On the approach to Malaysia’s US$100-billion island megaproject backed by Chinese investment, a collapsed bridge forces drivers to detour before they reach an artificial city emerging from palm oil trees where condos, roads and shops lay empty.
Aimed at middle-class Chinese buyers, Forest City has weathered scant sales, Chinese currency controls, a COVID-19 shutdown and public anger at China’s growing influence in Malaysia.
However, its future is in doubt again because of the financial woes of Chinese property giant Country Garden. The project developer rose from a farmer’s idea to Beijing’s largest private real-estate firm, but is now saddled with US$196 billion of debt.
Photo: AFP
It posted a record loss for the first half of this year this week but won creditor approval to extend a key bond repayment deadline, narrowly avoiding a potential default that imperiled thousands of developments in and outside the world’s second-largest economy.
Another deadline looms next week over an unpaid multimillion dollar interest payment that again leaves it at risk of default.
“I hope Country Garden can overcome their financial difficulties. If nobody comes to Forest City, we cannot do business here,” said 29-year-old Zhao Bojian from Henan Province in China, who bought one of 26,000 Forest City apartments for about US$430,000 five years ago.
Sitting across from gleaming Singapore, the sprawling private town in Johor state was one of Country Garden’s many ambitious gambles that took the company to great heights, but now risk crashing it back down to reality.
Launched under China’s Belt and Road Initiative with a company partly owned by a powerful Malaysian sultan, Forest City houses about 9,000 people, way below its 700,000 target.
Construction workers chip away at the island city by day while an eerie silence falls over its deserted four-lane highway at night.
Only a small number of lights shine from windows by evening across the project’s more than two dozen high-rise towers.
Below those sit rows of shuttered shopfronts, some with court documents stuck to doors demanding outstanding payments. Inside, rubbish is strewn across the floors.
Many buyers do not live in the artificial city, a security officer said, and instead stash their money as absent owners.
Model sculptures of the completed city’s four artificial islands — far from its current state — sit in the lobby of a sales showroom to attract potential buyers guided by Mandarin, Malay and English road signs.
Previous governments have opposed residency for expat investors, criticizing the project as built only for foreigners.
Malaysian Prime Minister Anwar Ibrahim has stepped in to try to save Forest City as it threatens to become a white elephant.
Last week, he announced the creation of a “special financial zone” and perks including a special income tax rate and multiple entry visas.
Observers say Forest City faces an uphill battle regardless.
“The liquidity pressure could have an impact on their capability to complete overseas housing projects,” said Bernard Aw, chief Asia-Pacific economist at credit insurance firm Coface.
A three-hour drive from the capital, Kuala Lumpur, the city attracts visitors who want to catch a glimpse of the space-age towers or buy duty-free alcohol.
“Everyone comes here for the liquor,” Singapore-based technician Denish Raj Ravindaran, 32, said. “I will not stay here, it is a ghost town. The road is dark and dangerous and there are no street lights.”
Much of the activity is foreign workers — many from Nepal or Bangladesh — maintaining the city’s bushes, sweeping its roads or guarding its towers. An artificial sand beach littered with beer cans where families picnic under coconut trees also bears a sign warning would-be swimmers about crocodiles.
At one 45-story tower, only two floors are occupied while the rest are for sale, an official said.
As Country Garden fights for its survival, drastic efforts will likely be needed — from both Beijing and Kuala Lumpur — to get Forest City on its feet.
“I came here for a holiday after seeing TikTok videos,” said retail clerk Nursziwah Zamri, 30, from Malacca state. “If you ask me if I would live here, the answer is no.”
The Chinese Communist Party (CCP) removed former minister of foreign affairs Qin Gang (秦剛) from his post after an investigation concluded that he had conducted an affair and fathered a child while serving as ambassador to the US, the Wall Street Journal reported. Top officials were told in August that a CCP inquiry into Qin uncovered “lifestyle issues,” the newspaper reported yesterday, citing people familiar with the situation that it did not describe. That phrase usually means sexual misbehavior of some type in the parlance of Chinese officialdom. Two of the people said the affair led to the birth of a child in
GUNNED DOWN: The Canadian PM said there were credible allegations that India was connected to the assassination of Hardeep Singh Nijjar in Surrey on June 18 India yesterday dismissed allegations that its government was linked to the killing of a Sikh activist in Canada as “absurd,” expelling a senior Canadian diplomat and accusing Canada of interfering in India’s internal affairs. It came a day after Canadian Prime Minister Justin Trudeau described what he called credible allegations that India was connected to the assassination of Hardeep Singh Nijjar, an advocate of Sikh independence from India who was gunned down on June 18 outside a Sikh cultural center in Surrey, British Columbia, and Canada expelled a top Indian diplomat. “Any involvement of a foreign government in the killing of a
SECURITY: Wang met with the US national security adviser in Malta over the weekend, with the US side noting the importance of peace and stability across the Taiwan Strait Chinese Minister of Foreign Affairs Wang Yi (王毅) yesterday headed to Russia for security talks after two days of meetings with US National Security Adviser Jake Sullivan over the weekend in Malta. China’s top foreign policy official will be in Russia until Thursday for a round of China-Russia strategic security consultations, the Chinese Ministry of Foreign Affairs said in a brief statement. The US and China are at odds over Russia’s invasion of Ukraine. China has refrained from taking sides in the war, saying that while a country’s territory must be respected, the West needs to consider Russia’s security concerns about NATO’s
LOST BATTLE: The Varroa mite, which Canberra has called the ‘most serious pest’ to face bees, would cause serious economic damage, an ecologist said Australia yesterday abandoned its fight to eradicate the destructive Varroa mite, an invasive parasite responsible for the collapse of honeybee populations across the planet. Desperate to keep Varroa out of the country, authorities have destroyed more than 14,000 infected beehives since the tiny red-brown pest was first detected north of Sydney in June last year. The government said its US$64 million eradication plan could not stop the mite from spreading, and the country’s beekeepers should now prepare to live with the incursion. “The recent spike in new detections have made it clear that the Varroa mite infestation is more widespread and has