Sustainability, better jobs and a higher standard of living in Penang

Published by The Edge Malaysia• 10/10/2023

The state’s GDP projection entails maintaining a steady annual growth of 3.5% from 2023 to 2028 (Photo by Low Yen Yeing/The Edge)

This article first appeared in City & Country, The Edge Malaysia Weekly on October 2, 2023 October 8, 2023

Chow Kon Yeow, who was recently sworn in as Penang’s chief minister for a second term, is focused on achieving the Penang2030 vision. He aims to transform Penang into a developed state, with an emphasis on industrial and infrastructure projects.

The industrial sector is turning to high-value and technology-related businesses, such as medical technology and digital. Meanwhile, the fifth chief minister of the Pearl of the Orient is looking to at least kick-start all the infrastructure projects: Penang South Islands, 5G coverage and the long-overdue light rail transit (LRT) project. He tells City & Country his plans.

City & Country: The manufacturing sector continues to be a major contributor to the state’s gross domestic product (GDP). What is the state’s target for 2023?

Chow Kon Yeow: Indeed, investments in the manu facturing sector are something we monitor very closely. In the past two to three years, we have achieved tremendous results. For instance, in 2021, we attracted RM76.2 billion worth of investments — mostly foreign direct investments (FDIs), which was a record-breaking year. Then, in 2022, we achieved RM13.7 billion, of which 71% was contributed by FDIs.

Chasing record investment figures is not an objective of the state government. Our goal is clear: We want to focus on bringing in high-quality investments and high-value industries that can create high-income jobs and generate multiplier effects in the economy. High-value industries such as medtech (medical technology) should be promoted, and we will become the medtech hub of Asia. At the moment, there are three to four medtech hubs in the world, but there is none in Asia. In Penang, we already have a cluster of medical device companies and the success rate is higher when you have an ecosystem [of business vendors and suppliers]. So, we hope we will continue to attract related medtech companies to Penang.

We will continue to foster growth in the electrical and electronics (E&E) manufacturing sector, integrated circuit design, medtech, digital district and the new economy. All these efforts are guided by the Penang SEED framework, which ensures dynamic, inclusive and high-quality career opportunities while promoting the well-being of our citizens in accordance with the Penang2030 vision.

Our projection entails maintaining a steady annual growth of 3.5% from 2023 to 2028.

Furthermore, we anticipate a remarkable 5.8% growth trajectory by attracting more than RM10 billion in approved manufacturing investments, alongside a 1.4% expansion in the job market within the same period.

This year will be considered a good one if we can pull in RM10 billion worth of investments, considering the softening of the market. From January to March 2023, Penang garnered RM3.3 billion in investments.

What does Penang need to do to continue to being the preferred destination for investment?

First, the availability of industrial land is of utmost importance. Without sufficient land, we have nothing to offer investors. We are working on industrial land readiness. Penang’s current industrial parks, such as Mak Mandin, Perai, Bayan Lepas, Seberang Jaya, Bukit Tengah, Bukit Minyak, Penang Science Park, Penang Science Park North and Batu Kawan Industrial Park (BKIP) 1 and 2, are a testament to the state’s five-decade-long industrial efforts and success.

We faced land issues three to four years ago, but we have since actively expanded our industrial area in BKIP and the Penang Science Park North Industrial Park. We are working closely with relevant agencies and stakeholders to identify suitable industrial zones and land parcels that can accommodate the increased demand. Our aim is to provide them with accessible and strategically located sites that cater for their production requirements.

We are now working on seven new areas, such as Penang Science Park South with 120 acres, BKIP 3 with 420 acres and Bandar Cassia Technology Park (BCTP) with 253 acres. We have temporarily put on hold BKIP 2 to move on to BKIP 3 instead. It is about the infrastructure … You need to build bridges and connect the road system, and make sure electricity and water supply and other amenities are there. These amenities are already available in BKIP 3 and BCTP, so the development there can move faster than new fields. Therefore, we will go back to BKIP 2 later on.

All in all, we should have industrial park land ready to meet the demand for the next five years. In addition, we are embarking on the reclamation of [the 2,300-acre] Penang South Islands (PSI), which would provide another 700 acres for industrial and global business services.

We are also working on the regulations for and the construction of foreign worker dormitories.

Besides, we understand the importance of reliable transport networks, efficient logistics and modern utilities to the success of manufacturing operations. We have outlined comprehensive plans to upgrade existing infrastructure and develop new ones.

