Sunday, May 18, 2008

Rm3.8 Billion investment by year end..

Great commentary to share and I thought it is worthwhile to give a test on the pulse of our lovely Penang. While the entire world is suffering from possible inflation as well as economic downturn, I am sure this piece of news came at the right time. Investments create jobs but the recent downturn may have cost Penang as well as Malaysia lots of jobs. The importance of relearning new skills and retooling ourselves in terms of moving away from high labor intensive jobs to high skilled jobs will help to build back our economy. I think the last 20 years, the creation of a nexus of companies never took place. Instead, many SMIs did what many other SMIs did - a pair of hands to do the work of multinationals. These are my thoughts.

We have many companies based out of Penang. I classify them into 3 categories :
1. Passover companies - they are here in Penang just to enjoy tax breaks and locate their "so called accounts department" and build big buildings to show the state why they are here. I have seen many of these but not worth mentioning.

2. MNCs with no local authorities - in short, "the kau tow" companies. Bosses are all overseas. They make decisions by getting instructions from someone in Santa Clara, Tokyo etc. They practically have no say but enjoy high paying salaries to manage people and expectations.

3. Home grown management managing big companies locally and internationally - these are the ones that understand this importance of building nexuses around the state and country. I know a few of these and they are always wanting to move up the value chain. Hence, sometimes, our government tend to "lupa" these guys.

I believe that if the Rm3.8 billion came from a mixture of the above, I hope it's from the category 3 companies. These companies will help drive SMIs or supply chain companies to move up the value chain.

Now - I wouldn't want to say that Penang is losing its competitiveness but the state must focus on its priorities to drive in more investment. Niamah to all the politics that are happening around the country but certain individuals must now assist the state to steer the right direction. I am certain Datuk Lee Kah Choon will help in that effort.

My recommendation - grab whatever investments possible. Reach out the investors and not dependent on the federal to give free handouts. Once the state reaches that juncture, I believe the federal government has no choice but to give in. I believe in nation building and the Rm3.8 Billion will go a long way, if it does happen by year end.

Penang investments to exceed target
Athi Veerangan | May 17, 08 7:48pm - Malaysiakini
Penang may well exceed its RM3.8 billion investment target for this year by the end of the month, InvestPenang executive chairperson Lee Kah Choon disclosed today.

The state government’s optimism was driven by keenness from potential foreign and domestic investors, international developments and a favourable investment climate, he said.

Lee believed that Penang investors were drawn to the state due to availability of a highly skilled work force, good infrastructure and international recognition as Malaysia’s ‘Silicon Valley’.

liberal forum privatisation lee kah choonThe completion of major infrastructure projects such as the second Penang bridge, monorail, Penang International Airport expansion, upgrading of the Sweetenham Pier, were also factors which boost investors' confidence.

“The economic spin offs from these projects would be a major booster for domestic investors,” said Lee in his maiden press conference after being appointed to helm InvestPenang last month.

Last year, total investments in Penang was RM4.77 billion, comprising RM3.14 billion foreign direct investments and RM1.63 billion domestic investment.

According to Lee, the cornerstone for Penang’s economic growth is still in the manufacturing sector, which forms 42 percent of the state’s gross domestic product.

He said that the vast presence of tertiary education institutions in the state would also be contributing to a large pool of professional and skilled workers.

Suppliers must improve

He felt that such workers would boost the state government’s efforts to transform Penang’s industries from a labour-intensive manufacturing sector to high-end manufacturing, research and development sectors.

“All these are Penang’s advantages to lure both domestic and foreign investors in all sectors, ranging from manufacturing, services, transportation, medical, tourism and even entertainment,” he said.

Lee also called on Penangites to adopt a paradigm shift and look towards the global market which would require them to acquire more knowledge, education and technology to compete globally.

He said that at present, many multinational companies are demanding domestic suppliers to enhance the quality of their goods.

“Penangites, be it businessmen, developers or ordinary laymen, should absorb global outlook in their mindsets. Otherwise we would lag behind others such as China and Vietnam,” he cautioned.

Lee said that the state was on a mission to restore Penang’s former glory as the investment hub of Malaysia, but conceded that it won’t be smooth sailing.

“With tangible, progressive or dynamic policies, we can do it together,” he told reporters at his office in the Penang Skills Development Centre.

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