Penang a place to live, work and invest

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Penang’s Chief Minister Lim Guan Eng

Penang has the third largest economy of all states in Malaysia. Investvine asked Penang’s Chief Minister Lim Guan Eng about the prospects for the highly urbanised state which has been given the nickname “Pearl of the Orient”.

Penang has a focus on the high-tech industry, services and tourism. It attracts a large number of domestic and foreign investors, not only due to its open and free economy, but also its cultural heritage and high quality of life.

Q: In 2010, Penang had the highest total capital investments of all states in Malaysia. What is the reason for this, and how does Penang develop its advantages?

A: We have been number one in terms of investment inflows for two consecutive years, which is remarkable as we are the second smallest state in the country. One reason for this is our focus on building human talent, retaining it and attracting new one. The other reason is that we have been able to build up an efficient supply chain management, and we are also a logistic hub. Finally, we are very focused on transforming Penang into an international and intelligent city. We want this state to be a place where one can work, but can also live and play. There must also be some culture, that’s what makes international cities nowadays. We must also attain international benchmarks. Things must work, especially digital intelligence, because this allows us to connect to the world. Connectivity is everything nowadays. Being an intelligent state also requires institutional intelligence. There must also be integrative intelligence, meaning a clean government under integrative leadership, because that is what attracts investors. Penang has the cleanest government in Malaysia, this has been confirmed by Transparency International. And people prefer a clean government over one that is not clean. Many of the US companies wanting to invest overseas have their respective checklists and are also subject to the Prevention of Corruption Act, and any act of bribery overseas will be deemed as an act of bribery in the US and be a case for the public prosecutor as if it was bribery committed in the US. Penang has 40 years of good experience with multinational corporations, especially in the electrical and electronics industry and I think that is because we allow the workers and employees to easily adapt themselves to good practices. You know, you have to train people, but to ensure that they learn fully, and do their work properly and perform, that’s not easy but that is what happens in Penang. Due to our intelligence and skills, companies are able to achieve the highest productivity and the highest quality in the production line.

Q: Are there challenges to retain these well-trained people?

A: We have to continue to invest into the future, into education, and into science and technology. We have set up the Penang Science Council to establish Penang as a centre of excellence for science and technology. We also have set up the Penang Tech Center, and what we focus on is to retain the interest in science and technology among the young. We also do science fairs in sport stadiums. Normally science fairs are not held in an indoor sports stadium, because organisers fear that not so many people would come to fill such a big venue.

Q: What do you think are the biggest obstacles or challenges in attracting investment? What is the promotional message for Penang to investors?

A: Our challenge is to build human talent quickly, but you cannot build it overnight. It takes a few years. We also have a slogan for Penang to attract investors: Cleaner, greener, and safer, that is our message. We were the first state in Malaysia to introduce green initiatives, for example against plastic bags and for recycling. And with respect to being safe, we have very low crime rates. As part of our efforts to make Penang a cultural city and attract new talent, we opened a performing arts centre last year, which is, in my opinion, much better than the one in Kuala Lumpur.

Q: What economic sectors is the government currently focusing on in terms of attracting new investment?

A: We focus on electrical and electronics, on biotech, medical devices, aerospace, all obviously high-tech, value-adding and capital-intensive sectors.

Q: Do you have special investment promotions for investors from the GCC, for example in the halal industry? What are the opportunities in Islamic-related sectors?

A: We did some promotions in the halal industry, and we have a certifying body for halal. Regarding investment from the GCC, you know, we are focused on high-tech, and there are not so many high-tech companies in the GCC. But halal has indeed a great potential. It’s a slowly growing sector, and we need to build capacity. We are very successful, but we don’t have much land left. We need to make sure that we choose the right companies for the little land we have left. Investment projects must be high-tech, service-oriented, and low-labour intensive, because we also have a problem of labour shortage. Thus, we do not want to over promote ourselves at the moment. We want to move up in the value chain to reach the next level of success. Anyway, GCC people know and like Penang, they also come here for their holidays. For example, one of the GCC rulers takes at least four or five floors in a hotel for at least two months a year, incognito of course.

Q: From which countries do investors in Penang come from?

A: From everywhere. We have one of the most dynamic electronic clusters in the world, and we have all the big names here. We have Intel, Motorola, Sony, Dell, Honeywell, Bose Corporation, National Instruments, or Agilent. For instance, Intel  employs 4,000 engineers in Penang. They don’t call their places factories anymore, they call it campuses. We have a huge concentration of talent, of brainpower, and, of course, intellectual capital. And our strategy is: Go to an investor or a company and give them your full attention.

