Briefing by the Rt. Hon. Lim Guan Eng, Chief Minister of Penang on "Penang's Promise of an International and Intelligent City", at E&O Hotel on 13rd March 2014
Thank you for inviting me to this briefing. I am glad that the MDBC has once again taken the proactive steps to work with the state government to have this briefing at the most happening state in Malaysia.
Being one of the top three tourist destinations in Malaysia, Penang is also among the top foreign direct investment (FDI) state in Malaysia for the period of 2010 to August 2013 amounting to RM19.7 billion or nearly 20% of Malaysia’s total FDI of RM103 billion.
Livability of a city determines the success of attracting talents into the state. ECA International selected Penang as the most livable city in Malaysia. Penang is not only the national champion but also the world champion when Lonely Planet listed Penang as the No.1 food destination of the world. Penang as an international and intelligent city is leveraged on building a liveable city that attracts human talent and formulates people-centric policies that upgrades Penang to a developed, sustainable and inclusive economy without poverty. Naturally this is focused on three key areas of growing the economy that is inclusive, establishing centres of excellence in our core competencies and improving liveability.
Penang has been able to not only foster a supply chain ecosystem of high-quality and efficient supply services but also embed ourselves in the global production network. With the foundation of the advanced manufacturing clusters, the Government aims to restore economic dynamism to Penang. We promote innovation in science and technology. The state, known as the Silicon Valley of Malaysia for being the dynamic and advanced manufacturing cluster with manufacturing making up 48 per cent of the state’s GDP. To sustain growth, Penang is now also attracting high growth E&E sectors of medical devices and aerospace to set-up production base.
In reviewing our past successes, Malaysia and Penang’s economy has shifted from extraction in the 1960s to industrialisation, from the export of raw commodities to manufacturing. In other words, Penang’s economy was factor-driven by relying on basic commodities before being efficiency-driven by relying on manufacturing. To win the future, Penang needs to be not only efficiency-driven but also innovation-driven in manufacturing, services and even the public sector.
The key to future economic success is not an over-reliance on one sector but to seek convergence of not only the manufacturing sector but also both the services and government sector. Services sector includes not only tourism, medical treatment and education but shared services, IT and BPO such as finance, accounting and data processing.
In seeking convergence, the government plays an important role as an enabler between manufacturing and services sector. Government must also invest and innovate. The government must invest in infrastructure, people, incentives and subsidies. The government must also innovate with new policies that stresses on:-
• liberalisation of the existing rules and to reduce red-tape,
• divestment from non-core businesses or accept that the “business of government is to stay out of business”,
• permit free and fair competition; and
• encourage human capital formation where human talent is now the new oil of the global economy.
In seeking convergence, what we need to do is to ensure a partnership of equals between the 3 sectors of manufacturing, services and government. In other words, a partnership with capital, labour, innovators with the government as an enabler. Penang’s future prosperity depends on whether we can achieve convergence and thus our manufacturing, services and government sectors can be both efficiency-driven and innovation-driven.
In addition to the array of manufacturing and industrial jobs, services are an even bigger creator of wide ranging employment through an extensive range of office functions in the IT-BPO services. This hub will help corporations in the state to take advantage of a globally accepted business and operating model, which allows business to focus on core competencies.
Developing the state’s talented young people to move up the value chain is also a priority of the State Government, including the key area of ICT. We shall at the same time encourage infrastructure development, especially in education by attracting world-class educational institutions not just at the university-level but also vocational level, and thus generate employment opportunities for our youths.
We are helping to build the capacity of the state as it moves toward a knowledge economy by maximizing local content, adding value through integrated industrial parks, and promoting economic diversification and entrepreneurship. In light of the demographic realities, this comprehensive framework offers a winning formula to create high-paying jobs.
