ALBAWABA – Chinese developer Country Garden’s massive Malaysia project is on track, the company said on Monday, despite concerns over its financial strength, according to Reuters.
The company said the project is going as planned and reaffirmed it had sufficient assets to complete the project, in spite of having missed two dollar coupon payments totalling $22.5 million last month.
"Our company's projects in Malaysia are operating normally and the sales performance is strong," the developer's Singapore and Malaysia unit said in a statement.
The company’s overall operation in the region was "safe and stable", the unit confirmed, as the Malaysia project is estimated at a total value of $100 billion dollars.
"Various debt management measures are considered to actively resolve the pressure of periodic liquidity, to ensure the company's long-term future development," the statement added, without elaborating.
Country Garden is building its largest overseas development project, known as the Forest City project, across four reclaimed islands in Johor, south of Malaysian, bordering the city-state of Singapore.
Gov’t issues incentives for Country Garden’s massive Malaysia project
The project, now home to about 9,000 people, has been facing challenges since 2006 and is now suffering a sharp decline in demand following China cut capital outflows, according to Reuters. The issue was exacerbated further with the COVID-19 pandemic.
Malaysians have also expressed concern at the prospect of a housing glut and environmental damage from a huge land reclamation effort, Reuters reported.
The Forest City project, Chinese Country Garden’s massive Malaysia project is on track - Shutterstock
The project aims to house 700,000 people by 2035 in a development that includes office towers, malls and schools, as well as residential buildings.
Country Garden’s statement comes after Malaysian Prime Minister Anwar Ibrahim said the project would be designated a "special financial zone" to attract investment. In addition to helping cut the cost of doing business there.
In a statement on Friday, Anwar announced new incentives for the project, including a special income tax rate of 15 percent for skilled workers and multiple entry visas.
RHB analyst Loong Kok Wen told Reuters that the new designation would attract companies and residents from Singapore, where costs are considerably higher.
"This move should help to revitalise the Forest City township, which has received lots of negative publicity over the last few years," the analyst said.
Malaysia's incentives should be "very positive" for Country Garden, said Steven Leung, Hong Kong-based director of UOB Kay Hian.
The Chinese developer said the incentives from Anwar's government showed its confidence in the project.
According to Reuters, the Forest City project is now in the second phase of development, focused on exploring more investment opportunities.
Shares of Country Garden were up more than 8 percent on Monday.
Forest City is a joint venture with Esplanade Danga 88, a private Malaysian company backed by the Johor government and the sultan of the state.
