Malaysian Prime Minister Anwar Ibrahim has breathed new life into the struggling $100 billion Forest City project. Developed by China’s largest private real estate firm, Country Garden, the project will now benefit from a ‘special financial zone’ status. This move aims to salvage the venture, which has been marred by financial setbacks and low occupancy rates.
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Financial Lifeline
Anwar revealed that Forest City will offer a special income tax rate of 15% for skilled workers and multiple entry visas. This comes after Country Garden missed two coupon payments this month, totaling $22.5 million. The financial instability of the Chinese developer has raised concerns about the project’s future and its potential impact on the global economy.
Project Details
The Forest City project is a collaboration between Country Garden and Malaysian company Esplanade Danga 88. It has the backing of the Johor government and the Sultan of Johor. The ambitious venture aims to house 700,000 residents in waterfront apartments across four man-made islands. Despite completing 28,000 residential units, only 9,000 people currently reside in Forest City.
Environmental and Political Challenges
Initially approved at the state level, the project faced scrutiny for skirting national environmental regulations. Local stakeholders, including fishermen and environmentalists, drew media attention, leading to the establishment of a compensation fund. Singapore’s objections also forced the project to comply with Malaysia’s environmental laws.
Impact of Chinese Policies
China’s efforts to limit capital outflows have adversely affected the project. Country Garden had to shut down its sales centers in China in 2017 due to these restrictions. Additionally, deteriorating relations between China and Malaysia, fueled by veteran politician Mahathir Mohamad, have also impacted the project.
Conclusion
The new incentives aim to revitalize Forest City and make it an attractive option for potential residents, especially those from Singapore. Whether these measures will succeed in turning the project around remains to be seen.