Network School in Johor's Forest City Ordered to Cease Operations

Singapore, Singapore Jul 21, 2026 ALN: Johor’s Iskandar Puteri City Council (MBIP) has revoked Network School’s business licences and ordered the company to cease its operations in Forest City with effect from July 22 over licensing and premises-use violations. This decision marks a significant development in the ongoing scrutiny of foreign business operations within Malaysia, particularly those involving sensitive geopolitical implications.

The technology start-up, which focuses on co-living and co-working spaces, has found itself at the center of a controversy following allegations that it has hosted Israeli participants using second-country passports. This has raised red flags among Malaysian authorities, prompting a formal investigation into the company's activities. Malaysia's stance towards Israel is well-documented; the country does not maintain diplomatic relations with Israel, a position rooted in its strong pro-Palestine advocacy. Consequently, Israeli passport holders are generally prohibited from entering Malaysia unless they receive special permission from the Home Ministry.

However, the situation becomes more complex when considering that Israeli citizens can enter Malaysia using passports from other countries, a practice that, while not unlawful, raises questions about the implications of such actions within the context of Malaysia's foreign policy. The Malaysian government has maintained a strict approach to immigration and border control, particularly regarding individuals linked to nations that it does not recognize.

In a statement released on July 21, MBIP explained that the decision to revoke Network School's licenses was made during a special full council meeting. This decision followed inspections and enforcement checks conducted at the company's premises on July 12, 14, 19, and 20. The local authority reported that enforcement action was taken after the company was found to have breached licensing conditions and premises usage requirements under its jurisdiction.

Specifically, for a unit located at Teluk Bintang in Jalan Forest City 5 in Pulau Satu Forest City, MBIP stated that the company had been operating without a valid business licence. This led to the issuance of a Stop Business Notice under the Iskandar Puteri City Council Trade, Business and Industrial Licensing By-Laws 2018. Furthermore, the council revoked the business premises and advertising licences for another unit in Jalan Forest City 5 after discovering that the business activities conducted there differed from those approved under its office-use licence.

In addition to the licensing issues, MBIP issued a notice requiring the company to comply with its advertising licence after determining that the signboard displayed at the premises did not match the approved application. These licensing discrepancies highlight the importance of regulatory compliance for businesses operating in Malaysia, particularly in areas with significant foreign investment and international interest.

Johor Menteri Besar Onn Hafiz Ghazi publicly supported the decision, emphasizing that the action was taken in accordance with existing legal provisions after a thorough review of inspection reports, enforcement findings, and representations submitted by the company. He stated, "The enforcement action was taken only after complaints and information were verified, inspections were conducted, non-compliance was identified, and all legal processes were completed.”

Onn Hafiz further noted that the duration for which a business has been operational does not necessarily imply that all of its activities have adhered to licensing conditions. He asserted, "When non-compliance is identified, action must be taken without compromise,” reinforcing the government's commitment to upholding the rule of law and regulatory standards in the state.

In his statement, Onn Hafiz reiterated that Johor remains open to high-quality investments that contribute to economic growth, create jobs, and support the state’s development. However, he stressed that no investor, company, or organization can be placed above the sovereignty of the country’s laws. This statement reflects a broader trend in Malaysia, where authorities are increasingly vigilant about foreign investments, especially those that may conflict with national interests or security.

Onn Hafiz emphasized that the state government and local authorities would not compromise on any violations of the law or issues that could jeopardize national security, sovereignty, or public interest. He urged the Home Ministry, Immigration Department, police, and other relevant security agencies to continue their investigations and take stern action if any offenses involving the misuse of second passports, identity misrepresentation, breaches of entry conditions, or other violations of Malaysian law are uncovered. This call for stringent enforcement underscores the government's proactive stance in safeguarding national integrity.

Particularly as Johor serves as Malaysia’s strategic gateway bordering Singapore, Onn Hafiz expressed concern that any weaknesses or abuses of the immigration system must be swiftly and firmly addressed. This is especially pertinent given the region's economic interdependencies and the potential implications for Malaysia's international relations.

Additionally, Onn Hafiz called on the Digital Ministry and the Malaysia Digital Economy Corporation to review the company’s Malaysia Digital status or any recognition granted to it, should there be any breaches of stipulated conditions or principles. This indicates a comprehensive approach to governance, where compliance extends beyond immediate business operations to include broader digital and economic frameworks.

The Menteri Besar also urged all relevant agencies to tighten their due diligence processes, including conducting background checks on ownership, funding sources, operational models, and the narratives promoted by companies or organizations seeking to operate in the state. This proactive approach aims to ensure that potential investors align with the state’s economic goals while adhering to legal and ethical standards.

Coordination between agencies is being emphasized to ensure that every international investment and initiative is comprehensively assessed in terms of licensing, immigration, security, premises usage, and legal compliance. Onn Hafiz stated, "The Johor government will continue working closely with all parties to ensure the state remains a trusted investment destination without compromising on national security, sovereignty, or the rule of law.” This statement reflects a commitment to creating a balanced environment that fosters economic growth while prioritizing national interests.

Finally, Onn Hafiz revealed that the matter had been presented to the Malaysian King, Sultan Ibrahim Iskandar, and Johor Regent, Tunku Ismail Sultan Ibrahim. This indicates the significance of the issue not only at the local level but also in the broader context of national governance and policy-making. The involvement of royal figures in such matters underscores the importance placed on maintaining the integrity of the state and the adherence to legal frameworks governing business operations.

In conclusion, the revocation of Network School’s business licenses serves as a critical reminder of the complexities surrounding foreign investments in Malaysia, particularly in relation to sensitive geopolitical issues. As the Malaysian government continues to navigate the delicate balance between fostering economic growth and upholding national sovereignty, the implications of this case may resonate beyond Johor, influencing future policies and regulatory frameworks governing foreign enterprises in the country.