Johor authorities have revoked the business licences of the Network School in Forest City, ordering an immediate cessation of operations effective July 22. The decision follows government investigations into licensing irregularities and public concerns regarding the digital nomad community’s activities and the potential presence of Israeli nationals.
Licensing Violations and Enforcement Actions
The Iskandar Puteri City Council (MBIP) initiated enforcement action following a series of inspections at the Forest City premises on July 12, 14, 19, and 20. Specifically, one unit at Teluk Bintang was found to be operating without the required business licence, while another unit in Jalan Forest City 5 was using its premises for activities that deviated from its approved office-use permit.
The enforcement process culminated in a special full council meeting where officials determined that immediate closure was necessary.
“The length of time a premise has operated does not mean its activities are in perpetual compliance with licensing terms. Once non-compliance is identified, action must be taken without compromise.”
Onn Hafiz Ghazi, Johor Menteri Besar
Controversy Over Digital Nomad Community
The Network School, founded by US investor Balaji Srinivasan, had been under intense public and official scrutiny prior to the license revocation.
While Malaysia’s Immigration Department conducted an inspection last week and found that all members possessed valid travel documents, the scrutiny extended to the nature of the community itself. Critics pointed to Srinivasan’s 2022 book, The Network State, which outlines a mission to establish decentralized communities independent of existing nation-states, as a potential challenge to Malaysian sovereignty.
State Government Stance on Sovereignty and Investment
The Johor state government has sought to balance its reputation as an investment hub with a firm stance on national security. Onn Hafiz Ghazi noted that while the state welcomes high-value investments that drive economic growth, such interests are secondary to national legal and security frameworks.
“However, no investor, company or organisation can be placed above the sovereignty of the country’s laws.”
Onn Hafiz Ghazi, Johor Menteri Besar
The state has also called upon the Digital Ministry and the Malaysia Digital Economy Corporation to review the company’s Malaysia Digital
status.
Developer Response and Ongoing Investigations
Forest City, the master developer of the project, issued a statement on July 21 welcoming the government’s investigation. The company stated that it has cooperated fully with authorities and maintains a zero-tolerance policy regarding regulatory breaches.
The developer expressed confidence that the current investigations will ultimately bolster investor trust in the Forest City Special Financial Zone. Despite the closure of the Network School, Forest City indicated it remains committed to attracting global firms in information technology and artificial intelligence.
Future Regulatory Oversight
The incident has prompted a broader call for stricter due diligence across the state. Johor authorities have urged the Home Ministry, the police, and immigration officials to continue scrutinizing the case for any potential misuse of second passports or identity misrepresentation. The state government has also instructed regulatory bodies to enhance background checks on the ownership, funding sources, and operational models of organizations seeking to enter the Malaysian market.
It remains unclear whether the Network School will attempt a formal appeal of the licensing decision or if further legal action will be taken against the organization’s leadership. For now, the authorities have made it clear that the focus remains on ensuring that Johor’s strategic proximity to Singapore does not become a point of vulnerability for the country’s immigration and security systems.
Sources: Straitstimes, CNA.
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