Bursting at the seams

  • Nation
  • Saturday, 15 Sep 2018

Maxed out: Filepic of Penang island’s Free Industrial Zone in Bayan Lepas. Foreign direct investment may go elsewhere if there is no more land for new businesses.

THE electrical and electronics (E&E) industry has been the key economic driver for Penang and the country over the last four decades and continues to spur export earnings and scale up the capabilities of the local workforce.

Multinational companies (MNCs) have also moved up the value chain, diversifying from the assembly and manufacture of computer chips and parts for electrical products to the design and production of components related to 5G, Artificial Intelligence and Internet of Things.

Many Malaysian companies have benefited from this vibrant ecosystem, investing and growing in tandem with the E&E MNCs in Bayan Lepas. Some of these Malaysian companies are quite large and are listed on Bursa Malaysia.

As a result, Penang island is literally bursting at its seams in trying to keep up with the rapid growth the sector has experienced over the past four decades.

Scarcity of land for development is not only frustrating expansion plans and hampering new foreign direct investment (FDI) to Penang, it is also making it impossible for workers to live close to where they work due to high property prices. The long commute to work is also impacting productivity and quality of life.

According to American Malaysian Chamber of Commerce (Amcham) honorary member and Malaysian American Electronics Industry Committee chairman Datuk Wong Siew Hai, this lack of new land on the island will cause investment and talent to move elsewhere, which will in turn affect the economy and prosperity of Penang.

“There are a number of US companies wanting to operate on Penang island but there is no more land available. If we don’t open up more land, investors will choose to go elsewhere.

“The island is also more appealing as it is closer to the airport and has better social amenities that are attractive to a young workforce.

“This gives companies which are into high-tech manufacturing a ready talent pool,” he said.

Free Industrial Zone Penang Companies’ Association (Frepenca) past president Datuk Heng Huck Lee has also repeatedly called for new land bank near Bayan Lepas to be opened up to draw in new investments, warning that investors will look elsewhere if land is not readily available when they come knocking.

Heng said it was crucial for the export-driven E&E businesses to be located in the Bayan Lepas Free Industrial Zone (FIZ) due to the proximity to the Bayan Lepas International Airport – the gateway for their products to reach the global marketplace.

It has been reported that over the last decade, US companies invested RM14.3bil in Penang, making them the largest FDI contributor to the Penang economy with its 30% representation.

Fearful of growth stagnating and the danger of Penang losing its competitive edge to other regional E&E hubs, industry leaders are calling for an urgent and holistic solution to mitigate these issues and cater for the next five decades of growth which they say are addressed in the Penang Transport Master Plan (PTMP).

They said the Penang South Reclamation (PSR) project made up of about 1,800ha of developable land on three newly formed islands in the south will increase Penang’s lure in attracting FDIs, enhance quality of life for its people and create multiplier effects for the Malaysian economy.

Currently, 40% of the country’s E&E exports are from Bayan Lepas. The 560ha Bayan Lepas FIZ is currently the only industrial park on the island which is fully developed with no more land available for expansion or new business.

Heng said that traffic woes on the existing road network on the island was another major setback that affected the smooth transportation of goods and productivity as workers faced delays getting to and from work.

“There are approximately 200,000 workers in Penang Industrial Park especially in Bayan Lepas.

“What is needed is affordable housing close by so that they don’t need to travel far to get to work. Currently, many of these workers have no choice but to live on the mainland as it is more affordable,” he said.

According to Y.J. Lim, regional president of Plexus in Asia Pacific, an American company with revenues of US$3bil and 14,000 employees globally, attracting the right talent for its operations is a constant challenge.

“We have 2,000 engineers but have trouble hiring another hundred.

“So, any plan that will make Penang an ideal state again for people to move in and work is welcomed as it will be a big boost to businesses and the state’s appeal as a manufacturing hub.”

Meanwhile, Amcham’s Wong said that to maintain Penang’s lure as an E&E hub, accessibility and connectivity issues on the island must be solved.

“Currently there is loss of productivity as workers get delayed due to congestion issues.

“To solve this, we need a good public transport system which is integrated with an improved road network and this forms part of the PTMP.

“Some NGOs argue that a public transport system is adequate without the need to add on to the road network but you will still need that last mile connectivity,” Wong said.

Under the PTMP, the proposed Bayan Lepas LRT is designed to give commuters a reliable and convenient mode of transportation while the Pan Island Link 1 will serve as a second spine road to relieve the congestion on the Tun Dr Lim Chong Eu Expressway.

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