Penang, June 12, 2019 – Penang remained a favourable investment destination, amid the intensified trade and technology disputes between the United States (US) and People’s Republic of China (PRC) that created uncertainties on the global trade and economic outlook. According to MIDA, in Jan to Mar 2019 (1Q19), Penang successfully garnered 41 manufacturing projects amounting to RM8.85billion (+768% year-on-year), representing 35% of Malaysia’s total approved manufacturing investment. Penang’s achievement of RM8.85 billion in 1Q19 has already surpassed 2018’s full year investment amount of RM5.78b. In addition, 1Q19’s total approved manufacturing investments are expected to create 10,073 new job opportunities in Penang.
Notably, Penang state is the key contributor to Malaysia’s foreign direct investment (FDI). In 1Q19, Penang attracted RM8.47billion of manufacturing FDI (+1360% year-on-year), representing 42% of Malaysia’s total manufacturing FDI. Remarkable investments in Penang included projects from Micron Technology, Jabil Circuit, among others.
In a press conference today, the Right Honorable Chow Kon Yeow, the Chief Minister of Penang, said that: “The optimal combinations of robust supply chain, strong talent pool, well-established infrastructure, and the State’s support services to investors makes Penang a preferred destination for investments”. Chow shared that the current trade tension created macro uncertainties but there are also opportunities in the challenging environment. He added that: “Regardless of whether the US and China could strike a deal on the trade agreements, corporates will have to strategize to diversify their manufacturing geographical footprint, to avoid being a victim of the two super powers’ trade and technology fight, which could last for years”. “The global supply chain is set to be reshuffled. Penang has to position itself to ride on the opportunities arising from this structural change”, Chow said.
While Penang could be a preferred investment destination in the mid to long run, Chow is CAUTIOUSLY OPTIMISTIC in the near-term outlook due to the latest trade war development. He shared that there was a truce on the trade war in 1Q19 but the situation has worsened since then. US President Donald Trump has threatened to slap tariffs on another $300 billion of Chinese exports to the US and the meeting between Trump and China's leader Xi Jinping later this month is crucial. Chow also highlighted that the superb 1Q19 investment figure may not repeat itself in 2Q19 or 3Q19 but Penang’s investment outlook in on the right track over the medium to longer term.
“Through investPenang, the State government will continue to focus on bringing in high quality investment that could create high value jobs and suit the State’s industry profile” Chow said. He highlighted that while some companies are benefitting from the US-China trade war, there are also companies’ that being impacted as their clients have taken a wait-and-see stand on the latest development. Chow said: “We acknowledge that the trade spat could have negative impact on certain SMEs and broader economy”. As such, the State has been monitoring the situation and working closely with both MNCs and local companies to face the challenges ahead.
“The State government cannot control the global macro risk but we have proactively introduced initiatives to mitigate the impact of US-China trade war on the overall local economy”, Chow said. Among the State initiatives include: 1) Signing of a Memorandum of Understanding (MoU) with China Chamber of International Commerce (CCOIC) with the objective to promote bilateral investment and economic & technological cooperation, 2) Providing subsidized rental rates scheme for local SMEs to rent industrial space at SME Centre and offers micro-financing option (called Skim Pinjaman Harapan) to assist small businesses and entrepreneurs in Penang, 3) Establishment of “Penang Strategic Investment Advisory Council” with the aims to obtain inputs from the industries that enable the State to form constructive policies and to enhance Penang as a preferred destination for strategic investments and 4) Providing seed fund to technology start-ups that require funding to grow their business and operation, with the aim to grow a strong pipeline of technology startups that enhance the Penang tech ecosystem.
InvestPenang is the Penang State Government’s principal agency for promotion of investment. Its objectives are to develop and sustain Penang’s economy by enhancing and continuously injecting business activities in the State through foreign and local investments including the spawning of viable new growth centres. To support the realization of its objectives, InvestPenang also runs initiatives like SMART Centre (to assist SMEs), Penang CAT Centre (to assist talents) and @CAT Penang (to assist start-ups).
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Yeoh Bit Kun