Just a few months ago, digital minister Gobind Singh Deo visited the school, gushing that it “reaffirmed Malaysia’s position as a rising destination for global tech talent”.
The scrutiny of Srinivasan’s school was sparked by allegations that Israeli students were living and studying on its campus, in breach of Malaysian immigration rules. Muslim-majority Malaysia has no diplomatic ties with Israel and passport holders are banned from entering without permission.
Old photos uploaded by Israeli content-creators who visited the campus late last year began to circulate during local state elections in July as alleged evidence that the school was “recruiting Israelis to join its operations”. The visitors are believed to be dual nationals who entered on different passports.
It blew up into a local backlash that prompted authorities to raid the campus and check the passports of all students. Although immigration officials found everyone at the school had “valid travel documents”, the damage had been done.
Freshly re-appointed menteri besar Onn Hafiz Ghazi widened the probe, which uncovered two violations of local licensing laws and led to an eviction notice.
Johor’s influential regent Tunku Ismail Sultan Ibrahim, the son of Yang di-Pertuan Agong Sultan Ibrahim, consented to the eviction notice, according to Onn Hafiz. Separately, Sultan Ibrahim owns a substantial stake in Forest City.
Representatives for Onn Hafiz didn’t respond to a request for comment.
The speed with which the controversy unravelled pointed to deeper unhappiness among Malaysian officials.
Behind the scenes of Gobind’s drop in, visiting officials felt uneasy about the school’s requests for longer visas and faster approvals, according to people familiar with the matter. Johor state officials also didn’t visit the campus during the trip, the people said. Representatives for Gobind didn’t respond to a request for comment.
Srinivasan mounted a last-ditch effort to save the campus, requesting a meeting with the office of Prime Minister Anwar Ibrahim and questioning the viability of tech community investments in Malaysia. In a post on X, he said he was willing to sign a memorandum of understanding that would commit both sides to respecting each other.
But negotiations failed to materialise and notices of the closure were circulated to students. As they packed up their things, Srinivasan announced a new site – in Kazakhstan.
His meeting with Kazakh officials was facilitated by Talgat Dossanov and Farhaj Mayan, two businessmen working on creating physical hubs associated with the Solana cryptocurrency.
“Regardless of what happens, (Network School) is going to continue to grow into something incredible in Kazakhstan,” Srinivasan said, posting a video of himself with Zhaslan Madiyev, the country’s minister for AI and digital development.
Srinivasan did not respond to a request for comment.
Screenshots of exchanges on an internal messaging system revealed some of the students were disillusioned by what they saw as Malaysia’s anti-innovation stance. One student also called into question Srinivasan’s commitment to the cause, prompting another to leap to his defence. Srinivasan, the person said, worked tirelessly each night from the school’s cafe.
In a message to students, Srinivasan elaborated that the project would be “permanently rebasing” to Kazakhstan as soon as it could find a suitable site, according to screenshots seen by Bloomberg News.
The students scattered, some taking up in a hotel on Batam, an island in neighbouring Indonesia, where they quietly lazed by the pool with their laptops and occasionally complained about the WiFi, according to resort staff Bloomberg spoke with. They were also given the choice to head straight to Almaty in anticipation of the new campus, or to quit and take a refund.
“The people affected now need clarity, continuity and fair treatment,” said Puan Chan Cheong, co-founder of Aurion Group, an investment advisory firm in Malaysia that builds AI-powered financial intelligence systems. Puan, who also founded Malaysia-listed Green Packet Bhd in 2000, spent a month at the Network School last year with his son.
While Network School has never clamored for political autonomy or diplomatic recognition, Srinivasan has proposed the creation of communities outside of the nation state system, bringing together people bound by values rather than geography.
His 2022 book The Network State provided a blueprint, suggesting that online groups crowdfund land for their members to live on according to their principles – like “techno-optimism” or healthy eating. Over time, Srinivasan said, these entities could gain diplomatic recognition and graduate to “network states”.
A harsh critic of the American political and media establishment, Srinivasan renounced his US citizenship in 2023, according to Internal Revenue Service publications, and said he is now a Singaporean citizen.
“Elon (Musk) wants to go to Mars, Bryan Johnson wants to live forever, Sam Alman wants to build a machine super-intelligence and I just want to start a new country,” he said at the Network State conference in Singapore in October.
For Forest City, beleaguered by sluggish sales and the financial distress of its developer, the school was a rare bright spot.
In a bid to help revive it, the government designated the city a special financial zone with a specific focus on attracting family offices. It’s secured assets under management of about RM670 million (US$164 million) from various family offices, although the number is far below its overall target of RM2 billion by the end of the year.
In July, shortly after the school shuttered, police arrested 335 people who were allegedly operating online scam syndicates out of Forest City, further dimming the prospects of a meaningful revival.
Malaysia’s case for investors is unlikely, however, to be dimmed by the experimental Network School exit.
“The lesson is not that Malaysia should reject experimental technology communities,” Puan said. “The lesson is that such communities should be structured properly from day one.”
Malaysia has long held ambitions to move up the technology value chain and is stepping up efforts to build a higher-value technology economy, with the government targeting an inclusive and sustainable “AI nation” by 2030.
The country is seeking to move beyond its traditional strengths in semiconductor assembly, testing and packaging by developing front-end chip-design capabilities while expanding digital and data infrastructure, building skilled talent and attracting investment in areas like AI and advanced semiconductor manufacturing. It’s also seeking to draw more tech talent to the country via a special economic zone being developed with Singapore in Johor.
Adib Zalkapli, founder of Viewfinder Global Affairs, a geopolitical risk consultancy in Kuala Lumpur, agrees the country’s tech future can still be bright.
“The case will be remembered, if at all, as a footnote in Malaysia’s tech investment history,” he said. “It will not affect how other technology companies view Malaysia.”
