Malaysia orders Network School to halt operations over licence breaches as founder denies shutdown claims

JOHOR, MALAYSIA: The Iskandar Puteri City Council (MBIP) has issued a Stop-Business Notice against premises linked to the operations of Network School in Forest City after finding alleged breaches of business licence conditions and approved premises usage, as scrutiny over the organisation's activities in Malaysia continues.

The enforcement action comes amid separate federal investigations into the identities and immigration status of individuals associated with Network School following allegations that some participants could be Israeli nationals.

However, American investor Balaji Srinivasan, who is behind the organisation, disputed reports that Network School was being forced to shut down, insisting that the issues raised by local authorities were administrative and could be resolved during a remedial period.

MBIP cites licence and premises-use violations

In a Facebook statement published late on 17 July 2026, Johor Menteri Besar Onn Hafiz Ghazi said the enforcement action followed investigations conducted by MBIP under the local authority's jurisdiction.

According to the statement, MBIP reviewed the company's compliance with business licensing requirements, premises usage and advertising regulations.

The inspection found that the company was operating from two premises. One held a valid licence as a business office, while the second was operating without an MBIP business licence despite being owned by a Malaysian citizen.

Authorities also found that premises licensed for use as business offices had instead been used as classrooms for educational activities. The state government further said the company had carried out business promotions without submitting detailed applications required under existing regulations.

As a result, MBIP issued a Stop-Business Notice, identified as IP012N260714001, against the unlicensed premises.

The council also issued an advertising licence notice under Section 107(2) of the Local Government Act 1976 after determining that signage displayed at the premises did not comply with approved conditions.

Onn Hafiz said the state government would continue investigating all matters within MBIP's jurisdiction and warned that further enforcement action would be taken if additional violations of laws, licence conditions or regulations were discovered.

Balaji rejects shutdown reports

Responding on 18 July 2026, Balaji rejected suggestions that Network School was closing its Malaysian operations.

In a post on X, he wrote: "Network School is not shutting down; that's fake news."

He said the organisation had received two notices from local authorities.

"The first tells us to change the text of a sign. The second says that our coworking site, which was created by joining two adjacent units, evidently has a valid license on the left hand side but not the right hand side," he said.

"We have a remedial period for both issues, and will remediate them shortly. But our members are otherwise unaffected."

The comments marked only the second public response by Balaji since investigations into Network School intensified earlier in the week.

State seeks federal decision

Beyond matters under state jurisdiction, Onn Hafiz urged the Federal Government to provide what he described as an immediate, clear and final decision regarding the status of individuals involved with Network School.

The Johor Menteri Besar said issues relating to the entry of foreign nationals into Malaysia fall under the jurisdiction of the Home Ministry.

He called on federal authorities to determine the status of those participating in Network School following allegations that some were Israeli nationals.

Malaysia does not maintain diplomatic relations with Israel and prohibits entry using Israeli passports.

However, reports have noted that there are no specific laws preventing Israeli citizens from entering Malaysia using passports issued by another country, provided they satisfy applicable immigration requirements.

Federal investigations continue

Earlier this week, the Home Ministry announced an investigation into Network School, stating that the government would not compromise with any individual or organisation found to have misused Malaysia's immigration facilities or engaged in activities that contravene the law or threaten national security, public order or national sovereignty.

The investigation followed Onn Hafiz's earlier request for a coordinated probe involving the Home Ministry, the Immigration Department, Royal Malaysia Police, Royal Malaysian Customs Department and other relevant security agencies.

Prime Minister Anwar Ibrahim has also addressed the issue, saying the government would expel any Israeli nationals found to be involved with Network School.

According to local media reports published on 16 July, the Immigration Department had not found evidence that Israeli nationals were present at the facility during its inspections.

The department said it had inspected 266 foreign nationals from 40 countries and confirmed that all possessed valid travel documents.

Nevertheless, officials said further checks were continuing to verify compliance with immigration laws and other legal requirements governing entry into Malaysia.

Investment plans put on hold

The latest enforcement action follows Balaji's announcement on 17 July that Network School had suspended further investment in Malaysia, including a planned RM500 million (US$122 million) expansion, while investigations remain ongoing.

He said the organisation now sees "two paths forward", depending on whether Malaysia wishes to continue attracting international technology investment.

Balaji added that, should the government remain open to such investment, he hopes to meet Prime Minister Anwar Ibrahim to discuss the possibility of negotiating a memorandum of understanding that would allow Network School to continue operating and investing in Malaysia.