By Farhana Poniman
GEORGE TOWN, April 26 (Bernama) -- Investor interest in Penang remains intact despite rising global uncertainties, underpinned by resilient demand in the electronics and electrical (E&E) sector and the state’s strategic positioning within evolving global supply chains.
InvestPenang chief executive officer Datuk Loo Lee Lian said, according to its latest industry survey, about 70 per cent of respondents indicated that production costs have risen by up to 20 per cent, while more than half reported longer lead times and disruptions in the procurement of raw materials, particularly in logistics and supply chains.
She said the impact, however, has been less visible in terms of reduced output or revenue, and more pronounced in the form of margin compression across manufacturing firms.
"Despite these challenges, investor confidence has remained intact with companies increasingly prioritising long-term strategic investments over short-term positioning, alongside a stronger emphasis on supply chain resilience, diversification and technological readiness," Loo told Bernama.
She highlighted that Penang has sustained steady growth in investments and trade across various geopolitical cycles, particularly in the electrical and electronics products (E&E) sector.
Before the conflict in West Asia, companies had already begun expanding capacity in anticipation of structural demand drivers such as artificial intelligence (AI).
Moving forward, Loo said the priority is to focus on strategic segments where Malaysia can create greater value, namely integrated circuit (IC) design, advanced packaging and equipment manufacturing, which are critical enablers of the global AI ecosystem.
"Initiatives such as the Penang Silicon Design @5KM+ (PSD@5KM+) and the Penang ATE Campus are expected to deepen local capabilities, strengthen supply chain resilience, expand the talent pipeline and enable local firms to move up the value chain.
“By building on its existing industrial strengths and fostering stronger collaboration between government, industry and academia, Penang is well-positioned to remain a relevant, competitive and trusted investment destination in an increasingly complex global landscape,” she said.
Meanwhile, OCBC Bank senior ASEAN economist Lavanya Venkateswaran said there are no signs of foreign investors turning cautious towards Penang or Malaysia despite global headwinds.
On the contrary, she said heightened geopolitical uncertainties, including the United States economic policies and tensions in West Asia, are making ASEAN and Malaysia more attractive investment destinations.
Lavanya noted that Penang has consistently outperformed national gross domestic product (GDP) growth since the COVID-19 pandemic, supported by the global semiconductor upcycle, which is expected to continue through 2026.
However, she said that geopolitical tensions, particularly in West Asia, could weigh on transportation and logistics, potentially dampening growth prospects.
Lavanya emphasised that efforts to move up the semiconductor value chain, improve connectivity and promote tourism, including medical tourism, would be key to enhancing resilience.
“While uncertainties remain elevated, Penang’s strong fundamentals and strategic positioning should allow it to sustain growth over the medium term,” she said.
According to the Malaysian Investment Development Authority (MIDA), the E&E sector continued to be the biggest contributor of Penang’s overall approved manufacturing investments in 2025, recording RM11.3 billion, which accounted for 50 per cent of the said total.
Investments from the E&E sector in 2025 also experienced a year-on-year increase of 44 per cent, further underscoring Penang’s growing significance for global E&E players.
A total of 232 approved investment projects were recorded by MIDA in Penang last year, whereby 118 were new investment projects, while 114 were expansions, diversifications, or extensions of existing projects.
-- BERNAMA
