GEORGE TOWN: The Penang state government is setting up its own Penang economic action council (PEAC) to draw up strategies to counter the impact from the global economic downturn.

Chief Minister Lim Guan Eng, who held the first meeting of the PEAC on March 5, said the main objective was to be an advisory body and pro active party to help the state government during this downturn.

"PEAC will help resolve problems and formulate short, medium and long term economic measures to ensure the stability of Penang's socio economic situation," Lim said at the launch of the PEAC.

Lim said Penang's open economy was exposed to various external risks and uncertainties while workers had lost their jobs as corporations and manufacturers had  downsized their operations.

“The situation has dragged the nation's economy and Penang into recession,” he said.

Malaysia’s economy grew at only 0.1% in the fourth quarter last year while manufacturing contracted for the first time in 26 quarters. Economists expect the country to enter into a recession this year.

Lim acknowledged that Penang had to be very competitive to take on low-cost manufacturing countries of China, India, Vietnam and Cambodia which offered attractive incentives.

"With these uncertain times caused by external factors, it is difficult for us to protect Penangites from the global negative impact,” he said.

The PEAC is chaired by Lim and members of the council are five executive councillors, heads of government departments, representatives from public and private sectors. They include the chambers of commerce, trade unions, banks and Consumers Association of Penang.

Lim said the PEAC will be assisted by the Penang Services Advisory Panel, Penang Industry Advisory Panel and Halal Hub Task Force to study the issues arising out of the economic crisis.

"New committees will also be created from time to time if there is a need to look into the tourism, consumer, human resources development, entrepreneur development, education, industrial development and agriculture based industries.