Penang Institute Pushes for Economic Ecosystems Development

SINCE THE THEME for January 2024 is Penang’s Economic Development, it seems appropriate that I present in somewhat truncated form the document produced in March 2023 by Penang Institute as a think piece for internal use. This is the “Penang Regional Industrial Support Measures” (PRISM).

PRISM functioned as the touchstone for Penang Institute’s researchers in formulating the Penang Strategy for Economic Ecosystems Development (Penang SEED), a policy paper commissioned by Penang Chief Minister Chow Kon Yeow. Completed in record time, it was launched by him before the State Executive Committee on 12 June, exactly two months before the state elections.

Hopefully, the summary here will help readers understand the main thoughts behind the larger document that is to direct Penang’s economic policy over the next five years.

PRISM reflects deliberations made internally at Penang Institute as well as discussions held between 2018 and 2023 in the Penang2030 Advisory Committee, the Penang State Economic Recovery Consultative Council and the Economic Development portfolio of the Executive Council. As can be discerned from its name, PRISM considers Penang’s development to be a regional one, meaning that its success is recognised to be tied to the wellbeing of its immediate environs at the northern end of the Malacca Strait, as well as to global forces. It also takes a short-to-medium-term view in identifying and prioritising major areas of concern, and encourages policy implementers to think in terms of “measures” as much as of “projects” or “blueprints”.

Perhaps most importantly, Penang Institute is convinced that economic policy discussions in the little Penang—given how the state always punches above its weight, and given the new challenges raised by the Covid-19 pandemic and the unsettled geopolitical situation of recent times—should give prominence to “industrial support” in any area being discussed. For example, if tourism is to be promoted, it is the support infrastructure and services within that industry which should be studied and encouraged. What this also implies is the importance of inter-sectoral and intra-sectoral synergy.

It is also recognised that synergy across industries, institutions and state boundaries is a largely untapped force that Penang—and the country as a whole— should leverage for economic empowerment, social unity and national cohesion.

For Penang to remain competitive in a challenging and changing global environment, its livability standards must be continuously improved, and its economic prowess enhanced. Needless to say, as has been expressed so often in Penang2030 discussions, digitalisation is an integral vehicle for growth and deepening of talents. By using a cross-sectoral approach to identify the pressing needs of various industries, PRISM determined three key areas which need sustained and effective policy input:

1. Talent Pipeline and Skills Enhancement

2. Infrastructure Resilience

3. Transport and Logistics Capacity Building

1. Talent Pipeline and Skills Enhancement

Building a competent and future-ready workforce is essential for sustaining economic advancement. A whole-of-society approach to address talent development and acquisition is urgently needed to keep up with technological changes across the key economic sectors.

Short- and Medium-Term Measures

1. Work closely with federal agencies to monitor, at higher frequency and granularity, the shortage of skills, skills demand and skills gaps occurring at the state level;

2. Transform Penang into a preferred destination for skilled talents;

3. Increase training and development programmes by expanding public-private partnerships to enhance the upskilling and reskilling of workers;

4. Proactively ensure that training supply is responsive to skill demand;

5. Enhance state-based school programmes to support high-demand skill pathways by providing training and development to school teachers;

6. Promote TVET and STEM education as options for further education, and create a monitoring mechanism for placements and for ensuring job security;

7. Increase the participation of women in the workforce by improving the quantity, quality and accessibility of child care and elderly care services, and increasing support for return-to-work.

Penang Institute is presently helping the state formulate a “human capital blueprint” in line with the first of PRISM’s identified area of policy input, “Talent Pipeline and Skills Enhancement”. A draft of this document should be available publicly after the new year.

2. Infrastructure Resilience

A resilient infrastructure, a robust logistics network, reliable internet connection, access to clean water, etc., are necessary for upgrading the quality of life in residential, commercial and industrial areas, especially in Seberang Perai.

Short- and Medium-Term Measures

1. Upgrade internet access and ensure stable internet connection to the public and to businesses across Penang, with a special focus on Seberang Perai and rural areas;

2. Improve water security and minimise water disruption for private households and industries;

3. Improve the management of safety and environmental hazards and increase livability, including life-cycle considerations, by working with the construction sector and local authorities;

4. Champion inclusive spatial development of affordable housing in areas nearer to work, school and hospital;

5. Modernise and improve public housing, including expanding and enhancing green spaces and community parks;

6. Encourage on-site solar power generation across the state, including industries, households and government offices, to ease the load on the electricity grid.

3. Transport and Logistics Capacity Building

Improving the local transportation system is essential for economic development, lowering costs and increasing efficiency across economic sectors. It is also necessary to raise the livability of Penang, achieve Sustainable Development Goals (SDGs), and transform Penang into a zero-carbon state, in line with the Penang Green Agenda. On a larger scale, expanding the capacity of Penang’s airport and seaport to support and reflect Penang’s outsized contribution to national exports is crucial.

Short- and Medium-Term Measures

1. Transform Penang’s public transportation system towards the mode of transportation choice;

2. Collect information about road users’ preferences and behaviours as well as traffic data in highly congested areas;

3. Increase airport and seaport capacity, flight connectivity and shipping lines;

4. Increase efficiency of airport and seaport service at the port and customs.

Based on level of strategic importance and sustained contribution to the state’s economy, PRISM also identifies Penang’s Key Growth Sectors for the immediate future, apart from the obvious ones, i.e. Manufacturing and Tourism, Creative Industries and Business Services as well as Agro-based and Agritech Industries.

The measures suggested to develop all of these can be studied in the document itself. PRISM, along with Penang SEED and other related reports are available for download at https://penanginstitute.org/category/publications/reports-and-papers/.