Mahathir Mohamad

Mahathir Mohamad ‘could send wrong message’ with warning for foreign investors in Malaysia’s Forest City

Comments could backfire at a time when the country should court Chinese investors, says chairman of Malaysian Chamber of Commerce in China

PUBLISHED : Saturday, 01 September, 2018, 5:00pm
UPDATED : Saturday, 01 September, 2018, 11:28pm

Malaysia’s decision to examine overseas ownership in the country’s largest residential property project Forest City could send the “wrong message” to foreign investors and have wider effects, the Malaysian Chamber of Commerce in China has warned.

Investment projects have been plunged into uncertainty since Prime Minister Mahathir Mohamad returned to power in May. The 93-year-old has called off three Chinese-backed infrastructure megaprojects and on Monday shocked many when he declared that foreigners would not be allowed to buy property at Chinese developer Country Garden Holdings’ US$100 billion Forest City project in the state of Johor, bordering Singapore.

Mahathir said his country was “not going to give visas for people to come and live here”, according to Reuters.

However, Malaysia’s Housing and Local Government Minister Zuraida Kamaruddin was quoted by Malay Mail as saying the government was still reviewing the project.

The development has added a further challenge in the already delicately balanced relations between China and Malaysia.

It has also injected uncertainty into Malaysia’s My Second Home programme, which allows wealthy foreigners to invest and live in the Southeast Asian nation on a long-stay visa, with Chinese nationals being the largest group to do so.

Mahathir bans foreigners from buying Forest City residential units in Malaysia

Will Fung, chairman of the Malaysian Chamber of Commerce and Industry in China, said he had received many inquiries from worried Chinese investors since Monday’s comments by Mahathir.

“It was a bombshell when he mentioned about Forest City,” Fung said. “When the Chinese media picked up this news, the sentiment wasn’t very positive. People are asking, ‘What do you really want, Malaysia?’”

Fung warned that it could be sending the wrong message to foreign investors.

“If not handled properly and carefully, I think the spillover effect could be drastic for Malaysia,” he said.

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Some potential Chinese investors expressed their concerns at an event in Beijing on Friday held by the Malaysian Chamber and a Malaysian property developer to promote a separate second home ownership programme.

“We have read about Mahathir wanting to prevent foreigners buying at Forest City, so I would like to know if this will extend to other projects as well?” one potential investor asked the developer.

Another potential investor said: “We are a bit concerned, but Mahathir meeting companies during his recent visit to China is a good sign, and has given us more confidence to invest in Malaysia.”

How China’s overseas property dream turned into a nightmare

Most other potential investors at the event were less concerned, and more eager to know whether their children would be able to attend privileged schools or whether they would gain other perks such as permanent residency should they invest and live in Malaysia.

Fung, from the Malaysian chamber, called on Malaysian businesses to seize an opportunity by attracting Chinese investment.

“With the escalation of the US-China trade war, I think it’s a very good opportunity, a good window for Malaysia in particular, and for countries in Southeast Asia in general, because the Chinese industries and businesspeople are exploring new markets.”