US-China trade war boosts Penang’s investments, but what about its talent supply?

Ida Lim
The ST noted that the trade war has resulted in a return or relocation of electronics manufacturing activity to Penang.— Reuters pic

KUALA LUMPUR, Dec 16 — Manufacturing hub Penang has this year benefitted from the US-China trade war as global firms pour in investments and tap on factories here to produce goods, a report has said.

At the same time however, Singapore daily The Straits Times (ST) pointed out that having an adequate supply of engineers and skilled technology workers in Penang is a concern.

The ST noted that the trade war has resulted in a return or relocation of electronics manufacturing activity to Penang, adding that the state has now regained its position of being among the top states within Malaysia for approved manufacturing investment by attracting RM9.2 billion in the first six months this year.

The report said Penang’s foreign direct investment for the first three months this year at RM8.5 billion even surpassed its figure for the whole of 2018 by more than 50 per cent, against the backdrop of global firms being keen on its relatively cheaper location compared to Singapore and the existing network of vendors and skilled workers.

Earlier this month, the state’s investment promotion agency InvestPenang said Penang had for January to September 2019 attracted 113 manufacturing projects worth RM13.3 billion and that are expected to generate 15,013 new jobs for January to September 2019, which is 23 per cent of Malaysia’s total approved manufacturing investment.

This figure for Penang in the first nine months of 2019 exceeded its 2018 amount of RM5.8 billion and was more than its 10-year annual average of RM6.6 billion.

InvestPenang had also said that Penang had attracted RM12 billion of manufacturing foreign direct investment in the first nine months of 2019, which accounts for 31 per cent of Malaysia’s total manufacturing FDI.

ST noted that the foreign investors include iPhone supplier firm Jabil and that local companies are also increasing production to plug the supply disruption to big firms such as China’s handphone manufacturer Huawei.

Datuk Seri Wong Siew Hai, who chairs the American Malaysian Chamber of Commerce’s electronics committee, indicated that interest in Penang has grown.

“These are the first movers... because there are a lot more inquiries today from both China and US,” he was quoted saying by ST.

But the ST noted that there are now only 70,000 engineers registered in Malaysia as compared to the 500,000 scientists and engineers that the country wants to have by 2020, and that the percentage of students who joined science and technology courses have fallen from 48 per cent in 2012 to 44 per cent in 2018.

Wong was also reported saying that such student enrollment was more than 60 per cent in the 1980s, and that about 20 per cent of engineering graduates do not meet standards required by the industry.

Wong also referred to the brain drain and “talent war”, reportedly saying: “On top of that, we have countries like Singapore and China taking our talent.” 

ST reported InvestPenang chief Lee Kah Choon as saying that Penang is still attractive as its multicultural talents can liaise with countries such as China, India and Indonesia.

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