Embattled Chinese developer Country Garden said on Monday its $100-billion project in Malaysia was proceeding as planned and it had sufficient assets, despite concerns over its financial strength.
The comment by China’s largest private developer came after it missed two dollar coupon payments this month totaling $22.5 million, fueling fears that the country’s property debt crisis could hamper a broader economic recovery and spill overseas.
“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, adding that its overall operation in the region was “safe and stable.”
“Various debt management measures are considered to actively resolve the pressure of periodic liquidity, to ensure the company’s long-term future development,” it added, without elaborating.
Country Garden is building its largest overseas development, the massive Forest City project, across four reclaimed islands in the southern Malaysian state of Johor bordering Singapore.
Beset by challenges since its 2006 launch, the project, now home to about 9,000 people, saw demand fall sharply following China’s move to stem capital outflows and 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.
The project aims to house 700,000 people by 2035 in a development that includes office towers, malls and schools, besides residential buildings.
The company statement comes after Malaysian Prime Minister Anwar Ibrahim said the project would be designated a “special financial zone” to attract investment, and help cut the cost of doing business there.
Among the new incentives offered are a special income tax rate of 15% for skilled workers and multiple entry visas, Anwar said in a statement on Friday.
RHB analyst Loong Kok Wen said 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, which was now in a second phase of development focused on exploring more investment opportunities.
Shares of Country Garden were up more than 8% 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.
Reuters