Mahathir’s Forest City mistake

I am a strong supporter of Dr Mahathir Mohamad and Pakatan Harapan (PH) but I think he is making a mistake by saying Forest City properties cannot be sold to foreigners.

Most readers are aware that I have been a strong supporter of Mahathir from the time he decided to join Pakatan Harapan (PH) in getting rid of then prime minister Najib Razak and ending Barisan Nasional’s rule.

I am proud to say that I joined Mahathir and Perak PH leaders during their election rounds in the state and campaigned vigorously for them in my election speeches. I also provided financial support to all the four component parties.

It is truly gratifying to see that there is now a new state (Perak) and federal government in place and to know that a new Malaysia is being born and that I played a small role in assisting in this rebirth.

Since then, I have been appointed as a member of an economic advisory committee to advise the new Perak state government on how to revive the state’s economy, which has stagnated after more than 50 years of Barisan rule.

As an independent adviser, I feel it is important for me not only to monitor developments at the state level but also at the national level. It is also necessary that I frankly assess these developments and communicate my concerns should there be any.

One issue that has been in the public eye recently warrants my speaking out.

This is the Forest City project taking place in Johor which has become the target of considerable press coverage – nationally and internationally – as a result of a statement made by Mahathir.

According to news reports, Mahathir told a business conference that overseas buyers would no longer be allowed to purchase homes in the US$100 billion Forest City development.

“One thing is certain, the city that is going to be built cannot be sold to foreigners”.

Further, he added “we are not going to give visas for people to come and live here. Our objection (towards this project) is because it was built for foreigners, not built for Malaysians”.

Much as I respect the prime minister, I feel that he has not only spoken out of turn but is also wrong on this matter.

Why do I say so?

Firstly, although the major developer is a Chinese company, this is a private sector project which is unrelated to the East Coast Rail Link (ECRL) project and the two gas pipeline projects under Suria Strategic Energy Resources Sdn Bhd (SSER). The new government may have good reason to review or even cancel the ECLR and SSER.

But I feel it has no ‘locus standi’ to intervene in the Forest City project and to prevent foreign buyers who have already bought into it from taking up their apartments.

Neither has the new government any legal right, in my view, from preventing the joint venture company, Hong Kong-based Country Garden Group and Esplanade Danga 88 Sdn Bhd, an associate company of state-owned Kumpulan Prasarana Rakyat Johor, from selling future apartments to foreign buyers.

According to a Reuters report, Chinese buyers make up about two-thirds of the Forest City apartment buyers thus far, with 20% from Malaysia and the rest from 22 other countries, including Indonesia, Vietnam and South Korea.

Sure, there are many concerns and questions about the project arising from its approval by the previous government and because of the Sultan of Johor’s interest in it. Were there elements of vested interest and politics that were involved? Most likely. But is this a good enough reason for Mahathir to intervene?

I remember that at the time of the project planning, objections were also raised by the Singapore government which was concerned with the sheer scale of the development and its impact. While Forest City does not cross the water boundaries between Malaysia and Singapore, large-scale dredging was seen as impacting water flows and silting in the channel.

In fact, the Singapore government demanded a thorough environmental impact assessment (EIA) and complained to the Malaysian federal government, calling for all reclamation work to be suspended. It seems ironic that Mahathir and the Singapore government now appear to be on the same page on this.

Despite these concerns – with many expressed publicly – the Forest City project was approved. Unfortunately, what has been done and approved by the state and federal authorities for Forest City cannot simply now be overturned just because Mahathir has expressed his disapproval.

My advice to Mahathir is to let it go and not waste his precious time by continuing to harp or to act rashly on this issue.

I should emphasise that I myself am a strong supporter of local participation in economic development. But we need to take a case by case approach and not simply base our position on ideology.

Firstly, if Mahathir thinks that foreigners are denying Malaysians of affordable homes in Forest City, he is wrong. They are really in a different, much higher value market.

Secondly, he should realise that he is sending the wrong signal to foreign investors and purchasers of properties in Malaysia by pushing an ultra-nationalist position on Forest City.

As one reader correctly pointed out: “We need to look at the big picture for Malaysia. We need FDI badly and the foreigners investing in Malaysian properties are bringing hard cash into Malaysia. Saying that we cannot sell houses to foreigners is wrong as the law allows foreigners to own property in Malaysia. In Johor, any foreigner can buy property that meets the minimum threshold. For landed property in the international zone, foreigners can only buy landed properties priced above RM2 million and they can buy strata titles priced above RM1 millions.”

It is also necessary to emphasise that I am not alone in thinking that Mahathir is making a mistake with his Forest City stand. His own office, the Prime Minister’s Office has clarified that foreigners are allowed to make Malaysia their place of permanent residence under the Malaysia My Second Home (MM2H) scheme.

“Conditions are clearly spelt out for those interested and information on this programme is also publicly available,” the PMO said in a statement.

“On property purchased by foreigners, irrespective of nationality, Malaysia imposes certain conditions and information on these existing conditions are publicly available,” the PMO had said.

According to Johor Mentri Besar Osman Sapian, Mahathir might not have the accurate information on the state’s policies pertaining to the project.

His position: “We always welcome foreign buyers, including those from China, to purchase residential properties in Johor, but at the same time we will safeguard the interests of locals.”

Please bear in mind the value of the Forest City is US$100 billion. Where can Mahathir find investors with so much money?

Koon Yew Yin is a retired chartered civil engineer and one of the founders of IJM Corporation Bhd and Gamuda Bhd.

The views expressed here are those of the writer and do not necessarily reflect those of FMT.