Deputy Housing and Local Government Minister Raja Kamarul Bahrin Shah Raja Ahmad says the federal government has no power to stop foreigners from buying properties in Forest City as the project is under the state government and located in an international zone.
"No restrictions can be imposed on foreigners buying those properties. This is beyond the jurisdiction of the federal government," he said in the Dewan Rakyat on Thursday, 1 November.
He was replying to Khairy Jamaluddin (BN-Rembau), who had asked if the government would restrict foreigners from buying the remaining unsold properties in Forest City.
Raja Kamarul said his ministry had made several initiatives to encourage locals to buy property in the area to prevent resentment among the people of Johor.
"The government feels there should be a social impact assessment so that the project will not be exclusive," he added. "We realise that exclusive zones will create resentment among the locals."
The Forest City project has faced uncertainty since Pakatan Harapan's shock victory in the May 9 polls, as developer Country Garden Holdings Co looks to revive faltering demand for a city planned to be home to 700,000 people.
Malaysians living in Johor have complained of large numbers of foreigners, especially from China, snapping up properties in Forest City. They also voiced concerns over environmental damage, a glut in the property market, and the impact of land reclamation on fisheries.
On Aug 27, Prime Minister Dr Mahathir Mohamad said Malaysia would not allow foreigners to buy residential units in the project.
However, Country Garden subsequently said there was no such ban under Malaysian laws.