GEORGE TOWN: Penang must prepare for a possible downturn in the global electronics industry despite the current boom driven by artificial intelligence (AI) and semiconductor demand.
Bertam assemblyman Reezal Merican Naina Merican (BN-Umno) said the electrical and electronics (E&E) sector accounted for 82.3% of Penang's total merchandise exports, leaving the state heavily exposed to changes in global demand.
He said although prospects for semiconductors and AI remained positive, every industry had its cycles and the state must prepare for the possibility of a downturn.
"We must prepare for winter while the sun is still shining," he said when debating the Penang Budget 2027 at the state assembly on Tuesday (Nov 3).
Reezal Merican, who is an Umno supreme council member, proposed that the state develop a comprehensive industrial diversification strategy to reduce its exposure to downturns in any single industry.
He said this did not mean moving away from E&E, but developing complementary high-value industries that could build on Penang's existing strengths.
These included medical technology, precision engineering, aerospace, automation, green technology and the electric vehicle industry.
He said Penang should strengthen its local companies' technological capabilities and ownership of intellectual property rather than merely expanding manufacturing capacity.
Reezal Merican began his speech by congratulating the state government on its economic achievements, including progress under the Penang2030 agenda.
He noted that the state's economy grew by 7.3% to RM130.3bil in 2025, exceeding the national growth rate of 5.2%.
He highlighted Penang's trade performance in the first nine months of 2026, when total trade reached RM1.12tril, an increase of 64.3%, with exports rising 74% to RM709.85bil.
However, he said economic success must translate into tangible improvements in people's lives, particularly housing affordability.
Citing findings by Khazanah Research Institute, he said 37% of households earned less than RM6,000 a month, yet only 6% of new housing supply was affordable to this group.
He urged the state government to increase the supply of homes priced below RM300,000, expand rent-to-own and public rental schemes and assess housing needs according to household incomes and purchasing power.
Reezal Merican proposed expanding the use of reclaimed water in major industrial parks, including Batu Kawan and Bayan Lepas, to reduce pressure on freshwater resources.
He suggested studying whether at least 30% of industrial water consumption in these areas could be replaced with treated wastewater where appropriate.
He further proposed recycling construction waste for suitable public works, converting padi straw into biochar and using food waste to produce animal feed and organic fertiliser.
Turning to healthcare, Reezal Merican sought clarification on the proposed 300-bed expansion of Hospital Kepala Batas, saying there was still no clear progress on the project.
He said the existing hospital had 134 beds and an occupancy rate of about 90%, with patients reportedly waiting between nine hours and two days.
He urged the state government to work with the Health Ministry and Federal Government to expedite the project and provide a clear implementation timetable.
