The country's largest foreign real estate developer, Country Garden Holdings Co Ltd, is scaling back its operations in Malaysia as sales of its US$100 billion Forest City project in Johor continue to decline because of the ongoing Covid-19 outbreak.
Country Garden has reduced its employment and sales team in Malaysia by two-thirds in the last two years, according to the South China Morning Post (SCMP), a Hong Kong-based news organisation.
SCMP stated, citing unidentified sources that included employees, that Country Garden had reduced its Malaysia headcount to 500 as of June, following three waves of layoffs over the previous 18 months, and sold less than ten properties in Forest City the same period.
Another round is expected, according to SCMP, with offshore staff being recalled to China either to fill gaps in Country Garden's home branch or to leave the company if they refuse.
Country Garden's spokesman in Hong Kong has not responded to SCMP's inquiries, according to SCMP.
Country Garden Pacificview (CGPV) Sdn Bhd authorities could not be reached for comment at the time of publication by NST Property.
CGPV is the master developer for Forest City and a real estate joint venture between Esplanade Danga 88 Sdn. Bhd and Country Garden. Esplanade Danga 88, an associate company of Kumpulan Prasarana Kerajaan Johor owns 40 per cent of CGPV while the remaining 60 per cent is owned by Country Garden.
Forest City, which will be built on four reclaimed islands and would cover 30 square kilometres (eight times the size of New York's Central Park) when completed in 2035, is expected to house 700,000 people.
The project is meant to be Country Garden's most significant overseas project.
The retrenchments, according to SCMP, are the result of a "triple whammy" that began in 2017 when China's government lowered the tax on offshore remittances by Chinese citizens to prevent capital flight, followed by deteriorating relations between China and Malaysia under former Prime Minister Tun Dr Mahathir Mohamad.
Country Garden was forced to close all of its Forest City sales centres in China in early 2017 as a result of this.
Property sales in Forest City plummeted due to the epidemic of 2020 and the ensuing lockdowns and travel bans. It worsened in August of last year with the suspension of the Malaysia My Second Home Program, which provided 10-year visas to foreigners who purchased mid-to-high-end residential properties in Malaysia.
Country Garden estimated annual sales of 18 billion yuan (US$2.8 billion), or 11 per cent of Country Garden's total revenue in 2016, and pledged to invest US$100 billion (RM414.65 billion now) in Forest City over the next two decades.
In 2013, the company reclaimed its first square kilometre of land from the Johor Strait.
After eight years of development, only one of the four islands has been constructed, with condominiums, the five-star Forest City Marina Hotel, an international school, an industrialised building systems (IBS) factory, and a commercial area.
At the end of July, Country Garden reported that 10,953 Forest City residents had gotten their keys.