The End of Industrialisation for Penang?

In 2008, Penang ushered in its State Government made up of parties from Pakatan Rakyat. They had also successfully defended the State in 2013 to continue governing the Penang state.

Then comes the time for reporting on the sustainable growth in Penang and whether the economic outlook fared well since 2008.

Overall, for the majority of Penangites, they enjoy a time of professional governance.  Like advertised, competency, accountability and transparency had occurred at above the crust where the ordinary people can feel the changes.

But what about what is in the mantle of the State economy?

In the publication of Pilot Studies for a New Penang, circa 2009, there is a chapter 10 on Position Penang for Sustainable Growth by Nungsari A. Radhi and Hamdan A Majeed, where it claimed 50% of the world’s microprocessors are being produced by Penang. In their article, it questioned whether Penang is prepared for the next phase of change? This is backed by a survey conducted by Khazanah from a year (before their publication) that Penang firm’s activities have dramatically changed and no longer just manufacturing based. To conclude their short article as much as the opening and ending suggested, the change simply is not happening as quickly as it should and in fact has decelerated over the years compared to (new) growth cities. Therefore the learned ones, suggested to wing it and see what happens next.

Today July 2014, Datuk Redza Rafiq had reported the Northern Corridor Implementation Authority (NCIA) has attracted RM 6.7billion in foreign direct investments (FDIs) by the first half of 2014 with some 9,800 jobs created. He said, "We are confident of achieving the investment target of RM10bil this year with contributions coming from manufacturing, tourism, agriculture and logistics sectors.”. Reda went on to add in his report prepared for the NCIA 12th Council Meeting chaired by Prime Minister Datuk Seri Najib Tun Razak. NCIA has been looking at designing a completely new manufacturing ecosystem by venturing into new growth sectors like medical devices.

To be very honest, medical devices is not a new growth sector and in fact, it’s one of the areas that we are not capitalising fast enough and we also do not have the quality assurance means to do so at the industrial level in Penang.

Indeed, there are calls for the resignation of the Chief Minister, Lim Guan Eng on what is said as abysmal results as Penang dropped to 6^th place in terms of FDIs in the country.

The background of this statement was against National FDI the Economic Transformation Program (ETP) by Najib which reported a highest ever record for foreign direct investment of RM38.7bil last year, a 24% increase over 2012 and 3.9% higher than the last record of RM37.3bil achieved in 2011. I can only suppose that the detractors did not read much into International Trade and Industry (MITI) minister Datuk Seri Mustapa Mohamed’s claim on the contributions, “….all sectors of the economy registered increases in FDI inflows in 2013.” What detractors also failed to comment was the movement of RM over USD that contribute to the record in 2013.

So what is happening to Penang Industry and FDI?

It is the quiet change.

The world industries are now shifting, again. No longer has Business Processing Outsourcing (BPO) automatically gone to India when they have Romania and The Philippines (according to Dr Vinod Devanthas at an American IT MNC) as English-speaking countries. And despite all the human resources hiccups from 2010 until today, Intel insisted on filling up their biggest plant located in Vietnam and slowly closing off their plants elsewhere in the world. Penang and Malaysia industrial leaders, Government researchers are fully aware of these changes. At minimum, information technology research and advisory firms continue to provide positive indicators with the usual, read between the fine-lines.

So where does Penang future economic outline seemed to be heading? One proponent of economic ideas said that Penang being the largest UNESCO historical and heritage city should fully concentrate on its heritage development and creation of very liveable state and shift away from industries. Others had said that Penang will have to move higher up the value chain to create a new ecosystem management for value-chain in the business processing outsourcing.

                                       

Whichever the path is, it is definite that we are seeing to the end of industrialisation for Penang by 2015. It is noteworthy that GST came in at a same time, to latch onto most sectors but for those with the income of RM 500,000 or less.

In any case, evidently both the State and Federal Governments as has been since 2008, must cooperate now and not rivalling each other for the worse in preparation for the next General Election.

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http://www.mole.my/content/penang%E2%80%99s-fdi-free-fall-guan-eng-must-resign-gracefully-0
http://www.thestar.com.my/Business/Business-News/2014/02/14/Malaysia-receives-record-FDI-of-RM39bil-By-DAVID-TAN/
http://www.thanhniennews.com/business/intel-opens-biggest-ever-chip-plant-in-vietnam-14495.html

http://whc.unesco.org/en/list/1223