Penang expects 2022 to be year of cautious recovery for businesses
24 Dec 2021
Penang will head into 2022 with fresh opportunities as well as challenges with the country moving into the recovery mode and as the world emerges from the pandemic, Special Investment Adviser to the Chief Minister of Penang Datuk Seri Lee Kah Choon said.
Lee, who is also Director of Penang state government’s investment promotion agency, InvestPenang, said as the world economy continues to open up, there is high expectation that the worst may be over.
“Companies that take the opportunities to strengthen and improve their internal control; subscribe to the ESG (Environment, Social, and Governance) business ideology; adopt and adapt digitalisation processes will stand in good stead to reap the benefits in the new normal environment,” he said in a statement.
On the Penang perspective, Lee said there are many opportunities on the horizon as the backlog of supply created by the supply chain disruption will continue at least for another year before normalising.
He said the impact of trade tension and the COVID-19 pandemic has seriously disrupted the global supply chain and the Just-in-Time manufacturing process under globalisation is now replaced by regionalisation that prioritises supply security over time and cost efficiency.
“This new normal gives Penang companies great opportunities to fill-in the broken supply chain which was previously denied to them,” he said.
On the investment perspective, he said growth will be led more by reinvestment by existing companies rather than by new foreign direct investment into the state.
However, according to Lee, the road to normalcy may be long, winding and full of challenges as when Penang moves up the technology value chain, the demand for talent will become more acute.
This challenge, he said, is multidimensional covering the quantity and quality of the young workforce that enters the market; the need for imported labour to supplement the local workforce; and the outward migration of talent which is not matched by inbound migration.
These are just a few major contributing factors toward the human resource crunch that is plaguing the Malaysian economy post-pandemic.
“While waiting for the federal government to put together an inter-ministerial holistic national human resource plan, the Penang state government has embarked on the journey to attract talents to the state.
“With the resort environment striking a work-life balance lifestyle, Penang is working towards attracting 150,000 talents to the state for the next five years to sustain its economic growth,” he said.
Lee said another challenge is the rise in the cost of doing business including increase in labour, raw materials, freight, and holding costs for inventory.
“All these will eventually feed into the higher costs of the end products, which may or may not be passed on to the consumers, depending on the elasticity of the demand,” he said.