The Johor mega development project Forest City, often labelled a "ghost city", has a new talking point.

Unfortunately for the people involved, the source appears to be the illegal trade of dutiable items.

Ghosting

Forest City is a mega development project located on reclaimed land in the south of Johor, near the Second Link bridge between the Malaysian state and Singapore.

It has encountered numerous troubles in recent years, with low take-up rates, many disappointed investors, and the project largely sitting empty in recent years.

The project however retains the backing of the Johor and federal governments, with the implementation of a duty-free zone within the development being one tool used to try to increase its popularity.

The development has 10 duty-free stores which are allowed to sell alcoholic beverages, cigarettes, and chocolates in limited quantities to visitors and residents of Forest City.

However, the New Straits Times has reported that individuals are smuggling duty-free items out of the zone, and selling them for significant markups after being alerted to the practice.

Pictures in NST's report appear to show personal vehicles being used to smuggle large amounts of beer from the development.

The NST reports that under laws applicable only to Forest City, customers can buy three crates of beer, five litres of liquor, and three cartons of cigarettes without having to pay duty.

However, buyers of such duty-free items need to identify themselves either as residents ,or using other identification papers, such as passports or Malaysian MyKad.

Items bought in the duty-free zone are to be consumed within Forest City and can only be taken out after paying additional taxes on the items.

Good terms

A NST reporter said they were approached outside a duty-free store by an individual claiming to be able to smuggle items out of the duty free zone.

NST said that a crate of 24 beers that cost RM 143.90 (S$41.30) was priced at RM74.30 (S$21.32) in Forest City’s duty-free stores.

The agent quoted a RM25 (S$7.18) delivery fee, meaning savings of RM44.60 (S$12.80), roughly 30 per cent cheaper than normal.

The agent said the customer would buy the duty-free items and hand it over to the agent in the basement car park.

The agent would then drive the duty-free goods out of Forest City and meet up with the buyer outside the development in a quiet forested area.

The duty-free goods would then be handed over to the buyer in exchange for payment.

When questioned, the agent said that he was on “good terms” with the customs officers.

He also said that as there were not many customers for the duty-free stores, his services contributed to their livelihood.

He further reassured the reporter that he would not simply run off with the goods, saying that he had been smuggling duty-free items for three years.

The NST reporter did not use the agent's services.

It appears that there are still some limitations to what the agent could do.

This was shown when the agent asked for the reporter to help him buy duty free goods as “his monthly quote had been used up”, implying that regulation of the quota was still taking place.

When the NST reporter entered the complex, a customs officer told the reporter that duty-free items had to be consumed within Forest City.

But when leaving the area, the reporter said there was no customs officer, and that he only encountered a security guard who allowed him to leave without inspecting his car.

Special economic zone

Forest City’s fortunes appear dire at the moment, but there have been attempts to resuscitate it.

Plans mooted by the Sultan of Johor and Malaysian Prime Minister Anwar Ibrahim have suggested that Forest City could be within a special economic zone (SEZ), where foreigners would be allowed to reside but maintain quick access to Singapore.

The SEZ was discussed during the October Leader's Retreat between Prime Minister Lee Hsien Loong and Anwar. A memorandum of understanding is due to be signed in January 2024.

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Top image via Forest City 森林城市/Facebook