Penang primed to prosper

 State leads the way in man­u­fac­tur­ing, ser­vices sec­tors

The state is strategically positioned to capitalise on long-term growth drivers such as artificial intelligence, advanced manufacturing and global supply-chain diversification.

PETALING JAYA: Penang has continued punching above its weight economically, contributing 7.6% of Malaysia’s gross domestic product (GDP) in 2024.

Anchored by its manufacturing (46.1%) and services sectors (48.1%), its growth has outpaced Malaysia over the long-term and continues to remain resilient.

As Malaysia’s premier semiconductor and electrical and electronics (E&E) hub, the state is strategically positioned to capitalise on long-term growth drivers such as artificial intelligence (AI), advanced manufacturing and global supply-chain diversification.

In 2024, Penang’s E&E segment contributed RM41.7bil to the state’s GDP.

RHB Banking Group recently hosted the Penang Economic Forum 2026 which brought together various stakeholders from across the board.

During the forum, multiple panel sessions were held which discussed topics surrounding Penang’s transition towards a higher-value economy, small and medium enterprise (SME) competitiveness, sustainable growth and funding accessibility.

“Panellists emphasised the need to move beyond the traditional low-cost manufacturing model towards higher value activities centred on 4T’s – talent, technology, things (product and services), and trademarks,” RHB Research said.

It added that supply chain diversification and geopolitical tensions have created opportunities for a technology transfer, collaboration and business relocation.

Another key topic discussed was how the state can unlock growth capital beyond just bank financing.

“Alternative funding channels such as venture capital, private equity and capital markets can support businesses at different cycles, so efforts to strengthen the funding ecosystem is important,” it noted.

As for SMEs and micro, small and medium enterprises (MSMEs), the panellists acknowledged that they remained a vital pillar of the economy, and have accounted for 96.1% of total business establishments while contributing RM652.4bil to the country’s GDP in 2024.

“Supported by more than 350 multinationals and over 6,500 manufacturing-related SMEs, Penang has developed one of Malaysia’s deepest industrial ecosystems, fostering technology transfers, capability upgrading, and innovation.

“Moving forward, SMEs are expected to play an increasingly important role in supporting higher value-added and innovation-driven industries.”

It’s worth noting that Penang ranks among the top four states in Malaysia for MSME employment, supporting approximately 469,900 jobs.

RHB Research said the state also generated RM91.5bil in MSME gross output, accounting for 7.2% of the country’s total MSME output.

The state has also continued to attract foreign direct investment despite global uncertainties – approved foreign direct investment (FDI) hit RM15.2bil in the first nine months of 2025, driven primarily by the the E&E, machinery and equipment and chemicals sectors.

“The United States remained the largest source of FDI, followed by China and the Cayman Islands.

“Subsequently, increasing investments in transport equipment and fabricated metal products are reflecting the broadening depth of the state’s manufacturing ecosystem,” RHB Research said.

Penang is also one of the main logistics hubs in the country, anchored by the Penang International Airport (PIA) and North Butterworth Container Terminal.

The state has continued to see an increase in tourists, supported by its diversity in offerings.

RHB Research said passenger traffic at PIA went up 10.5% in the first half of 2025 while cruise arrivals at Swettenham Pier grew 39.7% in 2024, reflecting improving travel demand and connectivity.

“Supported by Visit Malaysia 2026 initiatives, expanding international flight networks and the Malaysia-China mutual visa-free regime, Penang is well positioned to benefit from higher visitor arrivals and tourism spending, reinforcing the sector’s contribution to the state’s services economy,” the research house said.

Meanwhile, the Penang Economic Forum 2026 also highlighted how businesses need to be adaptive and resilient so that productivity and cash flows can be managed.

RHB Banking Group laid out potential key beneficiaries, among them included Pentamaster Corp Bhd State leads the way in man­u­fac­tur­ing, ser­vices sec­tors

The state is strategically positioned to capitalise on long-term growth drivers such as artificial intelligence, advanced manufacturing and global supply-chain diversification.

PETALING JAYA: Penang has continued punching above its weight economically, contributing 7.6% of Malaysia’s gross domestic product (GDP) in 2024.

