KUALA LUMPUR, Aug 29 — Bank Negara Malaysia (BNM) said yesterday banks incorporated in Malaysia face limited financial stability risk arising from exposure to China’s largest property developer, Country Garden.
Such banks’ exposure to Country Garden Real Estate Sdn Bhd (CGRE), the developer’s wholly owned subsidiary in Malaysia, amounted to less than 0.1% of total banking system loans and bonds by June, BNM told Reuters.
“CGRE is servicing their loans promptly and the local group of companies have adequate funds to meet their payment obligations,” said BNM,
Yesterday, the Chinese firm said its US$100 billion (RM465.05 billion) project in Malaysia is proceeding as planned and it has sufficient assets, despite concerns over its financial strength.
BNM said it requires financial institutions to consider current and prospective property market conditions in its viability assessment for financing property development and construction projects.
“In the property sector, risks from unsold units from CGRE’s various projects in the country remain manageable.
“The current development with Country Garden Holdings Ltd in China is not expected to pose any material impact on the overall property market activity and prices in Malaysia,” said BNM.
The Chinese property developer’s comments came after it missed two dollar coupon payments this month totaling US$22.5 million, fuelling fears the country’s property debt crisis could hamper a broader economic recovery and spill overseas.
Country Garden is building its largest overseas development, the massive Forest City project, across four reclaimed islands in Johor.
But the project, now home to about 9,000 people, has faced challenges since its 2016 launch, seeing demand fall sharply following China’s move to stem capital outflows and the Covid-19 pandemic.
Last week, Prime Minister Anwar Ibrahim said the project would be designated a “special financial zone” to attract investment and help cut costs of doing business there.
— Reuters
