GEORGE TOWN: Penang must formulate a comprehensive industrial diversification strategy to cushion its economy against potential global market shocks, the state legislative assembly was told today.
Bertam assemblyman Datuk Seri Reezal Merican Naina Merican said that while the state’s economy remained robust, its heavy reliance on the electrical and electronics (E&E) sector left it vulnerable to external downturns.
“Every industry has its own cycle. When there is a boom, we must also be prepared to face a potential bust,” he said when debating the state’s 2027 Budget.
“With more than 80 per cent of Penang’s exports relying on the E&E sector, we need to ask whether the state’s economy is adequately prepared for slowing global demand, technological disruptions or shifts in investment priorities.
“We must prepare for winter while the sun is still shining,” he added.
Reezal Merican said Penang had become the first state in Malaysia to record more than RM1 trillion in total trade within nine months, registering RM1.12 trillion between January and September this year, with exports reaching RM709.85 billion.
However, sharp declines in global technology indices and semiconductor stocks served as a reminder of how quickly market sentiment could change.
He stressed that diversification did not mean abandoning the E&E sector, but developing complementary, high-value industries that leveraged the state’s existing strengths.
He identified five potential growth areas: electronics manufacturing services (EMS), medical technology and devices, high-precision engineering and automation, aerospace and avionics, and green technology and electric vehicle (EV) ecosystems.
He also called for greater local ownership of technology and higher-value intellectual property, noting that Malaysian firms filed only 34 domestic semiconductor patents between 2012 and 2020, compared with more than 20,000 each in South Korea and Taiwan.
Reezal Merican also called on the state government to expedite the proposed Penang Technology Finance Centre (PTFC) to address funding gaps faced by local startups and small and medium enterprises (SMEs).
On public welfare, he said economic growth must translate into tangible benefits for ordinary citizens.
He highlighted the persistent mismatch between housing supply and affordability, citing Khazanah Research Institute data showing that 50 per cent of new homes launched in 2024 were priced at RM400,000 and above, although only 22 per cent of households could afford them.
He also called on the state government to follow up with the federal government on the long-delayed 300-bed expansion block at Kepala Batas Hospital, noting that the district had a low bed-to-population ratio of 0.39 per 1,000 residents.