Anchored by its manufacturing (46.1%) and services sectors (48.1%), its growth has outpaced Malaysia over the long-term and continues to remain resilient.

As Malaysia’s premier semiconductor and electrical and electronics (E&E) hub, the state is strategically positioned to capitalise on long-term growth drivers such as artificial intelligence (AI), advanced manufacturing and global supply-chain diversification.

In 2024, Penang’s E&E segment contributed RM41.7bil to the state’s GDP.

RHB Banking Group recently hosted the Penang Economic Forum 2026 which brought together various stakeholders from across the board.

During the forum, multiple panel sessions were held which discussed topics surrounding Penang’s transition towards a higher-value economy, small and medium enterprise (SME) competitiveness, sustainable growth and funding accessibility.

“Panellists emphasised the need to move beyond the traditional low-cost manufacturing model towards higher value activities centred on 4T’s – talent, technology, things (product and services), and trademarks,” RHB Research said.

It added that supply chain diversification and geopolitical tensions have created opportunities for a technology transfer, collaboration and business relocation.

Another key topic discussed was how the state can unlock growth capital beyond just bank financing.

“Alternative funding channels such as venture capital, private equity and capital markets can support businesses at different cycles, so efforts to strengthen the funding ecosystem is important,” it noted.

As for SMEs and micro, small and medium enterprises (MSMEs), the panellists acknowledged that they remained a vital pillar of the economy, and have accounted for 96.1% of total business establishments while contributing RM652.4bil to the country’s GDP in 2024.

“Supported by more than 350 multinationals and over 6,500 manufacturing-related SMEs, Penang has developed one of Malaysia’s deepest industrial ecosystems, fostering technology transfers, capability upgrading, and innovation.

“Moving forward, SMEs are expected to play an increasingly important role in supporting higher value-added and innovation-driven industries.”

It’s worth noting that Penang ranks among the top four states in Malaysia for MSME employment, supporting approximately 469,900 jobs.

RHB Research said the state also generated RM91.5bil in MSME gross output, accounting for 7.2% of the country’s total MSME output.

The state has also continued to attract foreign direct investment despite global uncertainties – approved foreign direct investment (FDI) hit RM15.2bil in the first nine months of 2025, driven primarily by the the E&E, machinery and equipment and chemicals sectors.

“The United States remained the largest source of FDI, followed by China and the Cayman Islands.

“Subsequently, increasing investments in transport equipment and fabricated metal products are reflecting the broadening depth of the state’s manufacturing ecosystem,” RHB Research said.

Penang is also one of the main logistics hubs in the country, anchored by the Penang International Airport (PIA) and North Butterworth Container Terminal.

The state has continued to see an increase in tourists, supported by its diversity in offerings.

RHB Research said passenger traffic at PIA went up 10.5% in the first half of 2025 while cruise arrivals at Swettenham Pier grew 39.7% in 2024, reflecting improving travel demand and connectivity.

“Supported by Visit Malaysia 2026 initiatives, expanding international flight networks and the Malaysia-China mutual visa-free regime, Penang is well positioned to benefit from higher visitor arrivals and tourism spending, reinforcing the sector’s contribution to the state’s services economy,” the research house said.

Meanwhile, the Penang Economic Forum 2026 also highlighted how businesses need to be adaptive and resilient so that productivity and cash flows can be managed.

RHB Banking Group laid out potential key beneficiaries, among them included Pentamaster Corp Bhd, Cnergenz Bhd, Inari Amertron Bhd and QES Group Bhd.

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Firms shift operations from singapore to improve efficiency

Firms shift to Malay­sia

Cross­ing over for growth

Firms shift oper­a­tions from singa­pore to improve effi­ciency

25 Jun 2026

PETALING JAYA: Com­pan­ies are increas­ingly shift­ing man­u­fac­tur­ing, logist­ics and regional headquar­ters from Singa­pore to Malay­sia, with H&M, Gardenia, Heineken and Yeo’s among the latest to relo­cate or expand oper­a­tions here.

