PETALING JAYA: Financially-strapped Chinese developer Country Garden said its property projects in Malaysia including the massive Forest City project in Johor, are on track and it has sufficient assets despite concerns about its mounting debt woes.

“Our company’s projects in Malaysia are operating normally and the sales performance is strong. To date, the overall operation of the region is safe and stable,” Country Garden’s Malaysia and Singapore unit said in a statement today.

The statement by China’s largest private developer came after it missed two US dollar coupon payments this month totalling US$22.5 million (RM104 million), exacerbating fears that the country’s growing property debt crisis could spread overseas.

Currently, the group has five projects in Malaysia namely, Country Garden Danga Bay, Forest City and Central Park in Johor, Lake City@KL North, and Diamond City in Kuala Lumpur.

“At the present time, the company has sufficient net assets and sufficient land reserves. At the same time, various debt management measures are considered to actively resolve the pressure of periodic liquidity, to ensure the company’s long-term future development,” it said.

It added it will strongly push forward the work of ensuring deliveries and operation, revitalise accumulated assets, strengthen internal management, and improve operating efficiency.

Country Garden is building its largest overseas development at Forest City, which spans four reclaimed islands bordering the island state of Singapore.

The project, now home to about 9,000 people, has been plagued by challenges since its launch in 2016. Demand for properties there fell sharply following China’s move to restrict capital outflows and the Covid-19 pandemic.

Reports indicate the project is targeted to house 700,000 people by 2035 in a development that includes office towers, malls, schools, and residential buildings.

The developer also welcomed Prime Minister Anwar Ibrahim’s announcement last week that the government plans to create a “special financial zone” in Forest City to boost investment and economic growth in Johor.

“This proves the government’s confidence in the Forest City project,” the statement said.

The special financial zone will provide an expansion of incentives in Iskandar Malaysia to Forest City, including a special income tax rate of 15% for skilled workers and multiple entry visas. This is expected to help spur the growth of businesses involved in the healthcare, education and tourism industries.

Forest City vice-president Syarul Izam Sarifudin said the project is now in phase two of its development and is poised to create more investment opportunities.

“The announcement made by the prime minister will benefit the Johor and regional economy as a whole. We are looking forward to a long-lasting and successful collaboration,” he said.

Forest City is a joint venture with Esplanade Danga 88, a private company backed by the Johor government and the Sultan of Johor.

Meanwhile, a Reuters report today said Malaysian banks had “limited exposure to Country Garden”, adding that its Malaysian unit was servicing loans promptly.

“The current development with Country Garden Holdings Ltd in China is not expected to pose any material impact on the overall property market activity and prices in Malaysia,” Bank Negara Malaysia told Reuters in an email.

The central bank added local banks’ exposure to Country Garden Real Estate Sdn Bhd, the developer’s wholly-owned Malaysian subsidiary, amounted to less than 0.1% of total banking system loans and bonds as of June 2023.