The manufacturing sector remains a key economic driver in Penang, contributing about 43% to Penang’s economy, and consistently making up about 13% of the sector’s GDP of Malaysia.
Ranked second, Penang received the largest-ever approved manufacturing investment in 2019 (Table 1). As of Q3 2019, a total of RM13.3bil investment was approved, which will create about 15,000 employments in the state.
Additionally, about 91% of the entire approved investment was contributed by foreign investors as of Q3 2019, while domestic investors made up the remaining 9%. This trend coincided with the historical pattern of Penang’s manufacturing investment, whereby foreign investment has always been the key driver for the state’s investment (Figure 1).
Among the foreign investors, the US was Penang’s primary investor, contributing over half of the total amount of approved manufacturing investment for the first three quarters of 2019. Micron Technology, Jabil Circuit, Bruker Malaysia and National Instruments were some of the approved investments announced last year. Meanwhile, Singapore formed the second largest foreign investor in Penang (15.2%), followed by the UK (12.6%) and Taiwan (7.3%).
In terms of industry, electrical & electronics (E&E) products emerged as the top industry, representing two-thirds of Penang’s total investments for the first nine months of 2019 (Table 2). This industry is expected to create 10,364 job opportunities, which is more than twice the number of jobs created in 2018.
Based on the latest available data, Figure 2 shows that Penang ranked second in the amount of value-added by the state’s manufacturing industries; this is closely followed by Johor. Penang created about RM41bil worth of value from intermediate input, with its gross output valued at RM180.7bil and intermediate input at RM140bil respectively in 2017.
On the whole, Malaysia’s manufacturing firms created an average of RM5.9bil of value-added to the economy in 2017.
Given the similar nature of the industries, Penang, on average, recorded a larger value-added than that of Selangor, despite the fact that the latter produced the highest sum of value-added in Malaysia. With 4,526 establishments responding to the Manufacturing Industries survey conducted by the Department of Statistics Malaysia, an average of RM9bil worth of value was generated by each manufacturing firm in Penang, compared to RM7.9bil value created by each firm – from a total of 10,432 firms in Selangor (Figure 3).
In terms of value created by each worker, Terengganu had the highest value-added created, followed by Labuan (Table 3). This is largely attributed to refining crude oil activities and petroleum products – where the operations are of high value-added.
With regard to states with high concentration of medium- and high-tech manufacturing industries, Penang surpassed Selangor, Johor and Kedah, with a sum of RM141,000 value generated by each employee. This indicates that the workforce in Penang are involved in relatively high value-added operations.
Meanwhile, firms in Selangor again made up the highest sum of salaries and wages paid to their employees in the manufacturing industries. However, Table 3 shows that while Selangor’s manufacturing firms spent almost twice as high as that in Penang, the average salaries and wages paid in Penang registered at RM42,200 compared to RM36,300 in Selangor, followed by RM29,100 in Johor, and RM31,000 in Kedah. In other words, this implies that workers who are engaged in manufacturing firms in Penang are compensated well above those in Selangor, Johor and Kedah.