SPEECH BY CHIEF MINISTER OF PENANG
AT THE ISLAMIC FINANCE RENDEZVOUS SERIES
14 JANUARY 2019
EASTIN HOTEL, BAYAN LEPAS, PENANG
Yang Berbahagia Encik Adnan Zaylani Mohamad Zahid
Assistant Governor Bank Negara Malaysia
Yang Berbahagia Dato’ Adissadikin Ali
President Association of Islamic Banking and Financial Institutions Malaysia
Yang Berbahagia Encik Muhammad Fikri Mohamad Rawi
Chairman of Malaysian Takaful Association
Members of the media
Ladies and gentlemen
It gives me great pleasure to be here today at the Islamic Finance Rendezvous Series, jointly organised by Bank Negara Malaysia (BNM), the Association of Islamic Banking Institutions Malaysia (AIBIM) and the Malaysian Takaful Association (MTA).
I am indeed honoured that Penang has been selected to host the first event of this series and I am truly hopeful that the programme we are having today will be an eye-opener for all of us to discover and explore suitable financial solutions offered by Islamic finance in the country which can help boost and sustain growth as well as the expansion of your business.
Enormous prospects for businesses and financial institutions in Penang
The Penang State Government is a strong proponent of business. Penang has grown tremendously from its early days as a colonial trading port to now becoming the third largest economy in terms of per capita income among the states and federal territories of Malaysia. In 2017, Penang’s GDP per capita surpassed the national level by 18%, amounting to almost RM50,000 . Penang also recorded the highest approved manufacturing foreign direct investment (FDI) among the states in Malaysia in 2017, valued at RM8.5 billion.
Domestic manufacturing investment also increased 92% year-on-year to reach RM2.3 billion in 2017. In the first nine months of 2018, our state achieved RM2.2 billion in FDI and RM1.7 billion in domestic investment respectively, bringing together our total investment for the first three quarters (Jan-Sept) of 2018 to RM3.8 billion, as reported by MIDA. The vibrant investment activity in Penang is a testament that the state remains a highly attractive location for local and foreign investors alike.
The next few years hold equally exciting prospects for Penang. Several major high impact projects; the completion of the Sultan Abdul Halim Mu’adzam Shah Bridge – also known as the Second Bridge, the upcoming expansion of Penang International Airport, Penang Sentral Integrated Transport Hub and the expansion of Penang Port are key infrastructure projects that will position Penang to continue in its current role as the economic powerhouse as well as a dynamic import and export gateway in the northern region of Malaysia. These open up vast potential and immense opportunities for businesses and financial institutions.
Penang recognises the role of finance including Islamic finance in advancing economic growth
Ladies and gentlemen,
The Penang State Government recognises that banks in Malaysia play an important role and provide support to businesses including SMEs, through wide-ranging offerings of financial products and services such as term financing, trade financing, overdraft and revolving credit. Over the years, these products and services have evolved in response to the actual and ever- changing needs of businesses. Currently, loans to SMEs accounted for 17% of total lending by banking system.
In 2017, about 290,000 new Islamic financing applications have been approved for SMEs, amounting to RM73.4 billion according to BNM. In Penang, total financing outstanding to SMEs almost reached RM4 billion in 2017, where the state ranked 5th among all states and federal territories in Malaysia. Penang is also among the top 5 states with the highest number of SMEs, accounting for 7.4% (66,921) of total SMEs in Malaysia. Of this, 90% are in the services sector, 6% are in manufacturing while 3% are in construction . This reflects the huge untapped potential available in various markets and thus, there is more that needs to be done. As mentioned by the Assistant Governor in his speech earlier, there are still many businesses that hardly capitalise on Islamic financing facilities.
Therefore, I believe business engagement programmes such as the one we are having today can be the catalyst for better understanding and synergy between businesses and financial institutions to seize greater growth opportunities. Such a platform is important for business owners to have greater knowledge and to keep themselves abreast with the various financial products offered in the market and to identify suitable financial solutions in meeting their business needs.
At the same time, financial institutions can also gain a better picture on the issues and challenges facing businesses and offer customised solutions. I wish to applaud the Islamic finance industry for making this proactive move to engage directly with entrepreneurs and corporations.
Ladies and gentlemen,
One natural area of collaboration that we are well positioned to capitalise on is the vast opportunities in the global halal industry, which is forecasted to grow to USD3.1 trillion by 2022 . The halal industry is a thriving business sector that stands to hugely gain from leveraging on Islamic finance. Moving forward, Islamic finance should take a leading role as a key growth driver for this industry. Penang is now the second largest hub for halal businesses and exporting companies. The Penang State Government is committed to support the development of the halal industry and the establishment of the Penang International Halal Hub (PIHH) on 11 August 2008 was meant to provide the impetus for serving the growing global consumer demands for halal products, services and solutions.
Among the strategic steps taken by PIHH are the promotion of halal tourism & hospitality in George Town especially with its UNESCO World Heritage City status, the 53ha Halal Industrial Park on prime state land in Bukit Minyak as well as the halal logistic services with its extensive ground infrastructure connecting the northern region of Malaysia and the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) areas.
To conclude, I hope this programme provides an effective bridge between businesses and Islamic financial institutions. I strongly encourage everyone to take the opportunity to pose questions, to offer suggestions and to provide feedback to fully reap the benefits of this event. It is also my ardent wish that today will mark the beginning of more collaborative initiatives in time to come.