Malaysia S Forest City Gamble Duty Free Status For Struggling Megaproject

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The government has taken a significant step to breathe new life into the struggling Forest City megaproject by granting duty-free island status to Pulau Satu, a 770-acre islet within the development.

The Parliament approved five amendment bills on Wednesday (17 July), paving the way for Pulau Satu to join the ranks of other duty-free islands in the country, such as Labuan, Langkawi, Tioman, and Pangkor.
This move follows Prime Minister Datuk Seri Anwar Ibrahim’s announcement in 2023 to designate Forest City as a special financial zone, aiming to boost trade and connectivity between Malaysia’s southern Johor state and neighbouring Singapore.
The government is also close to finalizing a deal with Singapore to develop a cross-border economic zone that will likely include the mega property project.
A Lifeline or a Bailout for Forest City? However, the decision to grant duty-free status to Pulau Satu has been met with mixed reactions.
Some have labelled the move a bailout for the Chinese-backed project, plagued by challenges since its inception a decade ago.
The development, once touted as a futuristic eco-city, has been criticized for its slow construction pace and low occupancy rates, with various media reports dubbing it a “ghost town.”
Supporters of the decision argue that the duty-free status will attract investments, stimulate economic activity, and boost regional trade.
They also point out that granting duty-free status is still a better alternative to the rumoured casino project, which would have raised moral and social concerns.
Deputy Finance Minister Lim Hui Ying stated that the existing laws governing other duty-free islands would apply to Pulau Satu, including the requirement for visitors to stay on the island for at least two days to qualify for duty-free products.

A Magnet for Singaporean Shoppers or a Smuggler’s Paradise? Some MPs have suggested expanding the list of duty-free items to include electronics and other popular products to encourage more purchases by Singaporeans.
They have also proposed reducing the 48-hour stay requirement to one night to give them a competitive edge over Singapore.
Despite these potential benefits, concerns remain over the project’s viability and the effectiveness of the duty-free status in reviving Forest City.
The proposed reduction of the 48-hour stay requirement to just one night could lead to an influx of visitors more interested in exploiting the duty-free status than genuinely engaging with the development.
This short-term thinking may provide a temporary boost in sales but could ultimately undermine the project’s long-term sustainability.
The Government tries to squeeze you with all sort of regressive taxes but dared not do anything where there is real legally sanctioned tax evasion happens. Example is your duty free islands. Instead of stopping the nonsense, they have added Forest City into it. pic.twitter.com/vcGRt8R4Ck
— FreeMalaysian (@FreeMsian) March 31, 2024
Balancing Economic Revival and Regulatory Challenges The development has also been plagued by allegations of duty-free goods being smuggled out of the area and sold at inflated prices, earning it the unwelcome title of a “smuggling hotspot.”
As Malaysia’s upper house of parliament, the Dewan Negara prepares to vote on the amended laws, uncertainty looms over whether the duty-free status will provide Forest City with the much-needed lifeline or serve as a temporary respite for a project that has failed to meet its lofty expectations.
The government must implement robust safeguards and stringent regulations to prevent potential abuse and maintain the integrity of the development.
Celaka. Another duty free smuggling from Forest City, Johor. Kastam dan Polis Johor tidur? pic.twitter.com/II2BCniKuM
— FreeMalaysian (@FreeMsian) January 16, 2024





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