Importance of Outsourcing To Economy and Employment
Globally, the outsourcing market is worth US$ 458 billion, and is expected to grow at Compounded Annual Growth Rate (CAGR) of 6.4%; it is projected to reach US$ 625 billion by 2017. Banking, financial services and insurance, telecom and manufacturing are the major contributors to the outsourcing industry; Information Technology Outsourcing (ITO) (63%) and Business Process Outsourcing (BPO) (33%) are the main contribution to the total outsourcing market.
Malaysia, together with India and China, have been on the top three positions in the AT Kearney’s annual Global Services Location Index (GSLI) since 2003. Penang was picked by KPMG Exploring Global Frontiers Report on the New Emerging Destinations in 2009 as one of the 31 emerging cities for IT-BPO operations.
The fastest growing sector in the BPO industry in Malaysia is in banking, financial services and insurance with 30% of the market share followed by manufacturing (27%), Oil and Gas (22%), and others such as retail, logistics, government and telecom. (Source : Value Note Research 2013). The outsourcing sector in Malaysia is expected to expand at an average rate of 15% in next three years in terms of revenue.
BPO services include customer operations, data processing, back office administration, accounting, technical support, transcription, software development, IT consultancy and disaster recovery services. I am informed that the outsourcing industry has created about 50,000 new jobs as at June 2013. MDeC targets the creation of at least 85,000 jobs by 2017 for Malaysia.
Penang received numerous Shared Service Organisation(SSO) investments made in the past two years from giants such as Citigroup, the USD 17 billion food-edible giant Wilmar, the world’s largest solar company First Solar and Air Asia. Citigroup employs more than 1,000 local employees to run their largest regional trade and cash processing centre for the transaction services business with an annual volume of 20 million transactions worth USD 5.8 trillion!
In addition, there is continuous expansion of existing SSO companies such as IHS, Atmel, Toll Forwarding and Jurong Shipyard. Invariably nearly 100% of the highly-paid workforce are Malaysians. Currently, this sector is employing over 7,000 persons in Penang. SSO can easily be expanded to IT-BPO. These unexpected successes have caused Penang to run out of Grade A office space. That is why this IT-BPO Hub is so important for Penang and Malaysia.
Multi-National corporations or MNCs in Penang do not merely manufacture world renowned products, they are also operating global SSO centres such as Intel, AMD, Jabil, Dell, Motorola, National Instruments, B. Braun, Mattel, Agilent Technologies, Seagate and many more. There is growing knowledge-intensity production in innovation-intensive areas and growing interest in the service sector in the industrial clusters. Penang State Government has identified the potential of IT-BPO and will provide special support as an effort to upgrade the economy.
The RM3.3 Billion IT-BPO Hub Comprises 3 Components
This RM3.3 Billion IT-BPO Hub is directed towards diversifying the state’s economy and enable the growth of a viable employment sector. The IT-BPO Hub comprises 3 components of 74 acres of IT-BPO Park in Bayan Lepas; a planned development of 7 acres BPO Prime in Bayan Baru; and a 100,000 square feet Creative Animation Triggers(CAT) in the George Town heritage enclave.
The Penang State Government is targeting the build-out of approximately 2.4 million square feet of high-grade office towers with integrated development of services apartments/SOHO, ancillary commercial with class ‘A’ amenities and facilities space. For the first time in Malaysia, a World Top 100 university will also be sited here.
The Creative Multimedia industry is making its mark as one of the most sought-after industries in the world, with prospects ranging from post production, visual / special effect studio, publishing, animation, computer games, interactive content, mobile content, applications, and also interactive media. In another words, the Creative Multimedia industry acts as glue that bonds technology and arts together in harmony.
Penang has the potential to become an animation cluster for Malaysia in the future. Here in Penang we have universities, colleges and academies that train creative multimedia talents. Our talents are also very deep in creativity in areas such as arts, 2D and 3D animation and animation touches, not just illustration and artistry.
