By Gavin Bowring and Hafiz Noor Shams

Malaysia has informed a leading Chinese real estate company of a decision to slash the size of a huge but controversial development bordering Singapore following complaints from the city state’s government, according to local media reports.

The Malaysian Insider, a popular bilingual local news site, reported that Kuala Lumpur has cut the size of “Forest City” – a joint venture between the Chinese developer Country Garden and the sultan of Johor – to 405 hectares from the originally planned 1,600 hectares. In its shrunken form, the project is set to be slightly smaller than the Singaporean island of Sentosa, which covers 500 hectares.

“The DOE has decided to limit the project to the first phase and wait for a few years to see the impact before looking at future phases,” The Malaysian Insider quoted a source as saying. The news website added that Malaysia’s Department of Environment (DoE), which made the decision, has informed executives at Country Garden Pacific View, the Chinese company’s Malaysian affiliate, of the ruling.

The project, which had an estimated total investment of around $150bn in its original form, envisioned scattered assortments of residential-commercial-retail districts, a new football stadium and sports centers (see photo).

It would have added to Country Garden’s existing project under construction in Johor Bahru’s Danga Bay. Although this project occupies a comparatively small 22 hectares of reclaimed land, it is already Johor state’s largest standalone condominium project, delivering over 9,000 housing units upon completion by 2017-2018.

Singapore, however, raised concerns over the Forest City development, which would have reclaimed islands from the Straits of Johor, the narrow waterway that separates the city state from Malaysia. “Given Johor’s close proximity to Singapore, we are naturally concerned about any possible transboundary impact on Singapore from property development projects that involve reclamation work in the Straits of Johor,” a Singapore Ministry of Foreign Affairs spokesman has been quoted as saying.

It was not clear if the ruling – yet to be publically confirmed by the Malaysian DoE – would assuage the concerns that Singaporean officials have voiced to their Malaysian counterparts.

In any case, the DoE’s ruling does not appear to be permanent and does not rule out future expansions of the project beyond the first phase.

The ruling on the project may have been complicated by the fact that Country Garden’s 34 per cent partner in the project is the Sultan of Johor, with whom Kuala Lumpur is thought to have a somewhat fractious relationship. Utusan Malaysia, a Malay-based national daily closely-linked to Umno – the leading party in the country’s ruling coalition – has criticised the Johor sultan for interfering in state government administration.

Underlying the complex relationship across the Straits of Johor is the migration of Singaporean manufacturers to Johor to take advantage of abundant low cost land no longer available in Singapore. Singapore is also tightening its immigration requirements, leading to growing labour shortages in the city-state.

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