Iskandar Puteri City Council Revokes Network School Licenses in Forest City

Licensing Revocation and Forest City Shutdown

By the morning of July 22, the presence of the Network School in Forest City had been dismantled. Its signage was removed, and the co-working space, which occupied four adjoining units, was sealed by authorities. According to reporting by CNA, officers from the Iskandar Puteri City Council (MBIP) arrived to inspect the premises and affix an official closure notice after the organization’s office furniture had already been cleared out.

The shutdown followed a special full council meeting where officials determined the company had breached several conditions, including operating without a valid license. The Straits Times reported that Johor authorities found the school was operating out of premises that lacked proper authorization and that its activities exceeded the scope of its existing office license. Furthermore, the details displayed on its signboards did not comply with the approved advertising permits.

Founder Balaji Srinivasan previously characterized these issues as technical matters that could be corrected, noting that the co-working space resulted from joining two neighboring units, only one of which was fully licensed. However, after reviewing enforcement findings and company representations, the city council moved to revoke the license. Johor Menteri Besar Onn Hafiz Ghazi emphasized that the process followed standard procedures, stating that no organization is above Malaysian law.

Public Controversy and Immigration Scrutiny

The closure was preceded by intense public and political pressure. Allegations surfaced on social media claiming that Israeli nationals had participated in the program using passports from third countries. Because Malaysia maintains no diplomatic ties with Israel and generally restricts the entry of Israeli passport holders, the claims triggered investigations by the Immigration Department and other federal agencies.

Authorities stated that further compliance checks would continue, but the focus of the enforcement action ultimately shifted to the organization’s business licensing status.

Impact on Participants and Investor Sentiment

The sudden closure left participants in a state of uncertainty. One member, a Canadian national, described the experience as a frustrating disruption after receiving less than a day’s notice to vacate. It’s not cool how we’ve been treated. Let’s see what happens, but for now it’s better we head back, he told reporters while preparing to depart for Singapore.

In the aftermath, former Malaysian officials have weighed in on what the closure signals for the country’s technology sector. Former science, technology, and innovation minister Khairy Jamaluddin and former Umno leader Shahril Hamdan argued that the event is unlikely to deter major foreign direct investment (FDI). I suspect the big FDI (foreign direct investment) players don’t care. They’ve invested here for a long time. They know the ins and outs of investing in Malaysia, Khairy said on the Keluar Sekejap podcast, as cited by Freemalaysiatoday.

Shahril suggested that the controversy might have been mitigated had the organization been more diplomatic regarding local cultural sensitivities. He added that future initiatives should focus on better integration with local startups and government agencies, such as the Malaysia Digital Economy Corporation, to demonstrate local benefits.

Future Plans in Kazakhstan

Even as operations in Johor were halted, the organization moved quickly to announce a new partnership. On July 22, Srinivasan confirmed on X that he had signed a memorandum of understanding with the Republic of Kazakhstan to establish a new campus. The agreement, signed with Deputy Prime Minister and Minister of Artificial Intelligence and Digital Development Zhaslan Madiyev, aims to create a hub for artificial intelligence education, research, and startup support.

The collaboration is set for a five-year term and will focus on attracting international engineers and researchers. According to the Kazakhstan Ministry of Digital Development, Innovation and Aerospace Industry, the partnership may include hosting a Network State Conference in 2026. Srinivasan described the planned location as a haven for the global technology-optimist community.