Fred Hobby tells the story of the failed Chinese Belt and Road development in Johor Bahru, Malaysia — what can we learn from this?

The Malaysian peninsula. A tropical paradise and one of the most influential gateways from East to West. Ever since Zheng He’s voyages in the 15th century from Suzhou, this has long been an area that China has taken an interest in. An analogy for Malaysia and China’s symbiotic relationship is best put by the former Chinese Foreign minister, who compared them to “lips and teeth”.

Malaysia has an ethnically diverse population, of which 23% are of Chinese descent. Domestically, the political landscape has been affected by ethnic tensions and this came to light as a result of China’s Belt and Road Initiative. 2013 saw the beginning of China’s fiscal footprint on the region, as the number of economic excursions came thick and fast. Local Malaysians often saw this as a way of raising Malaysia’s international status, however, it came with its complications.

One project worth discussing is Forest City, in Johor Bahru Malaysia, a proposed megacity to be funded with vast sums of Chinese investment. The city was to be built on land reclaimed from the Johor Straits, a rich aquatic habitat that attracts some of the most fascinating tropical fish species in the world. Positioned opposite the predominantly western investment powerhouse of Singapore, Johor has long been pinpointed in China’s economic expansion in the Southeast. Forest City was designed to be a modern metropolis including top of the range apartment buildings, five star restaurants and water parks built on reclaimed land from the ocean. It was also touted to provide 700,000 jobs for local Malaysians, potentially lifting a large percentage of Johor residents out of unemployment.

In essence, the reclamation process was achieved by depositing sediment or sand into the sea to extend the shoreline. Environmentally and socially, there were three glaring problems that resulted from this process: seagrass meadows, tropical mangroves and the fishermen’s livelihoods were all put at risk.

  • The Johor Straits played host to Malaysia’s largest seagrass meadow, called the Tanjung Kupang. This area was home to some of the world’s most diverse marine wildlife and, similar to coral reefs, it was also immensely fragile to changes in temperature, water composition and tides.
  • The Sungai Pulai mangroves are Johors largest, with similar habitats are seen throughout Thailand, around Malaysia and Singapore. In particular, the Sungai Pulsai mangroves were designated as RAMSAR sites, wetland areas deemed of international importance.
  • Not only did these richly diverse areas play a key role in nature, but they were also a vital source of income for local fishermen. Declining fish stocks and rising petrol prices were regular issues that arose as a result of the development.

Prior to construction beginning, one would assume that a project worth “S$58.3 billion (US$40.9 billion)” would have passed appropriate local environmental regulations. But, after the initial phases, not only did local stakeholders begin to complain to authorities, but the Singaporean Government took notice and exchanged letters of concern with their Malaysian counterparts. Unsurprisingly, reclaiming land across the Johor Straits from Singapore was not only causing issues for their own environmental habitats but it was seen as a security concern for the Singaporeans.

The combined power of local pressure and international concern halted the project. Due diligence had to be undertaken from Country Garden — the Chinese company funding the project — in order to ensure they had carried out correct environmental checks for sanctioning the endeavour. It was subsequently revealed that they had not; only preliminary site assessments had taken place and the invasive nature of land reclamation was completely illegal.

Despite this seemingly damming revelation, the local elites in Malaysia who sanctioned the project initially allowed it to continue. Forest City started up once again and the advertisement surrounding this artificial paradise increased tenfold. Apartments were being sold regularly, construction continued and the land reclamation was fully finished — until the COVID-19 outbreak, that is.

China’s lockdown affected their population massively. Individuals struggled to travel abroad and the incentives for owning offshore property diminished. In light of this, Forest City’s rapid explosion of interest was slowed to a stroll. It quickly lost popularity and the buildings were left unfinished.

So, not only was the local seagrass and mangrove habitat completely decimated, but the project itself is now set to fail as a development. For the locals in the region of Johor, this has been an absolute disaster. The Insider, a UK construction based newspaper, described the project as a “living ghost town”, with less than 5% of the expected number of residents living there. The obstructions of this project from the beginning and the destruction it has caused to the local environment and economy has been unnecessary by all accounts. Sadly, it is a damming example of enterprise and investment having no interest in the repercussions for locals and land users.

However, it is not all doom and gloom. During Cop27, as reported by China dialogue, China’s Ministry of Commerce (MOFCOM) and the Ministry of Ecology and Environment (MEE) stated they will hold to the following maxims when assessing their future Belt and Road Initiative (BRI) projects:

  1. Adhere to the “green development concept” throughout the entire process of foreign direct investment and cooperations.
  2. Encourage the practice of environmental impact assessments and due diligence in accordance with internationally accepted standards;
  3. Apply high standards at the planning and design phase of infrastructure projects, and strengthen contact with host country governments, media, local people and environmental protection organizations; and
  4. Support investment in solar, wind, nuclear and biomass energy and other forms of clean energy.

It remains to be seen how well China will stick to these maxims, or whether it will at all. That said, if the outcome of the failed Forest City project is that in China’s future BRI projects developers and host governments take the local environment into consideration, then that is at least one silver lining that can be taken away. After all, foreign investment from China isn’t going to stop anytime soon, so ways in which this can be carried out sustainably need to be found. That is, if the damaging effects incurred by the local population of Johor are not replicated elsewhere around the world.