This article first appeared in Forum, The Edge Malaysia Weekly on July 27, 2026 - August 2, 2026

When it comes to assessing investment proposals, it’s not what you don’t know that gets you into trouble. It’s what you know for sure but does not turn out as expected that eventually leads to the proposal going bad.

That is the case for the authorities that oversee investments in Forest City and their now soured relations with Network School and its founder, Balaji Srinivasan.

When Network School was set up in Forest City in 2024, it was positioned as a congregation point for tech talent from around the world. It was to effectively serve as a co-working and co-living space for tech entrepreneurs and digital nomads to explore anything and everything related to tech, AI and the digital economy.

Network School offered opportunities for crowdfunding and the gathering of “tech-minds” to talk about the latest tech applications for frontier AI-driven applications. The emphasis on the digital economy was a given, considering Balaji’s background as the former chief technology officer of Coinbase, a New York-based digital coin exchange.

The state and federal government agencies gave Network School all the approvals it needed to operate. The approvals in the state came from the top brass while the Malaysia Digital Economy Corporation gave Network School a Malaysia Digital status licence.

When the approvals were given, the authorities knew that Network School would be a congregating point for tech entrepreneurs from around the world.

They felt that the under-utilised Forest City could do with a good story to attract more people to live and work there. Forest City is already known as a “ghost city” in the region because of all its unoccupied space.

What the state and federal government authorities did not know was who exactly would be using the Network School facilities and whether their activities bordered on circumventing the local laws. In particular, nobody really took the initiative to find out if Network School and its techno entrepreneurs were carrying out anything illegal under Malaysian laws.

As it turned out, Network School closed down last week after the Immigration Department started looking at who were using the premises and where they came from. The raid only came about following speculative reports that the premises were being occupied by persons from Israel, a matter that until now has not been proved conclusively.

The allegations on social media were that Network School was linked to an Israeli agenda to establish a foothold in Malaysia through cryptocurrency-related investments.

The Immigration Department could not find any truth in the allegations that Israeli citizens were using the facilities. But the local authorities closed down Network School on the grounds that it did not have a licence. Balaji and Network School have found a new home in Kazakhstan after closing shop in Forest City.

But there are many unanswered questions.

Firstly, how did Balaji manage to set up shop in Forest City? Who approved the company’s presence? Was any due diligence done?

Or were approvals given because Forest City, a massive development that is largely empty, was in dire need of some catalyst to improve its utilisation and population count?

Secondly, was there any audit done on how much money Network School actually invested in its venture in Forest City?

According to Balaji, they had spent more than RM100 million on their venture in Forest City and were going to spend another RM500 million. A company search on the parent company of Network School, which is NSO Malaysia Sdn Bhd, does not suggest an investment to the tune of RM100 million.

According to NSO Malaysia’s filings, it has a paid-up capital of RM500,000. It is owned by NSO Pte Ltd and has three Malaysian directors who were appointed in December 2024. Balaji’s name does not appear anywhere in the company’s filings.

The filings state that the core business of Network School is computer programming and other IT-related services, providing co-working space, a café and other related services. The description of its business fits what is required for a technology commune to operate.

A technology commune rarely follows the local laws and rules. They believe that modern-day regulations do not apply to the technology world. Which is why they embrace digital coins as their currency instead of fiat money.

Although digital coins are gaining ground in the modern economy, the downside is that they are also used as a medium of transactions in illegal activities. For instance, hackers that blackmail companies usually demand digital coins as ransom.

And lastly, were there really Israeli citizens in Network School?

For the Immigration Department to conduct raids and the local authorities to close down Network School’s operations in Forest City, they had to have found something credible to back the allegations.

This case should not be one where there is nothing to substantiate the allegations, which would only leave Forest City with more bad publicity despite the many incentives given to it by the government.

When Forest City was launched in 2016, it was supposed to have been a huge development on four man-made islands spanning nearly 30 sq km. It was supposed to house 700,000 people.

It was planned as a city where people worked and lived.

However, planned cities are rarely successful. Brasilia and Canberra are examples of planned cities that are busy during the day and become empty at night. Nearer home, Putrajaya is another example of a planned city where the buzz is conspicuously missing.

In the case of Forest City, it does not have any activity during office hours and becomes a place with many empty and dark apartment buildings at night.

Forest City was a grand plan of China’s Country Garden and Kumpulan Prasarana Rakyat Johor to house 700,000 people on the reclaimed islands. The project received the backing of the Johor Palace.

But it has not shown any commercial viability so far. Country Garden is financially stretched and based on the large number of unoccupied lots in Forest City, it is hard to fathom how the development can progress in the future. Getting investors for new launches is an unlikely prospect for now.

The locals only live in Forest City because the rent is cheap compared to that in other parts of the state. The foreigners using the facilities of Network School were staying at Marina Hotel.

The federal government has thrown in many incentives for Forest City to help spur the development and make it a viable commercial venture. These include giving the development duty-free status and tax incentives for family offices and corporations with offices there and making it part of the Johor-Singapore Special Financial Zone.

But so far, nothing seems to have created any excitement about Forest City.

Until the Network School episode happened, the only interest in Forest City was about its empty apartment and commercial buildings and its reputation as the “Ghost City” of the region.

M Shanmugam ([email protected]) is a contributing editor at The Edge

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