After a rosy performance in 2019, Penang’s investment momentum is expected to be at a slower pace in 2020. Working together with the federal government, the Penang State government has strategized to face the challenges ahead and is committed to bringing in strategic investments that will create high value job opportunities.
Penang, Jan 2, 2020 – In Jan to Sep 2019 (9M2019), Penang recorded RM13.3billion (+247% year-on-year) of total approved manufacturing investment, according to Malaysian Investment Development Authority (MIDA). Out of the RM13.3billion investment, 91% of it or RM12.0 billion was foreign direct investment (FDI), making Penang the top recipient of FDI inflow to Malaysia. The investment figures for Oct-Dec 2019 is yet to be disclosed by MIDA.
Electronics & electrical (E&E) products and scientific & measuring equipment are the largest contributors, making up 68% and 18% respectively of Penang’s total approved manufacturing investment in 9M2019. Companies from the US, Singapore and the UK contributed 57%, 15% and 13% respectively of Penang’s total FDI in 9M2019.
Despite the rosy performance in 2019, in a press conference earlier today, Dato’ Seri Lee Kah Choon, the Special Investment Advisor to the Chief Minister of Penang, highlighted that the investment momentum in 2020 could be at a slower pace. “2019’s approved manufacturing investment was extraordinarily high. The investment amount is expected to be lower in 2020” Lee said. He added that Malaysia may face fierce competition in attracting high quality investments as other ASEAN countries introduced a variety of incentives in 2019 to attract investors. He also shared that talent shortage is an issue that could not be neglected if Malaysia wants to remain relevant in the technology sector. In addition, Lee said that the urgency for companies to relocate their operations may slow down in the near-term due to the US-China Phase 1 trade deal that concluded recently.
Having said that, Lee highlighted that the growth-oriented Budget 2020 strategically layout a series of initiatives that could aid in attracting investments from the targeted industries and investors. Some of these key initiatives include expediting the tax incentive approval process through enhanced National Committee on Investment (NCI), customized incentive packages to attract Fortune 500 companies and to grow homegrown exporters and tax incentives for E&E companies.
“The government also encourages corporations (including SMEs) to digitalize and automate their operations through matching grants” Lee added. He is also delighted that Budget 2020’s Malaysians@Work program addressed the challenges in human capital. With the wage incentives for workers and hiring incentives for employers, the Malaysian government aimed at simultaneously creating better employment opportunities for youth and women as well as reducing the country’s over-dependency on low-skilled foreign workers.
In terms of Penang’s strategies on attracting investments, Lee stressed that the State government will continue focusing on capital-intensive, high-quality and knowledge-based investments and deepening the value chain and capability building of the key promoted sectors – medical technology, equipment manufacturing (include automation & machining), semiconductor and high value EMS. Apart from that, the State government having constant engagement with existing companies having operations in Penang will equally focus on both re-investments and new investments.
For small-to-mid sized foreign companies, the State encourages them to outsource jobs to local vendors or form JV partnerships with local companies in order to expedite their time to market. “The State is also working on plans to collaborate with other northern region states to develop northern region as an ecosystem hub for promoted industries” Lee added.
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).