Q: Is Penang present at trade fairs?

A: Yes we are, but an important factor for us is also that existing investors are recommending Penang as a place where they have made the best experience. Such recommendations are equally important to us.

Q: Would you support the claim to re-establish the free port status for Penang?

A: Of course, but that is a decision of the federal government.

Q: Which greater infrastructure projects are currently in the planning for Penang? At what costs, and where does the funding come from?

A: The land swap project that comes at RM8 billion. It’s the state’s largest infrastructure project including new highways and a sea tunnel. A land swap agreement grants private developers prime government-owned land in exchange for their investments into infrastructure. Generally, most of the developers say they don’t have enough projects to launch as people continue buying. Demand is here, but we also need to be careful that it not ends up in a speculative bubble.

Q: What role does the financial sector play for Penang’s economy?

A: It plays an important role, but we ourselves don’t issue banking licenses, they are issued by the federal government.

Q: What other sectors are in the focus?

A: We are building up the service sector, for example with BPO (Business Process Outsourcing), SSO (Shared Services & Outsourcing), and KOS (Knowledge Outsourcing Services) centers. The service sector is very important. We achieved around RM9 billion in manufacturing revenue last year, but already RM5 billion in services. We are working towards balancing it to reach a 50:50 ratio. And there is no high capital investment necessary into the service sector.

Q: What about the tourism industry?

A: People want to come to Penang because this is where all the action is. We have our World Music Festival in March, the George Town Heritage Festival in July for 30 days and the World Jazz Festival in November.

Q: What is the message you would like to convey to our readers in the GCC?

A: We are now seen as the best halal facility in Asia. And even though Penang is not in the Middle East, here you can have all the Arab food you want, for example. We also have Arab quarters, and streets with road signs in Arabic. And Malaysia’s only halal hotel is in Penang. My general message is: Penang is open, Penang is free, and Penang is safe. The infrastructure is there, and we are improving it continuously. Investors come here for a reason.

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Reading Time: 5 minutes

Penang’s Chief Minister Lim Guan Eng

Penang has the third largest economy of all states in Malaysia. Investvine asked Penang’s Chief Minister Lim Guan Eng about the prospects for the highly urbanised state which has been given the nickname “Pearl of the Orient”.

Reading Time: 5 minutes

Penang’s Chief Minister Lim Guan Eng

Penang has the third largest economy of all states in Malaysia. Investvine asked Penang’s Chief Minister Lim Guan Eng about the prospects for the highly urbanised state which has been given the nickname “Pearl of the Orient”.

Penang has a focus on the high-tech industry, services and tourism. It attracts a large number of domestic and foreign investors, not only due to its open and free economy, but also its cultural heritage and high quality of life.

Q: In 2010, Penang had the highest total capital investments of all states in Malaysia. What is the reason for this, and how does Penang develop its advantages?

A: We have been number one in terms of investment inflows for two consecutive years, which is remarkable as we are the second smallest state in the country. One reason for this is our focus on building human talent, retaining it and attracting new one. The other reason is that we have been able to build up an efficient supply chain management, and we are also a logistic hub. Finally, we are very focused on transforming Penang into an international and intelligent city. We want this state to be a place where one can work, but can also live and play. There must also be some culture, that’s what makes international cities nowadays. We must also attain international benchmarks. Things must work, especially digital intelligence, because this allows us to connect to the world. Connectivity is everything nowadays. Being an intelligent state also requires institutional intelligence. There must also be integrative intelligence, meaning a clean government under integrative leadership, because that is what attracts investors. Penang has the cleanest government in Malaysia, this has been confirmed by Transparency International. And people prefer a clean government over one that is not clean. Many of the US companies wanting to invest overseas have their respective checklists and are also subject to the Prevention of Corruption Act, and any act of bribery overseas will be deemed as an act of bribery in the US and be a case for the public prosecutor as if it was bribery committed in the US. Penang has 40 years of good experience with multinational corporations, especially in the electrical and electronics industry and I think that is because we allow the workers and employees to easily adapt themselves to good practices. You know, you have to train people, but to ensure that they learn fully, and do their work properly and perform, that’s not easy but that is what happens in Penang. Due to our intelligence and skills, companies are able to achieve the highest productivity and the highest quality in the production line.

Q: Are there challenges to retain these well-trained people?

