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9th Malaysia Plan - What is in Store for Penang?

9th Malaysia Plan: What is in store for Penang?

Aptly themed Together Towards Excellence, Glory and Distinction, the 9th Malaysia Plan is the first of three five-year blueprints that underlines the policies, strategies and direction in which the Government plans to steer the country in its quest to achieve the status of a developed nation by 2020. The plan, recently released in April 2006, underscores 5 major thrusts in achieving the nation’s goals and is, by and large, a relatively all encompassing plan, covering most areas of concern, ranging from economic and human resource development to the environment, quality of life and public service delivery system.

5 Key Thrusts for Malaysia

- To move the economy up the value chain
- To raise the capacity for knowledge and innovation and nurture ‘first class mentality’
- To address persistent socio-economic inequalities constructively and productively
- To improve the standard and sustainability of quality of life
- To strengthen the institutional and implementation capacity

In the period of the 8th Malaysia Plan (2001 – 2005), Penang’s growth outpaced the nation’s, whereby the Gross Domestic Product (GDP) for the State is estimated to have grown at an annual average of 5.0 percent in the last 5 years in comparison with the 4.5 percent annual growth rate recorded by the nation as a whole. In terms of per capita growth, Penang recorded the highest average per capita GDP growth in Malaysia at 5.6 percent. Besides that, Penang is among the front runners compared to other states in Malaysia as it ranked 2nd in Development Composite Index after the Kuala Lumpur F.T. and has one of the lowest incidences of poverty and hardcore poverty in the nation. Albeit not achieving the targeted growth rate projected in the first Penang Plan (RNPP1), Penang has managed to perform fairly well for a state that faces land and natural resource constraints and given the fact that the global economy was beleaguered with economic uncertainties and challenges in fundamentals in the past 5 years.

With the 8th Malaysia Plan behind us, we have now entered the threshold of another 5 year plan which is set against the political-economic background of volatile oil prices, tougher fiscal measures in the form of higher interest rates, rising fears and uncertainties of global security, slowdown in the global economy in particular of the US market, pandemics and natural disasters in the region. With the 9th plan already unveiled, what can we expect from it and what is in store for Penang in the next 5 years?

Under the 9MP, the nation will put greater emphasis on New Agriculture, which will focus on the further expansion of large-scale commercial farming, nurturing farmers to move up the value chain and unleashing the potentials and application of bio-technology. This is expected to strengthen the development of agro-based activities and increase agriculture yields in both nation and the State. The development of the Northern Peninsular Development Zone, which Seberang Perai is part of, will certainly bring much benefit to the mainland as this corridor has been identified to spearhead the development of food industries including halal hubs. In the recent 2007 Budget announcement, Penang is also set to play a role in the Ornamental Fish Cluster which is part of the Government’s plan to develop the aquaculture industry in the northern region. The flourishing aquaculture sub-sector holds much potential for greater expansion in Penang. Together with the completion of the Malaysian International Tuna Port in Batu Maung, the agriculture and fisheries industry is poised to experience further growth in the near future.

The manufacturing sector has always been one of the main propellers of growth for the State. The 9MP, as expected, has pushed for more application of higher technology and movement up the value chain to higher value added activities among the industries. The electrical and electronics (E&E) sector, which represents more than half of the manufacturing industry in Penang, is expected to further strengthen, leveraging on the further development of Penang Cybercity in Bayan Lepas and the future roll-out of the Cybercity to Batu Kawan and Bertam. There will also be the formation of an automotive cluster in Bertam. The new areas of growth in which holds much potential for  the State include sectors such as automation, pharmaceutical and bio-pharmaceutical, marine biology, manufacturing related services, shared services and outsourcing, medical devices and instrumentation, ICT related manufacturing, software development and agro-based / halal food manufacturing. The emphasis on human capital in the 9MP coupled with some positive measures introduced in the 2007 Budget to further facilitate the inflow of skilled personnel is much welcomed as the State continues to struggle with the shortage of supply of skilled workers in the new areas of growth which it intends to develop in. Further expansion in the R&D, D&D and other manufacturing related services is only possible if the State is equipped with a large pool of skilled human resources.

Many rejoiced at the news of the approval of 2 much-needed and widely anticipated projects in the form of the 2nd bridge, linking Batu Maung on the island with Batu Kawan on the mainland, and the light monorail transit (LMT) project. Work on the Penang Second Link project is likely to commence in the middle of next year and it is expected to stimulate growth and development for Batu Maung and for Seberang Perai especially in Batu Kawan and thus, encourage re-distributive growth across the State. The Penang Outer Ring Road (PORR) has also been listed as one of the Private Finance Initiatives (PFI) that will be carried out within the next 5 years. Both the PORR and LMT projects are expected to ease traffic congestion within the State. Besides that, various Government projects of building quarters for civil servants and low-medium cost housing in the State are also in the fold. The infrastructural developments that are expected to take place will provide a much needed catalyst for the growth of the property and construction industry within the State, which has been rather sluggish in recent years, and at the same time help create spin offs in terms of entrepreneurial and business developments.

As Penang move towards a knowledge-based economy, greater emphasis will be placed upon the service sector to steer the economy to that direction. The service sector is the largest contributor to the State’s economy and it is expected to continue to be the one of the main generators of revenue and growth for Penang. Manufacturing related services and shared services and outsourcing (SSO) are two areas in which have been highlighted as new sources of growth and these include activities such as marketing, product development and supply chain management. Not to be forgotten is the tourism sector. Although this sector has experienced much instability in the new millennium, it remains as a very important sector for economic growth for the State. The Tourism Ministry is said to have allocated RM103 million to complete 11 tourism projects in Penang under the 9MP and this will include upgrading works, improving tourism facilities and infrastructure in some tourist attractions in Penang and promoting eco-tourism on both the island and mainland and therefore, there is much to look forward to for this sector, especially with the Visit Malaysia Year 2007 next year. The state is also expected to further benefit from the expansion of health tourism, education tourism and the Malaysia-My Second Home programme.

The 6.1 percent growth projected for Penang in the next 5 years is not far-fetched. However, the State’s limitation in terms of resources may be a big bane as different sectors continue to compete for land and resources among themselves. In striking the right balance, State needs to efficiently allocate its resources. The provision for all the mentioned infrastructures and projects provided under the 9MP is certainly something to look forward but the proper execution and maintenance of these infrastructures is a must in order to make the most out of these projects and further establish Penang as an attractive and conducive place for living and for investment. An understanding of the National Mission and objectives of the 9MP coupled with a synergistic partnership between the public and private sector together with all the citizens of the nation is vital in ensuring a successful implementation of the plan.

Note: The intelligence of this article is derived from the 9th Malaysia Plan, Economic Planning Unit and various newspaper articles.

By:
Tan Yin Hooi
Socio-economic & Environmental Research Institute (SERI)
The Socio-Economic & Environmental Research Institute (SERI) was established by the Penang State Government in 1997, as the think tank of the state to formulate policy recommendations and strategic plans that seek to enhance the quality of life for its citizens through adherence to the principles of sustainable development.