Country Garden Debt Crisis: Impact on Projects in Malaysia and Australia

Jakarta –

Chinese real estate giant Country Garden are having a lot of problems. In addition to debts of US$ 191 billion or the equivalent of Rp. 2,875 trillion which have the potential to default.

The debt crisis has made global headlines as the company has become the country’s largest developer by sales value before 2023.

Last week, the company halted trading of nearly a dozen domestic bonds, paving the way for debt negotiations and possible restructuring, as its share price plunged.

The company now has a reported 30-day grace period through early September to pay its debts before being deemed defaulted.

The debt also caused a new problem, namely that there were 1 million housing units that were stalled due to the problems faced by Country Garden.

Quoted from Reuters, Friday (25/8/2023), Country Garden now still has a project of 1 million housing units to complete, according to Bank Nomura from Japan. It is not yet generally known whether the project was halted due to financial circumstances.

Country Garden Debt Crisis Impacts Projects in Malaysia and Australia

The company’s business and construction projects are primarily concentrated in cities across mainland China, but has a subsidiary in Malaysia that also oversees three developments in the southern state of Johor.

Quoting Channel News Asia, Thursday (24/8/2023), this subsidiary of Country Garden also oversees the company’s flagship mega project worth US$ 100 billion or the equivalent of Rp. 1,500 trillion (exchange rate of Rp. 15,000/US$) called Forest City in Gelang Patah and another coastal development, Danga Bay, near Johor Bahru which has a gross development value of US$ 18 billion or Rp 270 trillion.

Elsewhere, still citing CNA, according to news reports in Australia, the beleaguered Chinese company is offering to sell 150 hectares of undeveloped Windermere land for an asking price of A$250 million (S$218 million).

A report by the Financial Review also quoted the developer as saying it plans to “disvest” its last remaining project in Australia – the A$2 billion Wilton Greens Estate in Sydney.

Country Garden Project in Malaysia Becomes a Ghost Town

It is feared that Country Garden’s failure to pay will affect various projects of this developer outside China.

Sure enough, one of his projects located in Malaysia is now on the verge of going bankrupt after being reported by the local media as a ghost town for a long time.

Quoting Insider, Friday (25/8/2023), built by Country Garden, Forest City can be considered a very ambitious project. Its area reaches 1,740 hectares, or four times the size of the city-state of Monaco. About 700,000 people were initially expected to live in the complex.

But in 2019, only about 500 people lived there, according to a 2019 Foreign Policy report.

An expert who declined to be named for security reasons said the area’s population had grown to several thousand people but still less than 5% of the expected population.

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(dna/zlf)

2023-08-26 01:00:49
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