Johor, Sarawak and Penang: Malaysia’s engine of growth
26 Jul 2024
Johor, Sarawak, and Penang, which collectively accounted for 25.9 percent of the gross domestic product (GDP) in 2023, are expected to remain key contributors to the national economy with stronger growth.
Although Selangor had the largest share of GDP at 25.9 percent, or RM406.1 billion, and exceeded the national growth rate with a 5.4 percent increase, economists foresee stronger growth in those three states.
Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid attributed the robust performance of these states to substantial inflows of direct investment and government development spending.
“Judging from the current and ongoing projects, it is likely that the three states will continue to thrive,” he told the Business Times.
Putra Business School economic analyst Associate Prof Dr Ahmed Razman Abdul Latiff said several factors make these states major contributors to the national economy.
Ahmed Razman said Penang has seen a surge in foreign direct investments (FDIs) from electronics and technology companies, bolstered by the state’s reputation as a technology hub.
“The reclamation land project in Penang, aimed at creating a huge industrial park, further enhances its economic prospects.
“As for Sarawak, financial strength has enabled significant investments in infrastructure and capital development, while Johor benefits from its strategic proximity to Singapore, offering potential economic advantages from the High-Speed Rail (HSR) project and the Forest City’s status as a financial zone,” he said.
Meanwhile, Maybank Investment Bank Bhd (Maybank IB) said newsflow on the three states was aplenty in the first half of 2024 (1H24), and the firm continued to see excitement ahead driven by catalytic developments and their longer-term growth proposition.
“Economic cluster plans under the New Industrial Master Plan 2030 (NIMP 2030) will further help raise industrialisation and economic activities in these three states,” it said.
*Johor – JSSEZ to be catalytic on many fronts*
Both Malaysia and Singapore governments inked the memorandum of understanding (MoU) to work on the Johor- Singapore Special Economic Zone (JSSEZ) on January 11, 2024.
Following the MoU, both governments will work towards a full-fledged agreement, with a deal expected to be reached in September 2024.
Maybank IB believes that JSSEZ will sharpen Johor’s longer-term prospects as potential beneficiaries of higher economic activities and infrastructure needs in Johor are many.
“The construction sector stands to gain from new demand for industrial and commercial buildings, and supporting infrastructure in Johor.
“For the property sector, the JSSEZ should help lift real estate prices in and around the identified JSSEZ zone, and support future demand for industrial, commercial, and residential properties,” it said.
*Penang – Malaysia’s high-tech powerhouse*
Penang has been among the top foreign direct investment (FDI) recipients in Malaysia – in 2023, it ranked number one with RM71.9 billion of approved investments, or 21.8 per cent of the RM329.5 billion approved investments in Malaysia.
Maybank IB believes that the upcoming infrastructure support for higher levels of economic activities in Penang will continue to be a key catalyst for its development.
In the construction space, the firm said Gamuda Bhd and Sunway Construction Bhd are among those vying for a role in the Mutiara LRT works.
“This LRT project is expected to cost RM10 billion to RM13 billion over three work packages (two civil and one system).
“Mutiara LRT line ought to have its construction completed by 2029 and be operational by 2030.
“For Penang’s property market, the Mutiara LRT project will be an immediate game changer, in our view,” it said.
*Sarawak – new economic Power-house*
A key development in 1H24 was the appointment of state-owned company, Petroleum Sarawak Bhd (Petros) in Feb 2024 as Sarawak’s sole gas aggregator.
Elsewhere, after taking on 4.8 per cent equity holding in Affin Bank Bhd in 2023, the Sarawak state is poised to take on a larger stake, which could make Affin Bank a dominant bank in Malaysia.
Maybank IB said this will effectively give Sarawak full control over the distribution of gas resources in the state, in-line with Sarawak’s 10-year Gas Roadmap.
It also said that a larger stake in a banking group should help mobilise more financing to industrialise and develop the state over the longer term.
In addition, Maybank IB said Sarawak remains committed to its hydrogen economy aspiration – the state is poised to be a commercial hydrogen producer by 2027, according to its Premier.
“In November 2020, Petroliam Nasional Bhd (Petronas) and Sarawak Energy signed an MoU to explore the commercial production of green hydrogen and its supply chain in Asia – this would position Sarawak as a hub for the hydrogen value chain,” it added.
Source: NST
