Malaysia passes new Bills to create duty-free island Pulau Satu in Johor’s Forest City
The beleaguered city development has been labelled a “smuggling hub” by local media under its current “duty-free area” status.
SINGAPORE: A 770-acre islet in Johor’s beleaguered Forest City will officially become a duty-free island, which will see it enjoy special tax provisions to boost economic growth in the area.
This comes after Malaysia on Wednesday (Jul 17) approved five Bills over the Pulau Satu island, which is part of the beleaguered US$100 billion development.
The Bills involve amending customs, excise (an indirect tax charged by the government on the sale of a particular good or service), free zones, sales and service tax laws. They were tabled by Deputy Finance Minister Lim Hui Ying for a third reading and passed through a voice vote.
They are the Customs (Amendment) Bill 2024, Excise (Amendment) Bill 2024, Free Zones (Amendment) Bill 2024, Sales Tax (Amendment) Bill 2024, and Service Tax (Amendment) Bill 2024.
Once the relevant laws are amended, Pulau Satu will join the likes of other duty-free islands in the country such as Labuan, Langkawi, Tioman and Pangkor.
Local media reported that Mdm Lim said that the existing laws governing other duty-free islands would also apply to Pulau Satu, including the requirement for visitors to stay on the island for at least two days to qualify for duty-free products.
Mdm Lim added that chocolates, cosmetics, alcohol and perfumes would be exempt from duty.
She also said the Bills aim to boost trade, attract investments and stimulate economic activity in the region, as part of administrative capital Putrajaya’s plans to create a special financial zone in Forest City to foster investment and economic growth in Johor, according to Free Malaysia Today.
Several members of parliament (MPs) participated in the debate on the Bills, which were met with some pushback and queries.
Mr Jimmy Puah, member of the People's Justice Party (PKR), which is part of the ruling Pakatan Harapan (PH) coalition, suggested expanding the list of duty-free items to include electronics and other popular products to encourage more purchases by Singaporeans.
He also proposed reducing the 48-hour stay requirement to just one night to provide a competitive edge against the Lion City, according to local media.
Forest City is currently classed as a duty-free area, a status it was granted in 2016. With the recent Bills amendment, Pulau Satu’s status will change and it will be gazetted as a duty-free island.
This means the area will be subjected to less stringent restrictions for tax permits and applications for the sale of duty-free goods, a spokesperson from Forest City’s Chinese developer Country Garden told CNA.
Under duty-free area laws, customers can buy up to three crates of beer (24 cans per crate), five litres of liquor, and three cartons of cigarettes (200 sticks per carton) at duty-free prices from designated complexes.
Alcoholic beverages and cigarettes must be consumed only within Forest City and cannot be taken out.
However, local media has previously reported a spate of trafficking of duty-free goods out of Forest City and reselling them at marked-up prices, labelling the development a “smuggling hotspot.”
Last August, Mr Anwar announced during a visit to Johor that the Forest City project would be designated as a special financial zone to spur the economy in the Iskandar Malaysia region.
In January, Singapore and Malaysia signed a Memorandum of Understanding on a Johor-Singapore special economic zone (SEZ), aiming to boost cross-border economic connectivity.
However, the Forest City project has met hurdles, including fears over lagging development and Country Garden’s financial issues.
Various media reports labelled the project a “ghost town” in reference to the development’s slow pace of construction and low occupancy rates for its residential properties.