Forest City: Close to Malaysia’s $100 billion Chinese-backed mega-island project, a collapsed bridge forces drivers to take a detour before they reach an artificial palm-oil city where apartments, roads and shops are empty.

Aimed at middle-class Chinese buyers, Forest City has weathered meager sales, Chinese currency restrictions, pandemic lockdowns and public anger over China’s growing influence in Malaysia.

But her future is again in doubt due to the financial problems of the Chinese real estate giant Country Garden. The developer of the project rose from a farmer’s idea to Beijing’s largest private real estate company, but is now saddled with $196 billion in debt.

It posted a record loss for the first half of 2023 this week but won approval from creditors to extend its key deadline for bond repayments, narrowly avoiding a potential default that puts thousands of developments in and out of the world’s second-largest economy at risk.

Another deadline looms next week on the payment of millions of dollars in unpaid interest, leaving it once again at risk of default.

“I hope Country Garden can overcome its financial difficulties,” said Zhao Bojian, 29, from Henan Province, China, who bought one of the 26,000 apartments in Forest City for $430,000 five years ago.

“If no one comes to Forest City, we won’t be able to do business here.”

This sprawling private town in the state of Johor, across from glittering Singapore, was one of many ambitious gambles by Country Garden that took the company to great heights but now risks bringing it back to reality.

Launched under China’s Belt and Road Initiative with a company partly owned by a powerful Malaysian sultan, Forest City is home to about 9,000 people, far short of its target of 700,000.

Construction workers navigate the island city by day and its deserted four-lane highway is eerily silent at night.

Only a few lights shine from the windows in the evening across the more than twenty tall towers in the project.

Beneath them are rows of shuttered storefronts, some with court papers taped to the doors demanding payments due. Inside, rubbish is strewn on the floors.

Private area

A security officer told AFP that many of the buyers do not live in the artificial city, but rather stash their money as absentee owners.

Model sculptures of the four artificial islands of the completed city – far from their current state – are located in the foyer of the sales showroom to attract potential buyers guided by Mandarin, Malay and English road signs.

Previous governments opposed granting residency to expatriate investors, and criticized the project as being built for foreigners only.

Malaysian Prime Minister Anwar Ibrahim has stepped in to try to save Forest City, which is threatening to be turned into a white elephant.

Last week, he announced the creation of a “special financial zone” and perks that include a special income tax rate and multiple entry visas. Regardless, observers say, Forest City faces an uphill battle.

‘ghost town’

Located a three-hour drive from the capital, Kuala Lumpur, the city attracts visitors who want to glimpse the towers of the space age or purchase duty-free alcoholic beverages.

“Everyone comes here to drink alcohol,” said Dinesh Raj Ravindaran, 32, a Singapore-based technician.

“I will not stay here, it is a ghost town. The road is dark and dangerous and there are no lights in the streets.”

Most of the activity is done by foreign workers – many from Nepal or Bangladesh – who maintain the city’s forests, sweep its roads or guard its towers.

An artificial sandy beach lined with beer cans, where families stroll under coconut palms, bears a sign warning would-be swimmers to beware of crocodiles.

In one of the 45-storey towers, an official says, only two floors are occupied while the rest are for sale.

And while Country Garden is struggling to survive, drastic efforts – from both Beijing and Kuala Lumpur – will likely be needed to put Forest City back on its feet.

“I came here for a holiday after watching TikTok videos,” said retailer Nurziwah Zamri, 30, from Malacca state.

“If you ask me if I will live here, the answer is no.”