When globally renowned corporations set up their operations in Penang, the state’s industrial landscape is transformed.
This is the second of the two-part article on the success of Penang evolving from a primary-based economy to a highly industrialised one.
IN 1969, the Penang Development Corporation (PDC) was established to drive economic growth, urban renewal and development of new townships.
The main policies of the early 1970s centred around the establishment and development of free trade zones (FTZs) – the first of which was operationalised in 1972 in Bayan Lepas on the southern side of Penang island. The pioneer investors also played a major part in nurturing the skilled workforce they needed.
In 1989, the PSDC (Penang Skills Development Centre), the first industry-led skills training centre, was set up within the free industrial zones. The PSDC’s tripartite model brings together the best of industry, academia, and government, both state and Federal.
This unique model pools resources and management expertise and allows the PSDC to provide invaluable advice and guidance on the latest industrial technological progress, along with up-to-date training and educational programmes.
Since 1990, under the leadership of former Chief Minister Tan Sri Dr Koh Tsu Koon, the PSDC increased its floor space from 5,000sq ft in 1990 to 300,000sq ft by 2008 on the basis of Federal funding, donations and generated revenues.
The Malaysian Investment Development Authority’s (Mida) efforts in the early years, in collaboration with the state government, specifically the PDC, brought globally renowned corporations to Penang’s shores and changed the state’s industrial landscape.
It took quite a convincing by Mida officials to get the corporate giants of the world to give Penang a serious look. These giants have transformed the largely agrarian landscape to a hub for making the most sophisticated products.
Among the pioneering MNCs that took the risk of converting the padi fields in Bayan Lepas into high-tech industrial enclaves were industry leaders such as Intel, National Semiconductor, HP, Clarion, AMD, Bosch and Litronix.
The presence of these MNCs has also stimulated the development of local supporting industries such as Pentamaster, Globetronics and Vitrox.
With the rise of local vendors in areas such as equipment making, metal stamping, plastics injection moulding and precision engineering, more foreign companies are attracted to Penang to tap into the supply chain and ecosystem.
Industrial development has not only contributed to the socio–economic growth of the island but has also led to the development of industrial areas in Kulim and Sungai Petani.
The emergence and excellent performance of the local SMI Cluster in Penang and neighbouring industrial areas in Sungai Petani, Kulim and Kamunting constitute a major attraction for new and existing investors to come to Penang and its vicinity.
Also, Bayan Lepas was designated the first MSC Cyber City outside Cyberjaya in 2005, reflecting Penang’s stellar performance as a technological hub.
Mida continues to aggressively promote investments into Penang, both from new and existing, domestic as well as foreign investors.
However, in line with the aspiration of the Economic Transformation Programme, the targeted activities have now shifted from manufacturing and assembly activities to more integrated investments, high knowledge, value-added and high technology industries, including the services sector. This focus is now showing results. More and more companies in Penang are undertaking global corporate functions and shared services such as R&D centres, operational headquarters, supply chain, distribution and fulfilment centres and treasury management.
Many of the big names that came to Penang over the last 40 years are still around. But their operations in recent times are totally different from their original investments.
This development benefits the local workforce and local companies. The establishment of global R&D functions with new product introduction (NPI) functions within the industries in Penang has paved the way for the transfer of technology from parent companies to the local workforce. The companies, especially the MNCs, also continue to play a major role in nurturing and developing local capabilities by establishing smart partnerships with universities and other institutions of higher learning.
These companies also have assisted the higher learning institutions to develop curricula that address the industries’ skills requirements.
As more responsibilities of R&D and NPI are given to the locally incorporated MNCs, Mida has encouraged these companies to create opportunities for local vendors via technical collaboration programmes.
In the electronics sector, complementing the technology companies, local electronic manufacturing service (EMS) providers are also involved in the design, development and manufacture of industrial electronic products. These local companies have the potential to grow into major global players.
The combination of the Federal and state governments’ investments in a robust ecosystem, especially in the E&E sector, over more than four decades and the strategic foresight of the likes of Andy Grove, the co-founder of Intel Corporation, and the promotional efforts of agencies such as Mida have enabled Penang to become a major node in the global supply chain.
The solid ecosystem will enable Penang to sustain the momentum of attracting investments, both domestic and foreign.
With the launch of the Northern Corridor Economic Region blueprint, further impetus is provided for investments into the state as the blueprint anticipates greater synergistic relationship between Penang and its neighbouring states within the corridor and the rest of the nation. All these are a result of continued support from the Federal Government and Mida.
Moving forward, Mida will continue to work with the Penang Government to ensure that the state continues to be one of the preferred manufacturing hubs in the country.