Penang’s economy is healthy and strong with rising incomes and decreasing inequality

Media Statement by Dr. Ong Kian Ming, Head of Penang Institute in Kuala Lumpur and Member of Parliament for Serdang on the 13th of October 2017

Penang’s economy is healthy and strong with rising incomes and decreasing inequality[1]

Data recently released by the Department of Statistics Malaysia (DOSM) has shown what many Penangites already know. Penang’s economy is growing strongly with very low unemployment and rising wages across the board coupled with decreasing inequality. A holistic examination of Penang’s economic data shows that Penang is among the top performing states in Malaysia on nearly all the important economic indicators.

Penang’s GDP per capita in 2016 (current prices) is RM47,322, the second highest after Wilayah Persekutuan, Kuala Lumpur and higher than Selangor (RM44,616), Melaka (RM41,363) and Johor (RM31,952). (See Figure 1 below)

Figure 1: GDP per capita by state, 2016 (at current prices) (Ringgit Malaysia)

Penang’s real GDP growth was 5.6% in 2016, 5.5% in 2015 and 8% in 2014 (See Figure 2 below). Penang’s real GDP growth was ranked 2nd in 2014, 5th in 2015 and 3rd in 2016. Penang and Selangor are the only two states to rank in the top 5 states in terms of real GDP growth from 2014 to 2016.

Figure 2: Real GDP Growth rate by state, 2014 to 2016

Penang’s unemployment rate of 2.1% in 2016 is the 2nd lowest in the country after Melaka (0.9%) (See Figure 3 below). This shows that despite some of the recent factory closures, the labour market in Penang is still very tight as a result of new and higher value added investments coming into the state.

Figure 3: Unemployment rate (%) by state, 2016

Penang’s Median and Mean Household Income of RM5,409 and RM6,771 respectively in 2016 puts it in 5th place behind KL, Selangor, Johor and Melaka (See Figure 4 below).

Figure 4: Mean and Median Household Income by State, 2016

If we examine the per capita household income i.e. household income divided by the number of people in each household, we find that Penang is ranked no.3 with a median and mean per capita household income of RM1,595 and RM2,402 respectively (behind Selangor and KL) (See Figure 5 below).

Figure 5: Per Capita Household Income Mean and Median, by state, 2016 (RM)

At the same time, Penang has also experienced the 5th largest drop in its Gini Coefficient (a measure of income inequality) from 0.364 in 2014 to 0.356 in 2016, a fall of 0.008. (See Figure 6 below) Note that there were 5 states whose Gini coefficient i.e. inequality actually worsened from 2014 to 2016 namely Sabah, Negeri Sembilan, Melaka, Kedah and Johor. (See Table 1 below) (Note: the higher the Gini Coefficient, the higher the inequality)

Figure 6: Gini Coefficient 2014 to 2016, by state

Table 1: Gini Coefficient and Change in Gini Coefficient 2014 to 2016

To summarize, in nearly all of the economic data reported above, Penang ranks in the top 3 among all the states in Malaysia and at worse, in the top 5. Penang’s economy is built on a sound foundation that is sustainable and equitable.

Dr. Ong Kian Ming
Member of Parliament for Serdang

[1] All of the statistics quoted in this statement are from the Department of Statistics, Malaysia (DOSM)