The Malay­sian Invest­ment Devel­op­ment Author­ity (Mida) said the moves were part of a broader trend as com­pan­ies reas­sess where best to loc­ate man­u­fac­tur­ing, logist­ics, headquar­ters and sup­port func­tions to drive future growth.

Mida chief exec­ut­ive officer Datuk Sikh Sham­sul Ibrahim Sikh Abdul Majid said busi­nesses were no longer look­ing at loc­a­tions solely based on costs, but are increas­ingly focused on oper­a­tional effi­ciency, sup­ply chain resi­li­ence, tal­ent avail­ab­il­ity and long-term growth poten­tial.

“Rather than view­ing this as a single relo­ca­tion trend, we see it as part of a broader regional optim­isa­tion strategy,” he said in an inter­view.

Last month, Swedish fash­ion giant H&M announced that it was relo­cat­ing its South-east Asia headquar­ters from Singa­pore to Kuala Lum­pur.

Also in May, Malay­sian bread man­u­fac­turer Gardenia said that it was mov­ing its bakery pro­duc­tion in Singa­pore to Johor Baru.

In March, mul­tina­tional brew­ing com­pany Heineken announced it was shift­ing pro­duc­tion from Singa­pore to Malay­sia and Viet­nam.

Earlier this year, bever­age brand Yeo’s said it was clos­ing its man­u­fac­tur­ing facil­ity in Sen­oko, Singa­pore, and con­sol­id­at­ing man­u­fac­tur­ing oper­a­tions in Johor and Selangor.

Accord­ing to Mida, Malay­sia con­tin­ues to attract interest across a wide range of activ­it­ies, includ­ing man­u­fac­tur­ing, logist­ics, regional headquar­ters, digital oper­a­tions, engin­eer­ing and shared ser­vices.

It said investor interest remains par­tic­u­larly strong in data centres and digital infra­struc­ture, semi­con­duct­ors, advanced man­u­fac­tur­ing, logist­ics, renew­able energy and green tech­no­logy.

Malay­sia approved Rm92.8bil in invest­ments across 1,249 projects in the first quarter of 2026, with the projects expec­ted to cre­ate 50,226 jobs, rep­res­ent­ing a 46.7% increase in job cre­ation com­pared with the same period last year.

The top sources of approved for­eign invest­ments were Japan, China, the United States and Singa­pore.

Johor attrac­ted Rm16.9bil in approved invest­ments across 191 projects dur­ing the quarter, cre­at­ing 8,287 jobs.

The Johor-singa­pore Spe­cial Eco­nomic Zone con­tin­ued to strengthen invest­ment momentum by improv­ing con­nectiv­ity and cre­at­ing a more integ­rated eco­nomic eco­sys­tem between the two coun­tries.

Sikh Sham­sul Ibrahim said Malay­sia and Singa­pore were increas­ingly being viewed as com­ple­ment­ary loc­a­tions, with many com­pan­ies main­tain­ing stra­tegic func­tions in Singa­pore while loc­at­ing man­u­fac­tur­ing, logist­ics and oper­a­tional activ­it­ies in Malay­sia.

“To remain com­pet­it­ive, our focus extends bey­ond attract­ing invest­ments to ensur­ing projects are imple­men­ted suc­cess­fully and con­tinue to expand in Malay­sia,” he said.

Among its pri­or­it­ies are strength­en­ing investor facil­it­a­tion and after­care ser­vices, accel­er­at­ing project imple­ment­a­tion through the Invest Malay­sia Facil­it­a­tion Centre, and attract­ing qual­ity invest­ments that cre­ate skilled jobs, encour­age tech­no­logy trans­fer and strengthen domestic sup­ply chains.

The agency is also pla­cing greater emphasis on sup­plier upgrad­ing, tal­ent devel­op­ment, industry col­lab­or­a­tion and higher-value activ­it­ies, par­tic­u­larly in sec­tors such as semi­con­duct­ors, digital infra­struc­ture and advanced man­u­fac­tur­ing.

