Malaysia in Talks With Tycoons on Casino to Revive $100 Billion Forest City

Malaysia is in early discussions with tycoons on opening a casino in Forest City, people familiar with the matter said, in a bid to revive the beleaguered $100 billion property project that counts the country’s monarch as one of its shareholders.

Prime Minister Anwar Ibrahim met Berjaya Corp. founder Vincent Tan and Genting Group’s Lim Kok Thay last week at the development on the southern coast of Malaysia near Singapore, the people said, asking not to be identified because the information is private. King Ibrahim Iskandar was also represented, the people said.

Anwar told reporters on Thursday that there are no plans to issue a casino license in Forest City. The people had told Bloomberg the talks were preliminary and it was unclear how seriously Anwar was taking the idea, which could cause a backlash in the Muslim-majority nation where gambling is frowned upon. The prime minister’s office didn’t respond to requests for comment on Wednesday.

A casino would be a boost for Forest City, the sprawl of high-rise condominiums built on reclaimed land by the Chinese developer Country Garden Holdings Co. It has struggled to attract residents from China and elsewhere, thwarted by a litany of hurdles including political resistance in Malaysia, a Chinese government crackdown on citizens buying real estate overseas and the Covid-19 pandemic.

It would also be a boon for King Ibrahim, a billionaire businessman himself who controls more than 20% of the joint venture with Country Garden that’s the master developer of Forest City, according to company filings. Members of the royal family or proxies of the king may also be invited to take a stake in any casino, one of the people said.

Anwar, senior government officials and the businessmen had lunch and meetings on the possibility of granting what would only be Malaysia’s second-ever casino license.

Country Garden is keen to have a casino at the development, a person with knowledge of the matter said, asking not to be identified because the information is private.

A spokesperson for Berjaya said the company isn’t aware of any conversation between Prime Minister Anwar and Tan on the potential development of any casino in Forest City. The National Palace, Country Garden and Genting didn’t respond to requests for comment.

Berjaya Corp.’s stock rose as much as 12% on Thursday, outpacing the broader market. Shares in Genting Malaysia Bhd. fell 1.5%, while Genting Singapore Ltd. dropped as much as 4.3%.

The two tycoons are among the most prominent businesspeople in Malaysia. Lim is chairman of Genting Bhd. His father, Lim Goh Tong, won approval in 1969 to open Malaysia’s first casino in a hill resort in a central part of the country. Genting also operates casinos in countries including Singapore, the US and the UK.

Tan is involved in businesses ranging from real estate development to operating brands such as 7-Eleven and Starbucks in Malaysia. He has long harbored ambitions of winning a casino license in Malaysia, but has been rejected at least twice, according to local media reports. King Ibrahim directly holds a stake in Berjaya Assets Bhd., while his daughter is the chair of Berjaya Corp. and the rail unit of Berjaya Land Bhd.

King Ibrahim, the sultan of the southernmost state of Johor where Forest City is located, ascended to Malaysia’s throne in January. Malaysia has a unique constitutional monarchy where nine hereditary Malay rulers take turns to serve five-year terms.

Any move to develop another casino in Malaysia could become a challenge for Anwar, who heads a coalition government made up of almost 20 parties. Gambling is prohibited under Islam and Muslims are barred from even entering Malaysia’s casino.

Gaming is one of the most regulated sectors in Malaysia. A casino license has to be renewed every three months at the discretion of the finance minister. Anwar also holds the finance minister post.

But a new gambling hub would bring in revenue for the government. The existing casino contributed as much as 5 billion ringgit ($1 billion) annually before the pandemic, according to a report by UOB Kay Hian, a Singapore-based brokerage.

Forest City is built on land near Singapore, which is linked to Johor by bridge. The city-state agreed with Malaysia in January to jointly develop a special economic zone in the state to boost trade between the two neighbors. Having a casino in Johor would appeal to Singaporeans who have to pay S$150 ($110) for day entry into one of the city-state’s casinos.

Once China’s largest developer by sales, Country Garden has become one of the biggest casualties of the nation’s real estate crisis. The company recently warned it will miss a deadline for reporting annual results, causing its shares to be suspended from trading in Hong Kong.