Penang still attractive to investors, says agency

PETALING JAYA: Last year, Penang’s manufacturing scene underwent some shifts, with plant closures, companies relocating to other places and layoffs involving scores of workers. Nevertheless, the Silicon Valley of the East is still attractive to investors, both for direct investment as well as reinvestment.
According to Datuk Seri Lee Kah Choon, director of Invest in Penang Bhd, the principal investment promotion agency in the state, investments in Penang are still growing at a healthy and steady rate, even though the agency remains cautiously optimistic on this year’s investment and manufacturing outlook.
“Penang remains a destination of choice for investors, as reflected by the confidence of over 300 MNCs and 3,000 SME’s currently operating in the state and also stable new investments into the state despite the challenging economic landscape,” he told SunBiz in an email interview.

“Stable growth from investors from diversified host countries is one of the keys to sustaining the investments, while locally we continue to increase the skills of our talent and increase technological know-how,” he added, but declined to provide projections for this year.
Companies such as Aemulus, Penang Automation Cluster, Scandinavian IBS and Luxoft, which recently announced their investments plans, will pump in a combined RM423 million and create more than 1,000 jobs.
Some of the recent developments on Penang’s plate, according to Lee, are the flow of new foreign direct investments and reinvestments in Penang through companies such as Boston Scientific, Broadcom, Osram and B Braun, and expansion of local companies such as Inari, Aemulus and Vitrox.
Besides that, some companies are diversifying, with the likes of Celestica, which has its manufacturing plant in Kulim, Kedah, setting up its Global Business Services (GBS) Centre in Penang. Celestica is not alone.
Lee said some subsidiaries of multinationals that have a large ICT design presence in Penang, such as the Intel Design Centre, are diversifying into GBS and Shared Services Outsourcing.
According to MSC Malaysia’s website, GBS is part of the National Key Economic Areas, and is fast gaining momentum in Malaysia, being one of the focuses in the country’s Economic Transformation Plan.
Furthermore, companies such as Motorola, Globetronics, Elsoft, and B Braun are expanding into value-added services such as research and development, besides focusing on just traditional manufacturing.
As for 2017, Lee said the outlook for the manufacturing sector of Penang, which is one of the country’s major manufacturing hubs, will depend very much on the vagaries of world economy despite the expected growth of 11% in the semiconductor market predicted by global trade association Semiconductor Equipment and Materials International.
In the first nine months of 2016, Penang attracted investments of RM3.8 billion, with RM2.8 billion coming in through foreign direct investments.
Penang, which contributes about 7% to the country’s gross domestic product, saw its investments shoot up by almost 89% to RM55 billion in the eight-year period of 2008 to 2015, from RM29 billion in the previous eight years.
On companies relocating out of Penang, Lee said the issue is not unique to Penang but can be attributed to the increase in mergers and acquisitions in the global semiconductor industry in the last two years.
Citing Seagate as an example, Lee said although it chose not to continue manufacturing in Penang, it is still operating in the state with a headcount of more than 200 in its IT shared services centre.