GEORGE TOWN, Jan 2 — InvestPenang is dialling down its total investments prediction for this year to RM5 billion amid a prolonged global economic slowdown, citing a shortage in talent, stiff competition from its Asean neighbours and a focus shift among the multinational factories that had set up base in the state.
Special Investment Advisor to the Penang Chief Minister, Datuk Seri Lee Kah Choon, said the electrical and electronics (E&E) sector has expanded and made its reinvestments last year so this will be the year for the manufacturers to focus on production and output.
“They have already made the expansions and reinvestments in 2019, so 2020 will be the year that they focus on increasing output and operations of their expansions,” he said.
He said this year will be a good year for the E&E to increase their production and revenue so this will mean less companies will look at expansion and reinvestment plans.
He added that the US-China Phase 1 trade deal signed last month also meant companies will slow down their plans to relocate their operations in the near future.
Last year, between January and September, Penang recorded RM13.3 billion in investments which Lee said is a record high for the state since 2008.
“We hope to close the year with about RM14 billion in total investments,” he said during a press conference at InvestPenang today.
He added that the final investment figures will be announced by Malaysian Investment Development Authority (MIDA) soon.
Out of the RM13.3 billion total investments, Lee said RM12 billion are foreign direct investments (FDI) while RM1.3 billion are domestic direct investments (DDI).
A large portion of the investors are from the United States (RM6.8 billion), Singapore (RM1.8 billion), the United Kingdom (RM1.5 billion) and Taiwan (RM880 million).
Lee said the expansions and new investments last year created 15,013 new jobs between January and September.
Looking forward, he said Malaysia has a serious talent shortage issue that must be addressed in order to attract more investors here.
“On average, between 10,000 to 12,000 new jobs are created from investments and reinvestments in Penang each year,” he said.
Last year, more than 15,000 jobs were created and if another 15,000 jobs are opened up this year, he fears there will be insufficient local talents to fill the jobs.
“The talent market is not there to meet the demand. We need high skilled talents with science and engineering background to fill these vacancies,” he said.
He pointed out that Malaysia only produced between 40,000 to 50,000 engineers and science-related graduates each year and only about 20,000 of these go into the manufacturing sector.
“There is not enough to sustain the sector and investors want highly skilled local talents otherwise their business here would not be sustainable,” he said.
He said Malaysia may face fierce competition in attracting high quality investments due to its shortage in talents.
“Over the longer term, the dwindling number of enrolment of math and science students in the system could cause Malaysia to lose its competitive edge in attracting high tech investments,” he said.
Lee said Penang will be collaborating with other northern region states to develop the northern region as an ecosystem hub for various industries.
“Penang will continue to focus on attracting capital-intensive, high-quality and knowledge-based investments,” he said.
He said Penang will also look into deepening the value chain and capability building for the medical technology, equipment manufacturing and semiconductor sectors.
He added that the state will constantly engage with existing companies operating in Penang with equal focus on both reinvestments and new investments.
