Malaysia Contemplates Introducing Casino to Bolster Forest City’s Special Economic Zone Plans

Malaysia Contemplates Introducing Casino to Bolster Forest City’s Special Economic Zone Plans

Kuala Lumpur: Malaysia is considering the possibility of permitting a casino within the RM450 billion (S$128.5 billion) Forest City project in Johor, aiming to breathe new life into the struggling reclaimed islands property venture in which the country’s monarch holds a stake.

The introduction of a casino would provide a much-needed boost for Forest City, a collection of high-rise condominiums constructed on reclaimed land by Chinese developer Country Garden Holdings. The project has faced difficulties in attracting residents from China and elsewhere due to various obstacles, including political opposition in Malaysia, China’s crackdown on overseas real estate investments by its citizens, and the Covid-19 pandemic.

Sources familiar with the discussions informed me that this proposal is part of the deliberations for the Johor-Singapore Special Economic Zone (SEZ), designed as an integrated commercial and investment center to facilitate the flow of goods and people between the two countries.

In mid-April, Prime Minister Anwar Ibrahim reportedly held discussions at Forest City with Vincent Tan, the founder of Berjaya Corp, and Lim Kok Thay, the head of Genting Group, along with Johor Sultan Ibrahim Iskandar, who also assumed Malaysia’s kingship in January. Genting currently operates Malaysia’s sole casino and manages Resorts World Sentosa on Sentosa Island, one of Singapore’s integrated resorts (IRs).

An unnamed official source confirmed the prime minister’s visit to the development during his April 18 trip to Johor, during which he declared the state would become Malaysia’s most developed region, surpassing the economic growth of other areas. The Prime Minister’s office did not provide a comment on the meeting, which was among several discussions on April 18 focused on the SEZ and a proposed Special Financial Zone within Forest City.

During the discussions, Anwar, senior government officials, and the business magnates deliberated over the prospect of granting only the second casino license ever issued in Malaysia. Country Garden has expressed interest in having a casino at the development, according to a source familiar with the situation.

Lim Kok Thay and Vincent Tan are prominent figures in Malaysia’s business landscape. Lim chairs Genting Group, which obtained approval in 1969 to establish Malaysia’s first casino in a hill resort in the central part of the country. Genting also operates casinos in various countries, including Singapore, the US, and the UK.

Tan is involved in diverse businesses, from real estate development to the operation of brands such as 7-Eleven and Starbucks in Malaysia. He has long harbored aspirations of obtaining a casino license in Malaysia, though local media reports suggest his attempts have been rebuffed at least twice.

King Ibrahim directly holds a stake in Berjaya Assets, while his daughter chairs Berjaya and the rail unit of Berjaya Land. King Ibrahim, the sultan of Johor, where Forest City is situated, assumed the Malaysian throne in January. Malaysia follows a unique constitutional monarchy system where nine hereditary Malay rulers take turns serving five-year terms.

It could also prove advantageous for King Ibrahim, who holds a substantial stake in the joint venture with Country Garden that serves as the master developer of Forest City, as per company filings. Members of the royal family or representatives of the king may be invited to participate in the ownership of any potential casino, according to one of the sources.

“It’s worth noting that gaming is one of the key sectors earmarked for promotion under the SEZ for Forest City,” according to the sources, who requested anonymity due to the sensitivity of the information.

However, the prospect of establishing a second casino in Malaysia could potentially provoke opposition from the predominantly Malay-Muslim populace, which Anwar’s government is already striving to win over. In the 2023 polls, about two-thirds of these voters supported the opposition in elections for new administrations in six states.

Meanwhile, the gaming industry in Malaysia is heavily regulated, with casino licenses subject to renewal every three months at the discretion of the finance minister, a position currently held by Anwar. However, a new gambling hub could generate revenue for the government.

Prior to the pandemic, the existing casino contributed up to RM5 billion (S$1.4 billion) annually, according to a report by UOB Kay Hian, a Singapore-based brokerage. Forest City is strategically located near Singapore, connected to Johor by a bridge. In January, Malaysia and Singapore agreed to jointly develop a special economic zone in Johor to enhance trade between the two countries. A casino in Johor could attract Singaporeans, who currently pay S$150 for day entry into the casinos in the city-state.

Source:

https://www.straitstimes.com/asia/se-asia/malaysia-mulls-over-casino-as-part-of-special-economic-zone-plans-to-boost-forest-city
https://www.businesstimes.com.sg/international/asean/malaysia-weighs-casino-licence-revive-forest-city

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