Penang believes the availability of industrial land is of utmost importance (Photo by Low Yen Yeing/The Edge)

This includes enhancing road networks and expanding public transport options through the various components of the Penang Transport Master Plan (PTMP) as well as ensuring a consistent and sustainable supply of utilities such as electricity and water through the Penang Raw Water Contingency Plan 2030 and Perak-Penang water transfer scheme.

Furthermore, we are investing in digital infrastructure to support the Industry 4.0 transformation that many manufacturers are under-going. High-speed internet connectivity (5G), smart manufacturing initiatives and technology parks are part of our efforts to create an ecosystem that fosters innovation and competitiveness.

In conclusion, our comprehensive approach reflects our commitment to ensuring a seamless and mutually beneficial transition for all parties involved. We believe that by creating an ecosystem that nurtures growth and innovation, Penang will continue to solidify its position as a premier destination for manufacturing and industrial excellence.

PSI and PTMP will play a central role in Penang’s growth for decades to come. What kind of growth will it bring to the state?

They hold a pivotal role in shaping Penang’s growth trajectory for the years ahead. These projects are poised to bring about multifaceted growth to the state in terms of economic growth, employment opportunities, education and innovation, infrastructure advancement, urban development, tourism and recreation, property and real estate, as well as quality of life improvements.

These projects are anticipated to spur significant economic growth in Penang. PSI will be developed as an international business and leisure project that can attract FDIs and foster new industries. Even though we have scaled down the project to just one island, it holds the potential to yield an impressive RM1.1 trillion in GDP impact and attract investments totalling RM74.7 billion within a 30-year time frame.

The improved transport infrastructure provided by PTMP can facilitate the movement of goods and people, fostering heightened trade and economic activity.

Mega seafront project Gurney Bay, formerly known as Gurney Wharf, is set to be a major tourist attraction with retail and F&B components as well as a beach (Photo by Low Yen Yeing/The Edge)

These projects are poised to generate a multitude of employment opportunities. As PSI evolves into a hub for various sectors, including IT, research and development as well as services, it will diversify Penang’s economy while creating more higher-skilled and higherincome job opportunities. The construction phase of PSI and PTMP will also employ a significant workforce.

The growth brought about by these projects will lead to increased investments in education and research institutions. This could establish Penang as a hub for innovation and knowledge-based industries, further diversifying its economy.

The development of PSI and PTMP will require the establishment of modern infrastructure, including roads, bridges, public transport systems and utilities. These developments will not only improve connectivity within the state but also enhance its overall infrastructure quality.

PTMP’s emphasis on comprehensive transport solutions can lead to well-planned urban development. Efficient public transport systems can reduce traffic congestion and encourage the growth of urban areas in a sustainable manner.

The strategic integration of recreational and tourism components within the scope of PSI, enhanced by the smooth connectivity of the PTMP transport infrastructure, stands poised to attract both domestic and international visitors. This will not only revitalise the hospitality and entertainment industries, but it will also have a positive ripple effect on local businesses and the community.

The growth potential brought about by these projects can positively influence the real estate market. Demand for residential, commercial and industrial spaces is likely to increase, offering opportunities for developers and investors.

The holistic development approach of PSI and PTMP is likely to enhance the overall quality of life for Penang residents. Reduced congestion, improved public spaces and access to modern amenities contribute to a more liveable urban environment.

In conclusion, PSI and PTMP are poised to usher in comprehensive growth across economic, infrastructural, environmental and social dimensions. By strategically leveraging these developments, Penang has the potential to establish itself as a dynamic and sustainable region with improved opportunities and a higher quality of life for its residents.

Infrastructure is a focus of the state (Photo by www.123rf.com/profile_tsyew)

We started the reclamation works for PSI near Permatang Damar Laut on Sept 1. It is designed as an eco-sustainable island in which over 30% (450 acres) of the reclaimed land will be designated as public spaces and green area, waterfront promenade, canal, jogging trail and so on. The reclamation works will be carried out phase by phase, over the course of seven to eight years, starting from the industrial land. In two years, some industrial land will be available. The accessibility, which is the bridge, will be built concurrently. That’s our plan, to connect the LRT to the island, but it is up to MRT Corp.

There is concern about rising sea levels with reclamation projects. How will Penang address the environmental impact from the PSI project?

