Attracting Investment into Penang
Despite the pandemic, Penang achieved good investment. In 2021, its approved manufacturing investments hit a record high and its external trade topped Malaysia’s list. Dato’ Loo Lee Lian, CEO of InvestPenang, talks to Su Aziz on present strategies to attract high quality investment into the state and its digital economy.
‘During COVID-19 pandemic, 2020 and 2021, InvestPenang was unable to organise overseas promotional missions, which was what we did in the past,’ explains Dato’ Loo Lee Lian, CEO of Penang’s investment promotion agency, InvestPenang which was established in 2004. ‘We’re the non-profit agency of the Penang state government that aim to sustain and rejuvenate the state’s economy by promoting foreign and local investments. In short, it’s a one stop shop that provides all you need to know about investment opportunities and how to setup as well as run a business in Penang.’
As an alternative measure when borders were closed due to the pandemic, InvestPenang organised investment promotion webinars to reach out to investors and prospects from various regions including the United States, Europe, Japan and China. ‘Closure of borders caused delays in concluding investment projects because investors weren’t able to do physical site visits and do due diligence,’ says Dato’ Loo. But the agency stayed in touch with investors via virtual platforms and updated them on industry development in Penang.
Born and bred in Penang, Dato’ Loo has helmed InvestPenang since 2010. Here, she elaborates more on the state’s strategy for economic rebound and to attract high quality investment.
Besides the pandemic, what challenges does Penang face today in attracting investment?
Dato’ Loo: In general, we don’t face Penang-specific challenges. We share the common challenges that other countries are experiencing. In particular, the Great Resignation is a new global economic trend and Penang isn’t spared from talent crunch. Having said that, the state government has carried out multi-pronged approaches in talent attraction, retention and development, continuously bolstering Penang’s welcoming and conducive environment for talent. With the aim to support local companies on talent development program, the state government recently launched Penang Internship Subsidy Programme (PISP), offering qualified local companies for internship wage subsidy.
Some of the other ongoing talent initiatives include giving priority to knowledge workers on affordable housing applications. Some examples are Penang Future Foundation provides scholarships to deserving students, collaborates with industry players and Technical and Vocational Education and Training (TVET) institutions and institutions of higher learning.
How is InvestPenang supporting Penang’s strategy for economic rebound attract foreign as well as domestic investment?
Dato’ Loo: Despite the pandemic, Penang achieve stellar investment performance in 2019-2021. Specifically, Penang’s approved manufacturing investments hit a record high of RM76.2 billion in 2021 (+ 440 per cent year-on-year), representing 39 per cent of the country’s total. On the external trade, Penang topped the nation’s list in 2021 with an all-time high export value of RM354 billion. Penang accounted for over five per cent of the global semiconductor sales and made up close to 60 per cent of Malaysia’s electrical and electronics exports. To ensure sustained industry growth, the state government will focus on opportunities arising from the secular trends. This includes supply chain reconfiguration, proliferation of disruptive technologies and rapidly growing technological landscape in the APAC region.
With the disruption caused by the pandemic and trade war, the importance of supply chain resiliency is higher than ever. Further strengthening Penang’s industry clusters is one of the top priorities for the state government to help companies mitigate risks of supply chain disruptions while improving companies’ time-to-market at a lower cost. The state government also strives to uphold Penang’s competitive edge in advanced manufacturing and focus on penetrating into the upstream activities, particularly in the integrated circuit design as well as knowledge-based solutions while strengthening the Global Business Services and Centre of Excellence activities here.
At the same time, Penang will continue to promote supply chain localisation through business matching sessions between MNCs and SMEs. Penang aims to create more awareness on the capability of local companies, which in turn may create business opportunities to the latter. Separately, the state government will ensure Penang’s cost competitiveness and ease of doing business remain while consistently developing and maintaining infrastructure that are able to support the industry’s needs in the 4IR era.
InvestPenang plays an important role in supporting investors’ due diligence during site selection and provides ‘hand-holding programme’ to facilitate new projects by investors. All of these elements are important. They’re part of our offering to investors, ensuring that Penang provides a conducive business environment.
Penang is open to, and wants to, attract young entrepreneurs. Why do you think Penang may be attractive to young entrepreneurs?
