Towards a Sustainable Plan for Growth: Input-Output Model Charts Best and Worst Scenarios for Penang

EXECUTIVE SUMMARY

• MANUFACTURING is shown to be the sector that wields the highest output multiplier effect in Penang. This is mainly due to its various substantial links to a multitude of other industries throughout the economy.
• And within that sector, it is the E&E and optical industries that exhibit larger output multipliers than other industries.
• These are part of the results attained when Penang Institute applied an Input-Output model upon Penang’s economy. This model illustrates the array of economic transactions between different sectors over a given period of time, and is useful in evaluating the quantum effects wrought by a positive or negative change in activities within a given economy.
• The I-O analysis for Penang is based on data from the national level, and adopts the format provided by Penang Institute’s Penang SEED document published in 2023, wherein three scenarios for Penang’s future were presented..
• The analysis shows that, in the best-case scenario, by 2028, the total gross output of Penang will be about RM31.07 billion higher compared to the reference scenario. In the third scenario—the conservative, worse-case one—the total gross output of the state for 2028 is estimated to be RM19.11 billion lower compared to the reference scenario. This indicates that the conservative scenario is an outcome to be avoided.
• All in all, it is clear that developing a long-term sustainable economic growth plan is crucial for Penang thrive to expectations. Such a plan should include investments in innovation,technology, and human capital, adoption of sustainable practices, addressing of future challenges, and the fostering of national and international collaborations.