At the beginning of my first term, I said we want a balanced development — development with environmental sustainability. Climate change and rising sea levels are something of a concern, but the approvals obtained have gone through stringent scrutiny by various state and federal agencies. We are fully committed to complying with all regulatory requirements and conditions set by the relevant authorities, and we have the PSI Ecology Offset Master Plan (PEOM) and the Social Impact Management Plan (SIMP) to address these concerns.

The PEOM helps mitigate the project’s impact and enhance marine biodiversity. It involves planting mangrove trees (in collaboration with the State Forestry Department); deploying artificial reefs and fish aggregating devices (being studied by Universiti Sains Malaysia’s Centre of Marine and Coastal Studies); releasing fish and shrimp fry (also being studied by USM’s Centre of Marine and Coastal Studies); building eco-shorelines along the island’s perimeter; as well as providing research funds for marine ecology, fisheries, turtle, coral reef and other relevant studies.

Meanwhile, the SIMP addresses the concerns of local fishermen. While acknowledging that some impact is inevitable, the plan assures that fishing activities can continue. Furthermore, it seeks to provide opportunities for improved livelihoods and income generation for these communities, ensuring they are not left behind by the project’s progression.

We registered all fishermen along the project site and divided them into Tier 1 and Tier 2, where Tier 1 are those facing the three islands directly. Even now, the island has been reduced to one and none of them need to be resettled. We are still committed to offering the same ex gratia. Some of the Tier 1 have been offered new boats with a bigger capacity engine, and this will benefit the fishing community as they can travel further out. On Sept 1, we gave out 75% of the ex gratia to the fishermen, and another 25% will be gradually paid until 2024.

Besides the 450 acres for the development of public parks, wetlands, floodplains and bioswales, other green initiatives on PSI also include the creation of mangrove forests for locals and tourists, construction of water canals with a blue-green network for water taxi connection, 100% usage of renewable energy at Green Tech Park (in PSI), installation of 110km of a bicycle and pedestrian network for green mobility, implementation of electric public bus services as well as construction of ‘super-low-energy’ buildings with efficient cooling systems and smart features.

PSI and the broader PTMP initiatives are firmly grounded on the principles of sustainable development. It is about balancing economic advancement and socio-ecological well-being. The aspiration is not only to elevate Penang’s status but also to contribute to the global movement for a sustainable future.

Reclamation works for PSI started near Permatang Damar Laut (Photo by Low Yen Yeing/The Edge)

PSI’s commitment to environmental responsibility has been officially recognised through the ‘5-diamond’ designation in the Design Category by the Malaysian Green Technology and Climate Change Corp. This recognition underscores the project’s alignment with low-carbon and sustainable city goals, further validating its positive impact.

What is the state’s focus for the next five years?

The primary concern and major task for the next five years is to push all infrastructure projects to start or to be completed. Some may take longer than five years to complete but we need to start them and lay a good foundation for the growth of the state.

Some of the projects have been approved. We will also continue with the three road and undersea tunnel projects by starting the negotiation for the next package. We have started one package, which is now about 38% completed and on schedule, and we will start the negotiation for the second package.

The LRT project is now … under the federal government, but as the state government, we have the responsibility to facilitate the implementation as well. We want these projects to be completed as scheduled because these are long overdue projects.

There is heightened awareness that we need to resolve traffic congestion, so there are several traffic mitigation projects we want to implement, especially in the Seberang Perai area. We need to resolve the traffic issue to make the state attractive to investors and people outside Penang to come in to work. Being trapped in traffic congestion is not something we enjoy. We are pushing for more projects that can help alleviate the traffic issue in Penang.

Penangites recognise the importance of a rail transport system, but the debate is over what type of system and whether it is elevated or underground. Now that MRT Corp is responsible for the project, we will wait for them to finish their feasibility study and to decide on the final alignment and the system. The government recognises that Penang needs a good transport system and has offered to take over the project. Hopefully, it will happen soon as we have been hoping for it for so long. Assistance from the federal government is most welcome.

Then, 5G is well taken care of by the national agency and we hope for the rollout by the end of this year so there will be 5G coverage throughout the state. It will boost connectivity and we hope there will be more e-commerce activities in the state with a better 5G rollout.

Efficient public transport systems can reduce traffic congestion and encourage the growth of urban areas in a sustainable manner (Photo by Low Yen Yeing/The Edge)

Another challenge is water supply. We hope that with the negotiations with the Perak government and the help of government agencies, we will realise Perak’s supply of water to Penang. It is crucial for our future development.

