Forest City, a $100 billion mega-project in Malaysia developed by China's Country Garden, was designed to house 700,000 people but currently has only 9,000 residents, leading to a mere 1.3% occupancy rate. The project, often dubbed a "ghost town," has faced significant financial challenges, with Country Garden defaulting on $11 billion in offshore bonds in 2023 and owing $187 billion in total corporate debt. Despite political backing, tax incentives, and a strategic location near Singapore, sales plummeted over 90% after 2018, primarily because the high-end units, costing between $200,000 and $600,000, were unaffordable for most Malaysians and restrictions on foreign buyers, particularly Chinese, limited the target market.
In an attempt to revitalize the struggling development, the Malaysian government designated Forest City as a Special Financial Zone in 2024, offering incentives like duty-free status and a 0% tax rate for family offices. This has attracted new demographics, including participants of the Network School, founded by former Coinbase executive Balaji Srinivasan. Nearly 400 students, many of whom are entrepreneurs, have moved to Forest City to study coding and "unconventional theories on statehood," forming a community focused on shared ideology rather than territory, with prices starting at $1,500 per month for lodging and food in shared rooms. Srinivasan plans to build a permanent campus to house thousands of technologists.
However, the low occupancy and special zone status have also made Forest City a target for illicit activities. Malaysian authorities have recently busted several scam operations, primarily involving Chinese nationals, running out of luxury units. These syndicates engaged in fake cryptocurrency investments and "love scams," seizing hundreds of computers and over 1,500 mobile phones. The ease of human movement and duty-free status have been exploited for smuggling and other criminal enterprises, leading to concerns about the project's reputation and its regulatory environment. The recent closure of the Network School, amidst allegations of "ideological transgressions" and licensing issues, further complicates the image of Forest City as a hub for legitimate entrepreneurship.