Sikh Sham­sul Ibrahim said Malay­sia was mov­ing bey­ond tra­di­tional assembly activ­it­ies in the semi­con­ductor industry towards higher-value areas such as design, advanced pack­aging and innov­a­tion, sup­por­ted by eco­sys­tem devel­op­ment and industry part­ner­ships.

“When estab­lished regional com­pan­ies choose to expand or strengthen their pres­ence in Malay­sia, it reflects con­fid­ence in what the coun­try has to offer – a skilled work­force, strong infra­struc­ture and a gov­ern­ment that is com­mit­ted to facil­it­at­ing invest­ment,” he said.

by ALLISON LAI and Ger­ard GIMINO

25 Jun 2026

More global and regional com­pan­ies are mov­ing their Singa­pore oper­a­tions here, part of a broader invest­ment wave set to cre­ate thou­sands of new jobs. Busi­ness groups say the shift is per­man­ent, but eco­nom­ists warn that the coun­try must reduce the red tape and build up tal­ent and infra­struc­ture to reap the full rewards.

PETALING JAYA: Global and regional firms increas­ingly view Malay­sia and Singa­pore as com­ple­ment­ary des­tin­a­tions rather than com­pet­ing loc­a­tions, say busi­ness groups.

They said firms are split­ting man­u­fac­tur­ing, logist­ics and oper­a­tional func­tions across both mar­kets to improve effi­ciency and sup­port growth.

Asso­ci­ated Chinese Cham­bers of Com­merce and Industry of Malay­sia pres­id­ent Datuk Ng Yih Pyng said Malay­sia is emer­ging as a key bene­fi­ciary of regional sup­ply chain realign­ment.

“I believe this is no longer merely a trend, but rather a struc­tural shift driven by changes in the global eco­nomic and geo­pol­it­ical land­scape.

“With sup­ply chain restruc­tur­ing, ongo­ing trade ten­sions and com­pan­ies reas­sess­ing their regional strategies, more busi­nesses are look­ing for an oper­a­tional base that is stable, stra­tegic­ally loc­ated and well-con­nec­ted to regional mar­kets,” he said.

Ng said Malay­sia’s appeal extends bey­ond its rel­at­ively com­pet­it­ive oper­at­ing costs.

He poin­ted to the coun­try’s stra­tegic loc­a­tion, con­nectiv­ity to regional mar­kets and prag­matic approach in global affairs as key advant­ages.

“Whether serving the Asean mar­ket, the broader South-east Asian region or inter­na­tional mar­kets, Malay­sia offers strong con­nectiv­ity and access­ib­il­ity.

“This is one of the key reas­ons why more regional firms and mul­tina­tional cor­por­a­tions are shift­ing parts of their man­u­fac­tur­ing, logist­ics, oper­a­tions and even regional headquar­ters func­tions to Malay­sia,” he said.

Malay­sian Con­sor­tium of Midtier Com­pan­ies pres­id­ent Mar­tin Ang said Malay­sia’s attract­ive­ness also lies in its estab­lished indus­trial eco­sys­tem, mul­ti­lin­gual work­force and policy con­tinu­ity.

He said areas such as Johor and Greater Kuala Lum­pur are see­ing stronger interest from firms relo­cat­ing or expand­ing oper­a­tions from Singa­pore, sup­por­ted by estab­lished sup­ply chains and tal­ent eco­sys­tems.

Ang noted that Malay­sia’s long-stand­ing strengths in man­u­fac­tur­ing and semi­con­duct­ors con­tinue to provide investors with con­fid­ence.

However, both busi­ness lead­ers stressed that Malay­sia can­not afford to become com­pla­cent.

“The real com­pet­i­tion going for­ward will not only be about who offers lower costs, but who can provide higher value, greater effi­ciency and a more com­plete indus­trial eco­sys­tem,” Ng said.

He said Malay­sia’s pri­or­ity should be attract­ing qual­ity invest­ments that can trans­form the coun­try into a high-value eco­nomy, rather than remain­ing a low-cost pro­duc­tion base.

