Despite Penang's rosy performance in 2019, the investment momentum in 2020 could be at a slower pace, said special investment adviser to the Penang chief minister, Lee Kah Choon.
In a press conference today, he said last year's approved manufacturing investment was extraordinarily high.
"However, the investment amount is expected to be lower in 2020 as Malaysia may face fierce competition in attracting high-quality investments as other Asean countries introduced a variety of incentives in 2019 to attract investors," Lee (above) said.
He admitted that talent shortage is an issue that cannot be neglected if Malaysia wants to remain relevant in the technology sector.
"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."
Lee was referring to the state's RM13.3 billion (+247 percent year-on-year) total approved manufacturing investment in 2019.
According to the Malaysian Investment Development Authority (Mida), out of the RM13.3 billion investment, 91 percent of it or RM12.0 billion, was a foreign direct investment (FDI). This makes Penang the top recipient of FDI inflow in the country.
Mida has yet to disclose the investment figures for Oct-Dec 2019.
Lee said electronics and electrical (E&E) products and scientific and measuring equipment are the largest contributors, making up 68 percent and 18 percent respectively of Penang’s total approved manufacturing investment up to September 2019.
Companies from the US, Singapore and the UK contributed 57 percent, 15 percent and 13 percent respectively of Penang’s total FDI up to September 2019, he added.
Lee highlighted that the growth-oriented Budget 2020 strategically laid out 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 an enhanced National Committee on Investment, customised incentive packages to attract Fortune 500 companies and to grow homegrown exporters and tax incentives for E&E companies," he said.
“The government also encourages corporations (including SMEs) to digitalise and automate their operations through matching grants,” Lee added.
He pointed out that Budget 2020’s Malaysians@Work programme addressed the challenges in human capital.
Lee also spoke about the wage incentives for workers and hiring incentives for employers.
He said the 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, the state government will continue focusing on capital-intensive, high-quality and knowledge-based investments.
"We will work towards deepening the value chain and capability building of the key promoted sectors - medical technology, equipment manufacturing (include automation and machining), semiconductor and high-value small and medium enterprises (SMEs).
"Apart from that, the state government having constant engagement with existing companies operating in Penang, will equally focus on both re-investments and new investments," Lee added.
"For small-to-mid-sized foreign companies, the state encourages them to outsource jobs to local vendors or form joint ventures 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 the region as an ecosystem hub for promoted industries". - Mkini
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