Malaysia (Common Wealth) _ Despite concerns about its financial soundness amid debt troubles, embattled Chinese developer Country Garden (2007.HK) said on Monday that its $100 billion project in Malaysia was going as planned and that it had sufficient assets.
The comment came after China’s largest private developer skipped two dollar coupon payments totaling $22.5 million this month, fueling fears that the country’s property debt crisis will stymie a larger economic recovery and spill over into other countries.
Our company’s projects in Malaysia are working normally, and sales are high, said the developer’s Singapore and Malaysia unit in a statement, adding that the company’s overall operation in the region was safe and stable.
Various debt management methods are being evaluated in order to actively resolve the issue of periodic liquidity in order to ensure the company’s long-term future development, it added without more elaboration.
Malaysia’s central bank stated that banks established in the Southeast Asian country had limited exposure to Country Garden, adding that its Malaysia unit was servicing debts promptly.
The present developments with Country Garden Holdings Ltd in China are not expected to have a major influence on overall property market activity and prices in Malaysia, according to Bank Negara Malaysia in an email to Reuters.
The huge Forest City project is being built by the Chinese developer across four reclaimed islands in the southern Malaysian state of Johor, which borders the wealthy city-state of Singapore.
Faced with difficulties since its inception in 2016, the project, which now houses approximately 9,000 people, has seen a dramatic drop in demand as a result of China’s efforts to halt cash outflows and the COVID-19 outbreak.
Malaysians are also concerned about the likelihood of a housing oversupply and environmental damage as a result of a massive land reclamation initiative. In addition to residential buildings, the project plans to house 700,000 people by 2035 in a development that includes office towers, malls, and schools.
The company’s announcement follows Malaysian Prime Minister Anwar Ibrahim’s announcement that the project would be designated a “special financial zone” to encourage investment and lower the cost of doing business there.
Anwar said in a statement on Friday that among the new incentives offered are a 15% income tax rate for talented workers and multiple admission visas. According to RHB analyst Loong Kok Wen, the new classification will draw businesses and inhabitants from Singapore, where costs are significantly higher.
According to the analyst, this step should assist to revitalize the Forest City Township, which has experienced a lot of negative attention in recent years. Malaysia’s incentives should be “very positive” for Country Garden, according to Steven Leung, director of UOB Kay Hian in Hong Kong.
The Chinese developer stated that the incentives from Anwar’s administration demonstrated the Chinese government’s faith in the project, which is now in its second phase of development focused on pursuing more investment options. Country Garden’s stock closed flat after rising as much as 9% on Monday.
Forest City is a collaborative venture between the Johor government and the state’s sultan, and Esplanade Danga 88, a private Malaysian enterprise.
Yang Guoqiang’s family owns Country Garden, a property development company based in Guangdong, China. It was placed 206th on the 2023 Fortune Global 500 list. Country Garden has a market valuation of more than US$29.84 billion as of 2018, and its broad international project portfolio includes 187 high-end township developments in China, Malaysia, and Australia. The Cayman Islands are where the corporation is registered.
