Malaysia Got Angry at the Right Building for the Wrong Reason

I went to Network School for a hackathon. Not as a member, just a Malaysian who showed up, badged in, and spent the day there. What I found was a very large hostel. People from everywhere, each buried in their own startup, a gym that gets heavy use, internal talks and events here and there, decent coffee. I saw nothing that made me look twice.

Last week, half of Malaysian social media decided that building was a Zionist settlement project. Watching that unfold, as one of the few people arguing about it who had actually stood in the lobby, was a strange experience. The whole war was fought over symbols by people who have never seen the place. So here is my attempt to sort out what actually happened, what was true, what wasn't, and what I think Malaysia should do about it.

Some background first. Forest City is a US$100 billion development by China's Country Garden on reclaimed islands off Johor, planned for hundreds of thousands of residents and famous mostly for not having them. YouTube calls it a ghost city. In September 2024, Balaji Srinivasan, a former Coinbase CTO and a16z partner, leased a hotel there and opened Network School: a live experiment for his 2022 book The Network State. Membership starts at US$1,500 a month, close to RM6,000, which already tells you who it is and isn't for. Today it has more than 400 members from over 70 countries. Its promotional videos describe the location as an island "near Singapore." They almost never say Malaysia. Malaysians noticed.

The post

On the night before the July 10 Johor state election, an Instagram account called Malaysian Protest 4 Palestine, MP4P, published a ten-slide carousel titled, roughly, "Exposing the Zionist settlement project in Johor Bahru." It collected 64,000 likes and set everything else in motion.

I have read all ten slides carefully, and the uncomfortable part is this: most of the screenshots are real. Nas Daily really did buy St Kitts and Nevis citizenship to get around his Israel-passport ban, and bragged about it on camera. The fees and member numbers are accurate. Balaji really is listed on the advisors page of StarkWare, an Israeli blockchain firm in Netanya (he calls his involvement a small, years-old angel cheque). The slides about ministers are just screenshots of actual journalism: Digital Minister Gobind Singh Deo's visit to the campus on April 17, the post he later deleted, and the May 13 Bloomberg report that Balaji had pitched a redesigned prototype of Malaysia's visa application platform and floated fast-track visas for his own residents.

What is not real is the story those screenshots are arranged to tell. The headline verdict, a Zionist settlement, is asserted on slide one and never demonstrated across the next nine. The load-bearing claim, that Israeli entrepreneurs now want to settle in Forest City, rests on one Israeli-American creator who visited for ten days and a comment thread. My favourite detail is on slide six, where the circled Reddit "evidence" of Israelis sharing entry methods is actually a digital nomad explaining that Israelis are the exception who cannot get visa-on-arrival. Their own receipt says the door is closed. And the strongest accusations, that this bypasses Malaysia's security and threatens sovereignty, are phrased as rhetorical questions, which is how you plant a conclusion while keeping the right to deny you ever made it.

So the post was not fabricated. It was worse than fabricated, in a way: real facts, laundered through a frame the facts do not support. That is much harder to kill than a lie.

The raid

The state, asleep on this for 22 months, moved fast once embarrassed. On July 14 the Johor Menteri Besar, Onn Hafiz Ghazi, called for a full federal investigation. The same day, Immigration ran a naziran, a compliance inspection, on the campus: 266 foreigners from 40 countries, every one of them holding valid documents based on current records. Two days later the Immigration DG said plainly that so far there was no evidence to confirm the claims of Israelis at Network School. Checks continue on licensing, land use, and whether a thing that calls itself a school needs education approvals. Credit where due. Viral panic to orderly inspection to an honest preliminary answer in about 48 hours, without riding the mob, is better crisis handling than we usually get.

But I want to be honest about what that inspection can and cannot prove, because both sides are now overclaiming. A naziran verifies the documents people present. The allegation is about a document people withhold. An Israeli dual citizen hands over a perfectly valid American passport and the record check comes back clean, every time. There is no database Malaysia can query for someone's second citizenship. The only person ever actually caught in this whole saga, Nas Daily, was caught because he made a video bragging about it. So the raid genuinely killed the strong version of the claim, illegal entry on banned passports. It structurally cannot touch the weak version, Israeli dual nationals present on legal second passports. And note the word legal. Malaysia bans the Israeli passport, not the Israeli citizen; no law stops a dual national entering on their other document.

Here is where I part ways with anyone calling the anxiety irrational, because Malaysia has been here before. In April 2018, Fadi al-Batsh, a Palestinian drone engineer, Hamas member and lecturer who had lived here for a decade, was shot dead by two men on a motorcycle in Setapak on his way to dawn prayers. The gunmen were never caught. His family and Hamas blamed Mossad; Israel denied it, though its defence minister at the time allowed that al-Batsh was a rocket expert and, in his words, "no saint." In 2022, police broke up a cell of Malaysians recruited by Mossad to kidnap a Palestinian computer expert in Kuala Lumpur. And in March 2024 an Israeli named Shalom Avitan flew in from the UAE on a French passport, checked into a KL hotel, and was arrested with six pistols and around 200 rounds. He told police he had come to kill a rival Israeli gangster who was also hiding in Malaysia. Investigators never ruled out Mossad, security around the King and the Prime Minister was tightened for a while, and Avitan is now serving seven years. Three incidents in six years, each involving Israel-linked actors moving through this country unseen until something went loud. When Malaysians hear "Israelis entering on second passports," that is the pattern being matched. It is memory, not prejudice.

