Johor Chief Minister defends Forest City project amid mounting criticism from Putrajaya

JOHOR BAHRU — The Johor state government has defended the Forest City mega project after it came under scrutiny from Putrajaya, stressing that the development has contributed to both the state’s and country's economy.

Speaking at a press conference on Tuesday (Sept 4) morning, Chief Minister Osman Sapian said the federal ministers may not have gotten a “clear explanation” of the project.

Citing figures, Mr Osman said the state government has received RM600 million (S$199.34 million) in land premiums and other levies from the developer, Country Garden Pacific View (CGPV).

"Forest City has invested RM11.5 billion to help in the growth of the local economy and it has given contracts worth RM1.4 billion to 150 local companies," he said at his office in Kota Iskandar.

He noted that the project has created thousands of jobs for locals, including fresh university graduates.

As the state government has shares in CGPV, it has also received RM30 million in dividends from the company.

The federal government meanwhile, got RM83 million in taxes, which includes RM13 million in corporate tax, noted Mr Osman.

CGPV’s parent company, Country Garden Group, has also contributed RM309 million in taxes of which RM205 million is in the form of corporate tax in 2018.

The Chief Minister was reading from a prepared statement during the press conference, which was arranged only the night before. He took two questions from local media before his aides said that he needed to rush off for another meeting.

The US$100 billion (S$134 billion) real estate project came under renewed spotlight last week when Prime Minister Mahathir Mohamad announced that Malaysia will not allow foreigners to buy residential units there.

"One thing is certain, that city that is going to be built cannot be sold to foreigners," the premier said at a news conference.

"We are not going to give visas for people to come and live here," he added. "Our objection is because it was built for foreigners, not built for Malaysians. Most Malaysians are unable to buy those flats."

However, Tun Dr Mahathir didn’t specify how he would put a stop to foreigners buying the property at Forest City or how far-reaching the ban on visa approvals would be.

Hours after the premier's announcement, the developer said Dr Mahathir's comments "may have been taken out of context", and pointed to Malaysia's National Land Code, which stipulated that "a foreign citizen, or a foreign company may acquire land in Malaysia subject to the prior approval of the State Authority".

Subsequently, Housing and Local Government Minister Zuraida Kamaruddin said she will set up a committee to review the mega project.

On Monday, Johor’s housing and rural development committee chairman Dzulkefly Ahmad proposed to reserve 30 per cent of properties in the Forest City for Malaysians.

Mr Osman did not answer when asked for a response to the 30 per cent quota proposal on Tuesday. But he stressed that there has been no misunderstanding between the state and federal government on the project.

"There is no misunderstanding (between state and federal ministers)... I am just clearing the air following contrasting press reports on the project. Maybe they (federal ministers) didn't get a clear explanation, that's why the (federal Housing) minister (will) set up the committee," he said.

He believes the federal government will be fair in protecting the interests of foreign companies that run businesses in Malaysia, including those in Johor.

Forest City, the most ambitious project in Johor’s Iskandar economic zone, is still at an early stage of development and reclamation work is ongoing. The project is a partnership between Chinese developer Country Garden and the Sultan of Johor.

Four artificial islands will be created from the waters of the Johor Straits, covering a total surface of 14 square kilometres and bringing Malaysia’s shoreline closer to Singapore.

About two-thirds of buyers of the Forest City apartments are from China, with 20 per cent from Malaysia, and the remaining from 22 other countries. More than 700,000 foreign residents are expected by 2050