Korea Invests in Forest City Malaysia as Ringgit Weakens
Korean investment firm GG56 Korea Ltd. has announced a US$1 billion investment in Malaysia’s Forest City to establish the nation’s first Korean Culture Town, marking a significant milestone for the country amidst challenging economic conditions. The investment comes as Malaysian businesses face increasing pressures from a weakening ringgit. The Malaysia ringgit recently hit a 26-year low. This has caused intense cost increases for industries dependent on imports and dollar-denominated debts.
Forest City in Malaysia, originally conceived as a cutting-edge urban oasis, now struggles with a host of issues. The city faces a severe lack of buyers, resulting in large swathes of unoccupied buildings that have given it the label of a “ghost town.” Despite the city’s ambitious design and strategic location, the absence of residents and slow property sales have stalled its growth, raising concerns about the city’s future as a vibrant, livable community.
Weak ringgit bane and boon
The weakening ringgit is exerting significant pressure on Malaysian businesses. In particular those in sectors with high exposure to foreign currencies. The airline industry, including Malaysia Airlines and AirAsia, faces a “double whammy” of operational and financial challenges due to the currency depreciation. Furthermore, this largely exacerbated due to large expenses in dollars and revenues in ringgit.
Yet, as some sectors struggle, others find unexpected advantages. Companies like Sime Darby Plantation and Petroliam Nasional Bhd. benefit from the ringgit’s decline. Their dollar-denominated revenues gain value when converted back to the local currency. This juxtaposition of challenges and opportunities highlights the complexity of Malaysia’s economic landscape. The country navigates these issues while simultaneously welcoming significant foreign investments, such as GG56 Korea’s commitment to Forest City.
Korea investment saves Malaysia Forest City
The Korean Culture Town project, part of Forest City’s broader vision to become a global hub for culture and innovation, includes K-Content Production Studios, an international Cultural District, and a world-class residential development. This ambitious development represents a strategic move to attract international interest and diversify the region’s economy. Country Garden Pacificview Sdn Bhd (CGPV), the master developer of Forest City, and GG56 Korea’s CEO Kim Young Kun signed the memorandum of agreement (MoA) for the project.
CGPV Executive Director Datuk Md Othman Yusof described the MoA as a pivotal step in Forest City’s evolution. He emphasized the shared vision for a city that stands as a beacon of innovation, culture, and sustainability. Kim Young Kun echoed this sentiment, expressing enthusiasm for creating something extraordinary in Forest City. This move also aligns with GG56 Korea’s focus on high-impact projects across sectors such as technology, entertainment, and real estate.