Among the main areas that need atten­tion are tal­ent devel­op­ment in arti­fi­cial intel­li­gence (AI), semi­con­duct­ors, advanced man­u­fac­tur­ing and the digital eco­nomy, as well as improve­ments in logist­ics, trans­port con­nectiv­ity and digital infra­struc­ture.

Ang agreed, say­ing a short­age of spe­cial­ised engin­eers, AI tal­ent and advanced tech­ni­cians remains a chal­lenge for higher­value indus­tries.

He also high­lighted grow­ing demands on infra­struc­ture, par­tic­u­larly power and water resources, as indus­trial and data centre invest­ments con­tinue to expand.

At the same time, he cau­tioned that local small and medium enter­prises face increas­ing pres­sure from low-cost imports and global sup­ply chain dis­rup­tions.

They said stronger col­lab­or­a­tion between mul­tina­tional cor­por­a­tions and local firms would be cru­cial to ensure tech­no­logy trans­fer, strengthen domestic sup­ply chains and help Malay­sian com­pan­ies move fur­ther up the value chain.

AI chatbots are not doctors

 PETALING JAYA: More Malaysians are turning to artificial intelligence (AI) chatbots for health information, from checking symptoms and understanding medical reports to learning about medications and traditional ­remedies.

While healthcare professionals welcome the technology as a useful educational tool, they caution that information should not be mistaken for a diagnosis.

Doctors, pharmacists and traditional Chinese medicine (TCM) practitioners say patients are increasingly arriving with information obtained from AI chatbots, prompting concerns that some may delay seeking treatment, self-medicate or misinterpret symptoms without professional guidance.

Malaysian Medical Association president Datuk Dr Thirunavukarasu Rajoo said it has become increasingly common for patients to consult AI chatbots or search online before seeing a doctor. 

“This is not necessarily a bad thing. Patients today are more informed and more engaged in their healthcare.

“The concern is often not that AI gives a completely wrong answer. The concern is that patients may delay seeking medical attention because the advice appears reassuring,” he said in an interview yesterday.

ALSO READ: Chatbots show clear limitations during user scenario

“For some conditions, that may not matter. For others, such as dengue, stroke, heart attack or cancer, that delay can be significant. When it comes to healthcare, timing matters.”

He noted that AI can only work with the information provided by users and lacks the ability to conduct physical examinations or investigations.

“Medicine is more than information. It is examination, investigation, judgment and responsibility. AI can be a useful source of information, but it should not replace a medical consultation. It can point patients in the right direction, but it cannot confirm a diagnosis,” he said.

'CLICK TO ENLARGE'

Universiti Malaya epidemiology and public health expert Prof Dr Sanjay Rampal said AI has made health information more accessible, but users should be mindful that general-purpose models may also provide inaccurate information.

“The models’ reasoning is based on information available on the Internet. As we know, the Internet contains both good and bad ­information.

“As the models become more intelligent, AI literacy is going to be just as important as health literacy,” he said.

Malaysian Community Pharmacy Guild honorary ­secretary Rachel Gan said pharmacists are increasingly seeing customers consult AI before seeking professional advice.

“Sometimes they show us the AI responses and ask us to verify the information or explain why the chatbot suggested something different,” she said.

Gan said AI could be useful for general health information, but consumers may become unnecessarily anxious if they misinterpret the information provided.

Malaysian Pharmacists Society president Amrahi Buang said pharmacists are particularly concerned when consumers use AI-generated information to make decisions about medicines without professional advice.

He warned that over-the-­counter medicines, supplements and herbal products may ­temporarily relieve symptoms while masking more serious underlying conditions.

“Some symptoms that appear harmless can be signs of more serious diseases that require medical attention,” he said.

Federation of Chinese Physicians and Acupuncturists Associations Malaysia president Prof Dr Ng Po Kok said TCM practitioners are seeing more patients consult AI before seeking advice on herbs and traditional remedies.

“Some enter medical terms from their lab reports and ask AI to explain them before bringing the information to us,” he said.

However, he stressed that AI could not replace professional assessment.

“Two patients may have similar symptoms but require different treatment approaches. This is something AI may not always be able to determine accurately,” he said, adding that AI cannot replace a consultation, physical examination and follow-up.

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