Malaysian local authorities have ordered Network School, a digital nomad and co-living community in Forest City founded by U.S. entrepreneur Balaji Srinivasan, to stop operating after its business license was revoked, marking a sharp escalation in official scrutiny of the project and its legal status in Johor.
The closure order was issued by the Iskandar Puteri City Council and requires Network School to cease all activities on July 22. The decision followed a formal review of inspection findings, complaints, and documents submitted by the company, according to statements from Johor officials.
Johor Chief Minister Onn Hafiz Ghazi said the enforcement action came after verified complaints, site inspections, and findings that the operation had not complied with licensing conditions. He said the length of time a business had been operating in the area did not automatically mean it was fully compliant with local rules.
The move comes after Malaysian immigration authorities inspected the site and confirmed that 266 foreign residents there held valid travel documents. The inspection followed online allegations that the facility was hosting people in breach of local laws, including claims related to Israeli citizens. Malaysia does not have formal diplomatic relations with Israel and entry issues involving Israeli passport holders can be politically sensitive.
The Immigration Department said further compliance checks were continuing.
Business license revoked after review
The Iskandar Puteri City Council’s order effectively shuts down Network School’s local operation unless the decision is reversed or the organization obtains new approvals. Officials said the action was based on regulatory findings rather than the online discussion alone.
Onn Hafiz said local authorities had reviewed the company’s submissions before making the decision. He also said enforcement bodies had acted based on established procedures, including inspections and assessments of licensing conditions.
“The fact that a business has been present for a certain period does not mean it has complied with all licensing requirements,” he said in remarks summarized by local authorities.
The dispute has drawn attention because Network School was not presented as a typical hotel, hostel, or apartment operation. It marketed itself as a community for founders, remote workers, and digital nomads, combining housing with education, fitness, and networking. That model can place such projects across several regulatory categories, including lodging, coworking, education, and event hosting.
Local authorities have not publicly released every detail of the alleged licensing breach. However, Srinivasan said before the closure order that the organization had received two municipal notices and planned to address both.
According to him, one notice concerned the wording on signage, while the other related to licensing for a coworking space that combined two adjoining units. He described earlier reports that the operation had been shut down as inaccurate before the formal closure directive was announced.
Immigration inspection found valid documents
The enforcement action followed a separate visit by Malaysia’s Immigration Department, which inspected residents at the site. Authorities said 266 foreign nationals checked during that visit had valid travel documents.
Srinivasan said the immigration visit was triggered by anonymous social media claims. He said officials reviewed passports, including those held by dual citizens, and found the inspected documents to be valid.
Immigration officials have not said that all inquiries are complete. The department stated that further compliance reviews remain underway, meaning the legality of travel documents was only one part of the broader examination.
Immigration Director-General Datuk Zakaria Shaaban has also said that 430 people were connected to the disputed campus before authorities intervened. Of that number, 201 had left Malaysia, 210 remained in the area, and 19 were unaccounted for, according to his remarks.
Those figures broadened public interest in the case, especially because Network School was built around the idea of gathering a globally mobile community in one location. For officials, that model raised questions not only about licensing but also about tracking foreign residents, verifying entry status, and ensuring that the nature of the business matched approved permits.
State government seeks wider checks
In a separate statement, the Johor state government called on national and local agencies to continue investigating possible offenses involving false identity declarations, multiple passports, or breaches of entry rules.
The state also directed agencies to strengthen due diligence when approving new organizations. Officials said checks should include ownership, financing, and operational details.
That statement suggested the case has become more than a routine municipal business dispute. It now touches on how state and federal agencies evaluate projects that bring large groups of foreign residents into special development zones or privately managed communities.
Forest City, where Network School was based, is a major property development in Johor near Singapore. It has long been promoted as a cross-border residential and commercial hub. The area has attracted international attention because of its scale, its location, and its efforts to draw foreign buyers and tenants.
Network School’s arrival added another layer to that profile. Instead of simply leasing apartments to residents, the project promoted a structured lifestyle community aimed at entrepreneurs and remote professionals.
Srinivasan defended the project
Srinivasan established Network School in August 2024. The project was marketed as a co-living campus for people interested in technology, entrepreneurship, fitness, and self-improvement.
Its public materials described a community where residents could live, work, study, and collaborate with others. Monthly accommodation was listed at $1,000 per person for shared housing and $2,000 for private occupancy.
Before the latest order, Srinivasan pushed back against reports that Malaysian authorities had shut the operation. He said the group was responding to municipal issues and that the relevant notices were narrow in scope.
He also said immigration officers had found valid passports during their inspection. In his account, the visit was not the result of a verified immigration breach but of online allegations that officials chose to review.
The latest order from the Iskandar Puteri City Council changes the status of the dispute. It requires operations to stop on July 22, leaving the organization with limited time to respond unless it can secure relief through administrative or legal channels.
Srinivasan has not publicly announced a detailed next step in response to the formal closure directive. It is not yet clear whether Network School will appeal, seek a new license, relocate, or wind down its Malaysian operation entirely.
Planned expansion faces uncertainty
The shutdown also places the project’s future growth plans in doubt. Network School had been linked to a planned building expansion valued at about $122 million, intended to increase the size of the shared living space.
That expansion is now effectively paused as the licensing dispute plays out. Real estate growth tied to community-based or remote-work projects depends heavily on local approvals, zoning, immigration treatment, and political confidence. A dispute over any of those points can delay or halt construction plans quickly.
For Forest City, the controversy is another test of how far alternative residential and work models can develop inside a jurisdiction with established licensing and immigration rules. Projects built around global mobility often promise flexibility, but they still operate within national and municipal systems.
The case also highlights the tension between online community-building and physical governance. A project may recruit globally through social media and digital networks, but once it houses people in a specific location, it becomes subject to local laws on business licensing, accommodation, signage, workplace use, and immigration reporting.
Digital nomad model faces local limits
Digital nomad communities have expanded globally as remote work became more common. Some countries have introduced special visas to attract remote professionals, entrepreneurs, and high-income residents. Others still require such workers to fit into existing tourist, employment, education, or business categories.
Malaysia has promoted itself as a destination for skilled foreign workers and digital professionals, but that does not remove the need for local licensing. A co-living project may need separate approvals depending on whether it functions as accommodation, a school, an event space, a coworking facility, or a membership club.
Network School’s case shows how quickly those categories can become important. Srinivasan’s comments suggest that at least part of the municipal issue involved whether a coworking space combining two adjoining units had the correct license. Local officials, however, said their decision was based on broader compliance findings.
The immigration element made the case more sensitive. Online claims about residents’ nationality and entry status pushed authorities to inspect the site. Even though the inspected passports were found to be valid, officials continued to examine whether any other rules had been broken.
For foreign residents, the case underlines the importance of clear visa status and transparent housing arrangements. For operators, it shows that public-facing communities must ensure that their permits match how the space is actually used.
What happens next
Network School must stop operations on July 22 under the city council’s order unless it obtains a change in status before then. The Johor government has asked agencies to continue reviewing immigration, identity, ownership, financing, and operating details.
The immediate questions are whether the organization will challenge the revocation, whether residents will need to leave or relocate, and whether any part of the project can continue under a revised business structure.
Authorities have not said whether further penalties will be imposed. They have also not said whether the 19 people described as unaccounted for are suspected of any offense or are simply no longer traceable through the records reviewed so far.
The case remains under official review, with local and national agencies involved. For now, the central fact is clear: Malaysian authorities have moved from inspection and notices to enforcement, ordering one of the world’s most visible digital nomad experiments in Forest City to close its doors.
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