Plant closure and relocation of production lines are ‘old news’

IT is most unfortunate that MCA vice-president Datuk Tan Teik Cheng tried to recycle ‘old news’ and give them a spin in his commentary on Penang’s investment and E&E industry; published in English and Chinese daily last week.

I would like to refute his claims with facts and figures for the benefit of the community.

Tan had reportedly said that seven multinational electrical and electronics (E&E) factories have shut, resulting in 5,245 employees losing their jobs since 2015 to March this year.

I consider this as an ‘old news’ given that out of the 5,245 affected employees being mentioned in the statement, a total of 5,195 employees were impacted between September 2015 and June 2017. We did not witness any cases in 2018.

It is to note that most retrenched workers will find new job opportunities that are readily available because of ongoing investment.

In fact, on average, new investments in Penang have created 10,000 jobs annually. Penang houses more than 350 MNCs and the number is increasing yearly while the average FDI into Penang (mainly from the E&E sector) is about RM5 billion yearly.

In addition, Penang’s unemployment rate was only at 2.1% in 2017, the second lowest among the states. Malaysia’s unemployment rate was 3.4% in 2017.

Meanwhile, year-to-date, Penang is only experiencing a very small-scale headcount reduction by a few companies, and there is no plant closure.

It is important to note that the E&E business is cyclical, highly competitive and innovation-based. It is common for E&E companies to have continuous reorganisation and rationalisation.

In 2018, we saw many corporates had reserved their investment decision as they took the ‘wait and see’ approach on the United States-China trade war development.

In the near-term, the outlook of the global E&E industry could remain cloudy as the tensed relationship between the world two super powers dampened the global trade and consumer sentiments. However, Penang could benefit in the mid to long run due to corporates’ strategy in diversifying their investment destination.

We are now working with several serious potential investors. The state government wants to focus on high quality investment that creates high value jobs and suit our industry profile. We are not keen in pursuing low quality investment which may bring in huge investment amount but requires low technology and massive labour workforce.

Last but not least, Penang is the power house that drives the E&E sector in Malaysia, no doubt. In 2018, the E&E sector represented 38% of Malaysia’s total export, amounting to RM380 billion (up 11% year-on-year) and created a trade surplus of RM119 billion. This shows how important Penang is to the economy of Malaysia.

Chow Kon Yeow
Penang Chief Minister
Media statement by Chow Kon Yeow in KOMTAR, George Town on Wednesday, 15th May 2019