KUALA LUMPUR (Reuters) – Malaysia said Tuesday that a committee will review Forest City's $ 100 billion project, one day after Prime Minister Mahathir Mohamad said foreigners would not get visas to live there ,
FILE PHOTO: Interested parties are viewing a model of development in the Forest City Showroom at Country Gardens in Johor Bahru, Malaysia, February 21
Mahathir's comments were a setback for Chinese developers Land Garden Holdings Co. Ltd is trying to revive the weakening demand in the project at the southern tip of Malaysia.
"We will form a committee to study and review the conditions previously agreed," Minister of Housing and Local Government Zuraida Kamaruddin said at a press conference.
"We will work with all involved agencies as well as with the developer and we will see what the best way is," said the Minister.
Hong Kong-listed company Country Garden, China's largest real estate developer after sales, fell as much as 3.5 percent on Tuesday after Mahathir's announcement in early trading.
Mahathir had also said that Malaysia would not issue a visa to foreigners to live in Forest City.
The Forest City The project, which eventually housed 700,000 people on reclaimed land near Singapore, was facing uncertainty as the Mahathir coalition won a shock victory in a May general election.
The project, along with several other infrastructure megaprojects backed by Chinese money, became Mahathir's election campaign when he aroused public disapproval of alleged dependence on Chinese capital.
In a statement on Tuesday, the Prime Minister's office said that the purchase of real estate by foreigners in Malaysia does not guarantee automatic residence in the country.
The statement, however, does not refer to the development of Forest City.
"The government affirms that it welcomes foreign direct investment that contributes to technology transfer, creates jobs for locals, and builds industries," Mahathir's office said.
Since becoming Prime Minister in May, Mahathir has slowed China-backed projects worth over $ 20 billion, including a massive railroad project.
Country Garden Pacificview Sdn Bhd, a joint venture between Country Garden and the Johor State government to develop Forest City, said Monday in a statement that Mahathir's comments were "taken out of context".
The company said Mahathir had responded positively to Country Garden Chairman Yeung Kwok Keung at a meeting two weeks ago, and that the company had complied with all necessary regulations in the development of the project.
Reporting by Joseph Sipalan; Editing by Darren Schüttler & Simon Cameron-Moore