As Malaysia prepares to develop an economic zone with Singapore here in a bid to revitalize the region, it also hopes to breathe new life into a struggling decade-old urban development project nearby by turning it into a financial center.

The two countries are expected to ink a final agreement by year-end on developing the Johor-Singapore Special Economic Zone. The area, planned to be four times the size of Singapore, aims to promote industries including logistics, health care and financial services.

Alongside this project, attention is returning to Forest City, a huge development spanning four reclaimed islands in the southwest of Johor state.

Forest City, launched in 2014, is 60% owned by a Chinese real estate developer and 40% by a local company. The plan envisions 700,000 people living in the development, which also features offices, restaurants and schools.

But only 10,000 people reside there now, according to local media. Properties are being purchased mainly by Chinese buyers for investment purposes, leaving so few actual residents that the development has been dubbed a “ghost town.”

Malaysia looks to change this with a newly established special financial zone.

The government “announced a competitive package of incentives to make Forest City a magnet for international capital,” Prime Minister Anwar Ibrahim said in an address at a September event for investors.

Under a program set to launch in the first quarter of 2025, single family offices — businesses that handle the wealth of individual rich families — in Forest City that manage more than 30 million ringgit ($6.8 million) in assets will be eligible for corporate tax exemptions. Malaysia is also considering offering tax rates of zero to 5% for other companies in the zone that meet certain requirements.

In recent years, affluent families from China and other East Asian countries have been moving into Southeast Asia to seek tax breaks and education for their children. The number of family offices in Singapore is on the rise, and Malaysia hopes to draw these families across the border to Johor.

“It remains to be seen if the [family office] scheme at Forest City SFZ will be a solid alternative to other established jurisdictions, such as Singapore and Hong Kong, for high-net-worth families looking to set up a family office in the region,” wrote the tax, trade and wealth management team at Wong & Partners in Malaysia.

“Further clarifications from the [securities commission] is required, particularly on the scope of the tax incentive and detailed conditions,” the team wrote.

The special financial zone appears to have done little so far to bring fresh energy to Forest City on its own. On a recent visit, the development was still sparsely populated, with many shops closed. Store staff said they had seen no increase in customer traffic despite the financial zone designation.