Nature And Trends Of In-Bound Investment In Penang

Published date10 January 2023
Subject MatterGovernment, Public Sector, Inward/ Foreign Investment
Law FirmAzmi & Associates
AuthorMr Alfred Tan Hsiong Vei and Nur Insyirah Mohamad Noh


The Pearl of the Orient, Penang,is located on the northwest coast of Peninsular Malaysia. As of 2021, Penang has the highest population density at 1,688/km2 in Malaysia, with a population of approximately 1.8 million. The beautiful state consists of two parts; Penang Island where its capital city, George Town is located; and Seberang Perai on the mainland.1 Although it is Malaysia's second smallest state, Penang ranks second to Klang Valley in terms of urbanisation, and is the second largest city by population. In 2012, George Town was declared as a UNESCO World Heritage Site and has been a popular destination for tourists that thrive on heritage and culture. The modern history of Penang began in 1786, when Francis Light established George Town as a trading post for the British East India Company.2

Demographics of Penang

A vibrant and harmonious city, that what Penang is. The proportions of Bumiputera (44.4%) and Chinese (39.1%), which are the biggest communities in Penang, are remarkably similar. The rest of the state's population was made up of 9.4% Indians, 0.3% others and 6.8% non-citizens. A total of 176,100 people, or the majority of Penang's population, are adults between the ages of 25 and 29, while the minority are over 85 years old.3 Hence, it is not an odd sight to bump into elderlies that still manage to walk or cycle around the town. If you have never been to Penang and has absolutely zero idea on how to explore around, worry not as Penangites are famous for their friendliness and willingness to assist.

The Growth of Penang

Penang earns the name "the Silicon Valley of the East" as its economic structure is mostly oriented towards the industry and services sectors, specifically in the manufacturing and producing of electrical and electronics (E&E) goods.4 The state has accounted for an estimated 5% of the global exports of semiconductors.

Not only that, Penang is now one of the most vital economic powerhouses in Malaysia as it has been successfully contributing 6.9% (RM92,631 million) to the national Gross Domestic Product (GDP) in all sectors and outpaced Malaysia's GDP growth rate since 2014.5 What is even admiring is that Penang has also gloriously recorded the third highest Human Development Index (HDI) in Malaysia at 0.851 after Selangor and the Federal Territory of Kuala Lumpur.6

An outstanding escalation in the growth rate of Penang's economy can be seen year by year. This was believed to have been precipitated by the increase in the number of industry players, consisting of more than 350...

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