Dato’ Loo: Penang is deemed attractive to young entrepreneurs, underpinned by vibrant industries and robust ecosystem plus the strong presence of MNCs and large local companies. Essentially, Penang’s 50 years of sustained excellence has created strong talent pool and nurtured numerous homegrown technopreneurs. They have founded and built companies that have grown to become internationally renowned in their own right. As you may be aware, majority of the Bursa-listed technology companies are Penang-headquartered and almost all of them are founded by engineers.
Penang state government is committed to sustain the conducive environment, enabling startups and SMEs to thrive and scale up. Other than the supply chain localisation initiatives that mentioned earlier, InvestPenang has multiple initiatives to support entrepreneurship. These include:
- Penang i4.0 Seed Fund. Providing funds for high potential technology startups and guide them throughout the journey.
- Subsidising rental rate in Penang SME Centre for local companies and provide discount on the selling price of SMEs units to reduce their financial burden.
- Set up SME Market Advisory, Resource & Training (SMART) centre to provide advisory services to SMEs, on top of organising workshops and webinars that focus on improving SMEs’ competencies.
How do you think Penang should innovate for economic recovery in the post-pandemic period?
Dato’ Loo: The pandemic brought structural changes in many aspects of doing business. For example, consumer spending patterns, business operating models, supply chain management, talent attraction and retention strategies have to evolve accordingly to ensure Penang’s industries continue to shine in the global arena. Recognising that talent is the most valuable asset to drive economic growth, Penang aspires to attract 150,000 knowledge workers to the state over the next five years. Only with the future-ready talent pool, Penang will be able to achieve high income economic status driven by digitalisation, sustained excellence and innovation.
Penang’s Digital Economy
What are Penang’s efforts in developing its digital economy?
Dato’ Loo: Penang continues to build its position as a preferred location for digital investment. Since Penang was awarded the MSC Malaysia Cybercity Status in 2005, Penang Cybercity initiative has created over 200 MSC status companies with 14,000 high value jobs, of which, 60 companies have Global Business Services (GBS) operations.
What is InvestPenang’s Role in the State’s Digital Economy?
Dato’ Loo: As the state’s investment agency for inbound investment in manufacturing and digital for the state of Penang, one of our objectives is to spawn viable new growth centres. For half a century, Penang has been a thriving regional hub for electrical and electronics plus all related equipment, automation and medical technology. It wants to become a regional leading hub for integrated circuit design and front-end equipment manufacturing. In terms of digital investment, InvestPenang continues to attract more investments in knowledge-based activities such as digital global business services and R&D as well as emerging tech sectors such as cloud computing, IoT, AI, data centre, cybersecurity, advanced robotics, among others.
What is Penang’s Digitalisation Agenda?
Dato’ Loo: With the aim to establish Penang as a ‘one-stop location’ for global corporates, the state government is mindful of the fact that Penang’s digitalisation agenda will only materialis with the presence of sophisticated infrastructure. That’s why Digital Penang was established to enable and orchestrate Penang’s digital strategy including Penang Digital Transformation Master Plan and a roadmap for it to transform into an international smart city. Penang is targeting to achieve the status of Smart International City by 2025. It aims to be the first Malaysian state to become a Gigabit City. It’s also expanding the number of global business services grade-A office space or MSC Cybercentre buildings to cater to the strong industry demand.
Penang’s effort to nurture tech startups is tireless. In 2018, the state government established Penang i4.0 Seed Fund to provide funding for high potential tech startups and enhance the growth of Penang’s digital ecosystem. We’ve also curated an on-going initiative, G27, exclusively for i4.0 Seed Fund recipients with mentorship guidance, a networking platform linking startups with industry players, training and workshops that cover fundraising, finance and investment, human resource, legal, software development and market expansion, to name a few.
‘Foreign direct investment is a catalyst for digital economic development. Being the main location for global business services or engineering as well as emerging tech startups in Malaysia’s northern region, and hosting the second highest number of MSC Malaysia Status companies in the country, Penang is in a position to attract more investments into the state. Particularly, those from strategic sectors that could bring multiple and far-reaching impacts to the local companies and economy,’ concludes Dato’ Loo.