To be fair to Network School, the same history cuts the other way. Covert operators never needed a commune with an Instagram account and an open application form. The al-Batsh killers had no campus. Avitan needed a hotel room. A place this public is close to the worst cover imaginable. But the precedent is exactly why the passport question deserved a serious legal answer years ago instead of a viral one now. If citizenship rather than paperwork is what the country actually cares about, and after 2018 it has every reason to care, the fix is not more raids. It is a declaration question at the border, so that concealment itself becomes an offence. That is a decision for Parliament, not for Threads.

The video

Within two days of the raid, Balaji posted a half-hour video addressed by name to the Prime Minister. As a legal defence it is strong. As politics, watching it as a Malaysian, I winced most of the way through.

The strong parts are real. His members cooperated fully with the inspection. His director of operations and his Malaysia CEO are Malaysians. Local startups work out of the space. The best thing in the video is a scholarship he was about to launch with Amjad Masad, the Palestinian founder of Replit: a global merit exam, free room and board while you study, a tech job if you pass, explicitly built around the fact that Palestinians can enter Malaysia when they cannot enter most of the West. It is now paused, which is the quiet casualty of this whole mess.

Then there is the rest. He frames the entire episode as a question, should we invest in Malaysia, and answers that he will happily leave unless he gets a memorandum of understanding stating that he is, his words, personally welcome. He measures his spending against Johor's state budget, twice. He mocks the objection to "near Singapore" instead of retiring it. He names the anonymous account, then spends minutes ridiculing a Palestine protest page in front of a population where Palestine solidarity is about the closest thing we have to a universal position. And he cites the account's "stop Lynas" posts as proof they want to destroy Malaysia's economy, apparently unaware that opposing a rare-earth plant's radioactive waste in Kuantan has been a mainstream Malaysian position for over a decade. That one line told me he is betting half a billion ringgit on a country whose domestic politics he has not done the reading on.

And the centre of it is an own goal I still cannot quite believe. Strip away the Israel frame and the one allegation against him that came with receipts was that he privately lobbied a minister for special visa treatment. His response, on camera, addressed to the PM, is to demand special legal treatment. He answered the accusation by performing it.

The book

Because everyone kept quoting "tech Zionism" at each other, I pulled the actual book and searched it. The Network State runs 262 pages in the copy I have. The number of times it mentions Israel is zero. Zionism, zero. Herzl, zero. I checked twice. The famous phrase comes from a podcast in September 2023, where it sits alongside far stranger material about a grey-shirted tech tribe and a sovereign San Francisco, none of which made it into the book either.

So the critics attacked the podcast and missed the book, and the book is the part actually worth reading. "Diplomatic recognition" appears 56 times. "Sovereign," 68. The stated method is an online community that, in his words, "crowdfunds territory around the world and eventually gains diplomatic recognition." Everything is peaceful, consensual, legalistic. Which means the MOU ultimatum was not a tantrum. It was the book, executing: build a footprint, then convert it into negotiated legal status. He never plans to stop asking permission. He plans to make permission cheaper and cheaper to get. Whether you find that reassuring or more unsettling than open secessionism is a fair question. I go back and forth.

One more thing I found, and I promise this is real: Malaysia appears exactly once in all 262 pages. The context is a list of ways countries change shape by agreement. His example is Singapore's separation from Malaysia.

What this was actually about

My read, as someone local: the trigger was half false and the resentment is fully real. Malaysians cannot afford the door fee. The tax incentives around Forest City flow toward foreign wealth. The marketing erased the country's name for two years. None of that had a channel, so it sat and compounded, and then an Israel angle came along, the one grievance in Malaysia that needs no explaining, and everything detonated at once. The accurate version of the scandal, a billionaire pitching a private visa lane to a sitting minister, had been in the press since mid-May. Nobody cared. It took the shaky version to produce the raid, the parliamentary motions, and the licensing review. Wrong-but-viral beat right-but-boring as an accountability mechanism, in public, and I find that lesson more worrying than anything Balaji has done, because it will be learned by people with worse targets.

So, what should happen now. Publish the probe's findings either way, including the politically expensive version where the passport claims come up empty and someone has to stand in front of an angry public and say so. Put the passport-versus-citizenship question to Parliament and settle it in law instead of leaving it to carousel posts. Make Gobind answer properly for the April visit and the May meetings, because that part deserved scrutiny before any of this. And do not sign that MOU. A mid-sized country courting global capital has one real asset to sell, the same rules for everyone, and a personal welcome letter for one billionaire spends it. Keep hosting the conduct and taxing the money, and skip the carve-out.

I keep coming back to the building itself. Ping-pong tables, laptops, protein shakes, people from 70 countries doing push-ups and pitch decks. The most argued-about place in Malaysia this month is a hostel, and nearly the entire war was fought at the level of symbols, his manufactured island, their manufactured settlement, by people who have never seen the lobby. If Balaji wants to stay, one sentence would do more for him than that whole 32-minute video. Say Johor, Malaysia. Out loud, in the marketing, without the smirk. It costs nothing, and it is the one thing everybody here was actually asking for.