Malaysia mulls over casino as part of plans to revive Forest City, say sources

KUALA LUMPUR - Malaysia is looking at allowing a casino to operate in the RM450 billion (S$128.5 billion) Forest City project in Johor, which would revitalise the troubled reclaimed islands.

Sources with knowledge of the discussions told The Straits Times that such a development is among proposals for the Johor-Singapore Special Economic Zone (SEZ), an integrated commercial and investment hub to ease movement of goods and people between the two countries.

Bloomberg had reported that Prime Minister Anwar Ibrahim met Berjaya Corp founder Vincent Tan as well as Genting Group chief Lim Kok Thay at Forest City in mid-April with Johor Sultan Ibrahim Iskandar, who also began his five-year term as Malaysia’s King in January, also represented. Genting controls Malaysia’s only casino and operates Sentosa’s Resorts World Sentosa, one of two integrated resorts (IRs) in Singapore. The other IR is operated by Marina Bay Sands.

An official source, who asked not to be named, confirmed the premier’s presence at the development during his April 18 visit to Johor, during which he proclaimed the southern state would be Malaysia’s most developed with economic growth outpacing the rest of the country.

The PM’s office did not respond to a request for comment on the meeting that was among several on April 18 focused on the SEZ as well as a Special Financial Zone – offering special tax rates and visas – in Forest City.

“Interestingly, gaming is one of the key sectors to be promoted under the SEZ for Forest City,” the source told ST.

However, opening a second casino in Malaysia could prompt political backlash from the Malay-Muslim majority which Datuk Seri Anwar’s government is already struggling to win over. About two-thirds of these voters backed the opposition in 2023 polls to elect new administrations in six states.

But proponents of a casino see such a development as a boon for the 2,000ha Forest City township, off Singapore’s western coast and about four times the size of Sentosa, as well as for the wider Johor economy.

Several Johor-based businessmen also told ST that proposals for a casino in Johor have been mooted for over a decade, as south Johor’s Iskandar region, conceived as a development corridor in 2006, has failed to live up to expectations.

“There has not been a strong pull factor. A casino would have major spillover effects as high-value individuals would make footfall here and boost other commercial sectors,” one tycoon with wide business interests in the state told ST.

Although Johor’s state government claimed on April 22 that 70 per cent of properties in Forest City have been sold, it has repeatedly been dubbed a “ghost town” due to low occupancy.

Forest City is being built by a joint-venture company led by Chinese developer Country Garden Holdings. Sultan Ibrahim himself controls about a fifth of the joint-venture firm.

Although politically sensitive as Islam prohibits gambling, those that support the idea note that the existing casino in Genting Highlands has operated for over half a century without any issue as regulations bar Muslims from entering the gaming halls. Many Muslims visit Genting Highlands to enjoy other attractions such as theme parks, restaurants and retail shops in the cool mountain air.

According to its annual reports, Genting Malaysia – which mainly runs the highland resort, a couple of beach resorts in Malaysia and small operations overseas – contributed nearly RM5 billion to government coffers annually before the Covid-19 pandemic hit in 2020.

A similar boost from a new gaming-centred attraction would help ease the Anwar administration’s struggles to rein in the fiscal deficit having inherited over RM1.5 trillion in debt and liabilities.

In a note to clients, UOB-Kay Hian said that if the new casino materialises, it would likely not impact Genting Highlands which is largely frequented by Klang Valley visitors while “Genting Singapore has a different landscape and customer profile” and “cannibalisation from a potential Forest City casino will eventually be digested”.

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