The next five years is all about infrastructure projects in Penang. The state has become one of the important economic powerhouses for the country. For us to continue with this role and be a state with the highest export value and surplus from trade, the whole infrastructure ecosystem has to be improved tremendously. The federal government appreciates the role of Penang and, hopefully, they recognise it with a rollout of federal funds into these projects.

It seems that industrial and infrastructure projects have been and will continue to be the major focus for the state.

While industrial and infrastructure projects have been prominent, it is important to note that our focus is not limited solely to these areas. We are committed to fostering holistic development that includes economic growth, environmental sustainability and social wellbeing. Our efforts in industrial and infrastructure projects are geared towards generating job opportunities, enhancing connectivity and promoting economic diversification. At the same time, we are dedicated to strengthening education, healthcare, culture and heritage preservation for well-rounded progress as envisioned in the Penang2030 vision.

The Penang government is ramping up its efforts to ensure balanced development on the island and mainland through multiple authorised platforms. Can you tell us more about the progress?

The general perception is that the island is more developed than the mainland. Undeniably, the island was developed many years ahead of the mainland, but if you look at the industrial estates, we have seven to eight industrial parks to accommodate 300 multinational corporations and 4,000 small and medium enterprises. However, most industrial parks are on the mainland. With the [upcoming] better road system, the future of the mainland will have more developments.

For now, there are infrastructure challenges we need to resolve. Not only will PTMP address the mounting transport requirements and urban development challenges, but it will also act as a catalyst for economic advancement on both fronts. This overarching transport scheme is set to amplify connectivity between the island and the mainland, fostering seamless mobility for our citizens and bolstering sustainable growth across the state.

A balanced paradigm encompasses more than just bricks and mortar, it encompasses economic diversification, preservation of our environment and the well-being of our society. By leveraging these authorised platforms, we are confident that Penang is poised to embrace a future in which both the island and the mainland prosper in harmony.

Most industrial parks in Penang are on the mainland (Photo by Low Yen Yeing/The Edge)

What impact will the proposed Kulim airport have on Penang?

The Ministry of Transport said there has been no formal proposal. Nevertheless, looking at the debate, the original proposal for Kulim airport is just a cargo airport and the question is whether you need a cargo airport at this moment because there is still excess capacity for cargo at Penang International Airport. Do you just build an airport for cargo? I don’t think it is tenable because Penang International Airport can easily play that role. Also, we have the Penang port.

If there were an airport in Kulim, there would be an impact on Penang. One of the reasons people want to be in certain places is the infrastructure. Investors will have a better choice, but having another airport needs proper study. The Penang International Airport can be expanded and we can bring the airport into another 10 to 20 years, as we are able to cater for a bigger number. At the moment, this airport can cater for only 6.5 million passengers. But before Covid-19, we already received eight million passengers. The talk is that expansion will be able to cater for 12 million, but this can be easily surpassed. So, maybe Malaysia Airports Holdings Bhd should look beyond 12 million, maybe 16 million or 20 million. But again, it is a federal project. We definitely want it to happen.

The Penang government aims to build 220,000 affordable housing units in the state by 2030. How will you achieve it?

By partnering with developers, promoting mixed-use spaces and using innovation financing, including incentivising developers by reducing development charges to reduce housing prices. We are well on our way with 148,351 units as at May 2023. Collaboration between the public and private sectors drives us to make affordable housing a reality.

From the start of my second term, I have asked the exco to do a study on the actual need for housing in the state. It should be based on real demand and figures. It will determine if we need to review and revise our target to get a more realistic grasp of the housing demand and supply in the state.

Where do you see Penang in five years?

We have the Penang2030 vision, with the theme ‘A Family-focused Green and Smart State to Inspire the Nation’. It is the state’s four-pronged vision to increase liveability to enhance the quality of life, upgrade the economy, empower the people to strengthen civic participation and invest in the environment.

We will concentrate on strengthening our healthcare infrastructure and disaster preparedness, fostering digital innovation and the new economy, enhancing education and skills development, and promoting sustainable tourism. Our goal is to ensure a resilient and adaptive state that can effectively respond to challenges while continuing to provide residents with a high quality of life.

Ultimately, we are looking at sustainability, a higher standard of living and better jobs. By 2023, we should have a stronger foundation to bring the state to another level of development and that we can be classified as a developed state by then.