A: We have to continue to invest into the future, into education, and into science and technology. We have set up the Penang Science Council to establish Penang as a centre of excellence for science and technology. We also have set up the Penang Tech Center, and what we focus on is to retain the interest in science and technology among the young. We also do science fairs in sport stadiums. Normally science fairs are not held in an indoor sports stadium, because organisers fear that not so many people would come to fill such a big venue.

Q: What do you think are the biggest obstacles or challenges in attracting investment? What is the promotional message for Penang to investors?

A: Our challenge is to build human talent quickly, but you cannot build it overnight. It takes a few years. We also have a slogan for Penang to attract investors: Cleaner, greener, and safer, that is our message. We were the first state in Malaysia to introduce green initiatives, for example against plastic bags and for recycling. And with respect to being safe, we have very low crime rates. As part of our efforts to make Penang a cultural city and attract new talent, we opened a performing arts centre last year, which is, in my opinion, much better than the one in Kuala Lumpur.

Q: What economic sectors is the government currently focusing on in terms of attracting new investment?

A: We focus on electrical and electronics, on biotech, medical devices, aerospace, all obviously high-tech, value-adding and capital-intensive sectors.

Q: Do you have special investment promotions for investors from the GCC, for example in the halal industry? What are the opportunities in Islamic-related sectors?

A: We did some promotions in the halal industry, and we have a certifying body for halal. Regarding investment from the GCC, you know, we are focused on high-tech, and there are not so many high-tech companies in the GCC. But halal has indeed a great potential. It’s a slowly growing sector, and we need to build capacity. We are very successful, but we don’t have much land left. We need to make sure that we choose the right companies for the little land we have left. Investment projects must be high-tech, service-oriented, and low-labour intensive, because we also have a problem of labour shortage. Thus, we do not want to over promote ourselves at the moment. We want to move up in the value chain to reach the next level of success. Anyway, GCC people know and like Penang, they also come here for their holidays. For example, one of the GCC rulers takes at least four or five floors in a hotel for at least two months a year, incognito of course.

Q: From which countries do investors in Penang come from?

A: From everywhere. We have one of the most dynamic electronic clusters in the world, and we have all the big names here. We have Intel, Motorola, Sony, Dell, Honeywell, Bose Corporation, National Instruments, or Agilent. For instance, Intel  employs 4,000 engineers in Penang. They don’t call their places factories anymore, they call it campuses. We have a huge concentration of talent, of brainpower, and, of course, intellectual capital. And our strategy is: Go to an investor or a company and give them your full attention.

Q: Is Penang present at trade fairs?

A: Yes we are, but an important factor for us is also that existing investors are recommending Penang as a place where they have made the best experience. Such recommendations are equally important to us.

Q: Would you support the claim to re-establish the free port status for Penang?

A: Of course, but that is a decision of the federal government.

Q: Which greater infrastructure projects are currently in the planning for Penang? At what costs, and where does the funding come from?

A: The land swap project that comes at RM8 billion. It’s the state’s largest infrastructure project including new highways and a sea tunnel. A land swap agreement grants private developers prime government-owned land in exchange for their investments into infrastructure. Generally, most of the developers say they don’t have enough projects to launch as people continue buying. Demand is here, but we also need to be careful that it not ends up in a speculative bubble.

Q: What role does the financial sector play for Penang’s economy?

A: It plays an important role, but we ourselves don’t issue banking licenses, they are issued by the federal government.

Q: What other sectors are in the focus?

A: We are building up the service sector, for example with BPO (Business Process Outsourcing), SSO (Shared Services & Outsourcing), and KOS (Knowledge Outsourcing Services) centers. The service sector is very important. We achieved around RM9 billion in manufacturing revenue last year, but already RM5 billion in services. We are working towards balancing it to reach a 50:50 ratio. And there is no high capital investment necessary into the service sector.

Q: What about the tourism industry?

A: People want to come to Penang because this is where all the action is. We have our World Music Festival in March, the George Town Heritage Festival in July for 30 days and the World Jazz Festival in November.

Q: What is the message you would like to convey to our readers in the GCC?

A: We are now seen as the best halal facility in Asia. And even though Penang is not in the Middle East, here you can have all the Arab food you want, for example. We also have Arab quarters, and streets with road signs in Arabic. And Malaysia’s only halal hotel is in Penang. My general message is: Penang is open, Penang is free, and Penang is safe. The infrastructure is there, and we are improving it continuously. Investors come here for a reason.

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