THE US-China trade war may impact companies in Penang, state investment agency investPenang said.

Its chief executive officer, Loo Lee Lian, said investPenang was monitoring the situation for possible restructuring and reduction of working hours in companies that operate in the state.

“Overall, the trade war has caused the market to soften a bit. For example, Chinese automobile companies are seeing a 50% drop in sales.

“Many in the industry will be affected. Many companies are feeling the effects.

“We are watching for companies that may be cutting working hours or restructuring. We expect this to happen. We are monitoring,” she told a press conference at Chief Minister Chow Kon Yeow’s office in Komtar today.

Loo was asked if companies were closing or cutting their workforce due to the economic situation.

Last month, investPenang director Lee Kah Choon said in a statement that some factories were suspending operations and downsizing their workforce due to restructuring, following the slower global economic growth and demand, and business uncertainty caused by the US-China trade war.

Penang’s manufacturing sector is dependant on the electrical and electronic (E & E) business – the cornerstone of the state’s industry that has given Penang the monicker “Silicon Valley of the East”.

Despite the present climate, Loo said investPenang was in talks with several investors on investing in Penang.

Meanwhile, Chow said trade wars could also bring new opportunities.

Penang, he said, was also getting more enquiries from companies based in China looking to relocate their operations.

“But we are also selective. Penang looks for strategic investments that can contribute to our economy, and strengthen our industries and business ecosystem,” he said.

Penang recorded RM5.8 billion in total investments last year, a drop from 2017’s RM10.8 billion.

But Chow said the state still managed to achieve its annual average.

“For the last 10 years, we made RM58 billion in investments. The annual average is above RM5 billion. Some years, we exceed the amount, some years we don’t.

“Our industries are dependant on the E & E sector, which goes through a cycle of three to four years. There will be ups and downs.

“We are satisfied with the average. The investments are still high-value ones that create jobs,” he said.

Chow also said the state would step up its efforts to make Penang the destination of choice for investors.

“MIDA (Malaysian Investment Development Authority) can approve investments but it does not mean the investments will be realised. Investors may be looking at different locations at the same time.

“Implementing the investment is important, and our implementation rate in Penang is more than 80%,” he said.

Earlier, Chow announced the setting up of the Penang Strategic Investment Advisory Council (PSIAC), which will advise the state government on measures to develop and enhance Penang as a destination of choice for strategic investments in the industrial, technology, business and services sectors.

The council is chaired by Chow. Other members from the state are deputy chief ministers Ahmad Zakiyuddin Abdul Rahman and Dr P. Ramasamy, state local and international trade exco Abdul Halim Hussain, and investPenang’s Loo and Lee.

Industry leaders appointed to the council for two years are Globetronics Technology chief executive officer Heng Huck Lee; Texchem Life Sciences managing director Dr Yuma Konishi; Boston Scientific manufacturing and distribution general manager Dave Mitchell; Plexus Manufacturing Asia Pacific president Lim Yong Jin and Citigroup Transaction Services Penang and Asia Trade Operations head Srinath Sambasivan. 

Chow said the industry leaders’ firsthand information in the global market and technology trends would help Penang form constructive policies to grow its industries. – April 4, 2019.