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.

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.






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