Chinese developer Country Garden Holdings announced this weekend that its $121 billion Forest City project in Malaysia’s Iskandar region had been granted duty-free status by the Malaysian government, as the mainland home builder works together with the Malaysian authorities to create a new economic zone bordering Singapore.
In addition to exemption from import duties, the joint venture real estate project, which is planned to be built on four reclaimed islands, was also granted “a slew of incentives by the Federal Government of Malaysia” at a launch ceremony presided over by Prime Minister Datuk Seri Najib on Sunday.
The incentives provided include reduced corporate taxes and a waiver on requirements on equity ownership designed to attract corporate investors to the 1,400 hectare site in Johor state’s Iskandar Development Region – a special economic zone created to attract foreign investment.
Forest City Favored By Malaysian Leadership
Speaking at the launch of the real estate development, Prime Minister Dato’ Seri Najib Tun Razak named Forest City as one of four major projects that will spark Johor state’s growth.
“I believe that Johor’s future economy is in good hands with these projects, which will certainly change the state into a new economy powerhouse,” Najib was quoted as saying in The Straits Times.
The other three projects include a high speed rail link between Kuala Lumpur and Singapore that will stop in Johor, and two other infrastructure projects.
Najib himself has been taking heavy criticism lately with charges of corruption being levelled against the Malaysian leader related to alleged misuse of funds from a government investment fund.
The opening ceremony was officially presided over by the Sultan of Johor, the hereditary local leader whose family has partnered in the project with Country Garden, which owns a 60 percent stake in the development. Country Garden chairman, Yang Guoqiang was also present.
Creating a New Shenzhen Next to Singapore?
Malaysian officials have stated that they expect the Iskandar initiative, which Forest City is a part of, will create 220,000 jobs in high value sectors such as finance and ecommerce over the next 20 years.
Government plans for developing Iskandar, which is located just across the causeway from Singapore in an underdeveloped area of Malaysia, are often compared to China’s opening up of Shenzhen, which became one of the largest and wealthiest of mainland cities due to its liberal economic policies and proximity to Hong Kong.
In his remarks at the opening ceremony Najib said, “To ensure the success of Forest City, I am pleased to declare duty free zone area at Forest City, enabling local residents, businesses and tourists to benefit from the work, live and play environment,” according to a statement from Country Garden.
In addition to declaring the duty free zone the Malaysia government also offered support for Forest City by providing tax breaks for companies classified as “green developers” as well as for “green development” projects. Najib also said that there would be corporate tax incentives for qualified investors involved in tourism, corporate conferences, education and healthcare.
Country Garden has bet big on its outsized Malaysian project, and has been marketing Forest City heavily in the region, including advertising campaigns for the project that include everything from signage in Shanghai elevators to advertisements on Hong Kong buses.
The company has said it plans to bring the project online in four phases, to be completed by 2045. Forest City is the second project for Country Garden in Malaysia after its successful Danga Bay project, also in Johor State.
The Guangzhou-based developer is one of several Chinese companies rushing to build new homes for sale in Malaysia, including Greenland Group, Guangzhou R&F and several smaller Chinese home builders.