of this development is underscored by Country Garden’s recent financial troubles. As China’s most prominent private real estate developer, the company has recently defaulted on two coupon payments amounting to a total of US$22.5 million. These defaults have raised concerns about the potential for Beijing’s ongoing property debt crisis to adversely impact both the financial sector and the broader economic recovery.
The establishment of the “special financial zone” and the accompanying incentives within Country Garden’s Forest City project marks a noteworthy step by Malaysia to bolster the project’s prospects and attract investments, all while the developer navigates challenging financial waters.