GEORGE TOWN: Penang is gearing itself towards a balanced economic structure and becoming less dependent on the manufacturing sector which has been the driver of the state’s economy since the early 1970s.

Chief Minister Lim Guan Eng said by 2020, the state government hopes to equalise the tourism and manufacturing sectors which made up 39% and 52% respectively of the state’s GDP in 2010.

At a day-long Invest Penang seminar cum dialogue for local and foreign fund managers organised by ECM Libra Financial Group Bhd, Lim said he hopes to see the tourism sector reach 50% of the state’s GDP by 2020.

“We want to see a more balanced economic structure for the state so as to be less vulnerable to the vicissitudes of the global business cycles.

The manufacturing sector has been the driver of the state's economy since the early 1970s

“This means that we want to see a more dynamic services sector and a more sustainable economic growth for the state,” Lim said in his keynote address to the 25 fund managers and key decision makers. Some of the participants came from Hong Kong, China, the Philippines, Singapore and India and the rest were local players.

Lim said the presence of the fund managers with funds said to be in excess of US$100 billion (RM303 billion) in itself was testimony of their interest in Penang.

He is hopeful the seminar/dialogue could lure fund managers to invest in Penang in the high technology and high value-added sectors.

“There has been no such gathering ever in Penang as there was never much interest in Penang but now, there is a deep-seated interest and this is the real thing.

“They must like what they see to be here. Penang is on the radar of investors,” Lim said.

Lim outlined the state government’s recent achievements. Among them are Penang’s top ranking in investments approved last year. The state accounted for 36% of the RM12.2 billion in total foreign direct investments approved for the country.

For the first half of this year, Penang, with RM4.59 billion, ranks second in terms of total investment. However, in terms of FDI approved, the state came in top with 24% of the total.

Lim said the Penang International Airport which is undergoing a RM250 million expansion to increase its passenger capacity to five million people registered the highest arrivals growth among airports in Malaysia last year. The airport recorded a 25% increase with 4.1 million arrivals compared with 3.3 million in 2009.


He cited the commendation of Transparency International in 2010 for the state government’s competency, accountability and transparency governance for anti-corruption efforts. Since 2008, the state government has also been commended three years in a row by the Auditor-General as the best financially managed state in the country.

Growing services... Penang is gearing itself towards a balanced economic structure, says Chief Minister Lim Guan Eng.

Lim also mentioned Penang being voted by Yahoo travel as one of the top eight islands in the world to see before one dies, and the state’s green initiative including the ban on plastic bags daily.

“Penang is also the safest state in Malaysia with the highest reduction of 27% in crime index in the country among all states in 2010 and topped the country again for the first six months of this year with crime reduction of 26%,” Lim added.

The seven key factors which account for Penang’s success as a location of choice for investments — readily available human talent, supply chain, logistics and communications, strong intellectual property protection, non-corrupt governance, creativity and innovation in science and technology and liveable city environment — will continuously be promoted, Lim said.

He said in addition to high-value manufacturing in electronics, LEDs, medical devices, photovoltaic/solar, aerospace and avionics industries, Penang is also promoting and encouraging existing companies to move up the value chain to include research, design and development activities in software, hardware and firmware in their Penang operations.

“Other than manufacturing and related services, we hope to develop and promote Peanng as the hub for shared services and outsourcing, particularly for business process outsourcing (BPO), information process outsourcing (IPO), and knowledge process outsourcing (KPO),”
Lim said. He added that companies are encouraged to set up their regional headquarters here with land allocated for the purpose.

Lim also touched on the state government’s efforts to encourage world-class educational institutions to set up base at the 200-acre (80ha) plot in Balik Pulau and its efforts to promote Penang as a medical city.

To address worsening traffic congestion on the island, Lim said request for proposals would be called soon for the RM8 billion infrastructure projects, namely the Penang third link (underwater tunnel), the Gurney Drive-Tun Dr Lim Chong Eu bypass, Tun Dr Lim Chong Eu-Bandar Baru-Air Itam bypass and the Tanjung Bungah-Batu Ferringhi-Teluk Bahang paired road.

Lim said he strongly believes that decentralisation of decisions and resources is necessary to effectively reach out to communities as well as investors for the sake of development.

“By transforming Penang into an international and intelligent city, we will be more assured of a continuous inflow of FDI which will create a multiplier effect, inclusive of rising domestic investments, strong supply chain, economic revitalisation, increasing income for locals and more importantly, moving away from the middle-income trap,” Lim added.