To incubate this emerging knowledge cluster, the George Town Heritage Enclave has been identified as the centre of creative multimedia development with a totaol of 100,000 sq feet office space known as Creative Animation Triggers (CAT). The Penang State Government intends to rent the renowned Yeap Chor Ee heritage building as well as dedicating a land area of 723 sq.m within the George Town World Heritage enclave to develop the Creative Animation Triggers (CAT).
30,000 New High-Paying Jobs.
The RM 3.3 billion IT-BPO Hub brings a unique business model to Penang by leveraging on our manufacturing strengths, and is set to become a rich training ground for building new capabilities, skills and careers. The IT- BPO hub project will be a veritable economic change-maker that can generate up to 30,000 high paying, knowledge-intensive and high-value jobs for Malaysians. As the IT-BPO requires basically talented Malaysians and nearly no foreign workers, we need to develop and grow the services sector to make this a success.
Penang has recorded impressive growth in tourism with our promotion of George Town as a UNESCO World Heritage Site,the organization of various Festivals in music, arts and culture and the creation of a Bohemian art district within the heritage enclave with wall paintings and steel sculptures. Penang International Airport recorded a 15% increase with 5.5 million arrivals in 2013 compared to 4.8 million in 2012. Penang recorded the top three tourist arrival and receipts with RM8.58 billion in 2012.
Medical Tourism: Medical tourism is becoming more common in Malaysia, especially Penang to become a Medical City Penang. Malaysia is ranked fifth in the world for medical tourism destination in terms of reasonable cost with high quality medical services. Penang has seen a steady growth of 15 per cent . We are proud to see Penang contributing two-third of the RM250 million from medical tourism nationwide.
Making Penang cleaner, greener, safer and healthier will be crucial towards realizing our vision is to transform Penang into an international and intelligent city. To ensure that our economies are dynamic, resilient and capable of adapting to the volatile global environment, we must also be mindful of the need for solid fundamentals especially good governance, integrity in leadership and rule of law. In Penang, by adopting CAT governance of competency, accountability and transparency, there is both stability and prosperity. Only then can Penang achieve the trinity of choice as the habitat of choice for residents, the destination of choice for tourists and the location of choice for investors in setting up business.
-- CN Version --
槟城州首席部长于2014年3月13日在伊恩奥酒店举行的“槟城的承诺 - 国际智慧型城市”汇报会的讲词部份重点翻译。
马来西亚与印度及中国，从2003年开始，一直都被列为AT Kearney的全球服务位置指数（GSLI）前三名。槟城在2009年毕马威的“探讨全球崛起之前线城市年度报告”中，被遴选为31个外包中心（Outsourcing hubs）之一。
开拓共享服务及外包模式的公司还包括IHS, Atmel, Toll Forwarding 及Jurong Shipyard。近乎100%高薪职员是马来西亚人。最近，这个领域在槟城聘请了近7000名员工。服务共享组织可以轻易地扩展成为IT-BPO。我没有预料到槟城的商业服务领域反映热烈，导致A级办公室缺乏。因为这个IT-BPO中心对槟城和马来西亚如此重要。
槟城的跨国企业不再只是生产世界级的产品，它们也在进行世界级的共享服务及外包中心比如 ： Intel, AMD, Jabil, Dell, Motorola, National Instruments, B. Braun, Mattel, Agilent Technologies, Seagate 等等。在创新领域内，越来越多知识密集的产品，工业区内，越来多服务领域的需要。槟城政府已经鉴定IT-BPO的潜能，并将继续提供特别辅助，以提升经济。
这个33亿令吉的IT-BPO中心将促进槟州经济多元化并增加就业机会。这个中心包含三个部分，即峇六拜74英亩的IT-BPO；峇央峇鲁7英亩的BPO Prime, 以及乔治市古迹区10万平方尺的创意动画区（CAT）
槟城有潜能成为马来西亚另一个动画区。我们有大学、学院及学术机构来栽培创意动画的人才。我们的人才不只在图画及艺技方面有创意，在艺术、2D及3D动画 、animation touches方面也创意无限。