Island needs development for Penang to move forward — Joshua Woo

Published by Malay Mail • 25/07/2019 • 07:42 pm

Follow us on Instagram and subscribe to our Telegram channel for the latest updates.

JULY 25 — Penang South Reclamation (PSR) is necessary to move the state forward. Historically, the backbone of Penang’s economy is the manufacturing sector, in particular the electronics and electrical industry (E&E).

For the past four decades, this sector has contributed immensely to transform Penang from an agricultural state into the present “Silicon Valley of the East”.

The pioneers of this transformation are the legendary “eight samurais”, the first eight multinational corporations that came into Penang, all located on the island, within the Bayan Lepas free industrial zone. They are National Semiconductor, Advanced Micro Devices, Intel, Osram, Hewlett Packard, Bosch, Hitachi, and Clarion.

The samurais’ presence invited confidence from other companies to set up in Penang and gradually created the present vibrant industry ecosystem in the southern area.

Initially, the focus of industrialisation was on the mainland. However, the initiative did not mature. Therefore, the 1970’s Nathan Report, commissioned by the state government to map out Penang’s economic pathway, proposed to switch the state’s import substitution activities to export-oriented industry.

To be an export hub, the airport is a paramount enabler. It is therefore conducive to build the industrial zone near the airport.

At one point, Dell was able to deliver their product from Penang to the United States in 28 hours. At present, over 80 per cent of total E&E products exported from Penang via air cargo. [1]

However, the scarcity of land on Penang island prevents industrial expansion. Tax incentives are useless if there is no physical and conducive space to build industrial plants.

If Penang is not going to flatten hills, the next logical step to create land bank is to reclaim the sea. That was what Penang did — parts of the present Bayan Lepas industrial zone were paddy fields and sea.

At one point, long before PSR was conceived, the estimated possible total area of reclamation was about 3,800 hectares. [2]

Like the previous reclamation at Bayan Lepas, the proposal and location of PSR are not without strong rationale.

PSR’s close proximity to the airport leverages on the available global logistical network. The existing industrial ecosystem in the south provides the ease and convenience for businesses. The Penang Skills Development Centre, which is located right in the middle of the industrial zone, provides relevant talent pool and industrial knowledge exchange.

For these reasons, Penang’s manufacturing powerhouse has always been centred at the south. Starting anew from scratch at a less conducive place is not only “double work” but will also cost more and take longer time.

[1] Sari Wahyuni, et al, The Key Success Factors of Penang as the Silicon Valley of the East, SBS Journal of Applied Business Research, vol.1, September 2012; Prema-chandra Athukorala and Suresh Narayanan, Economic Corridors and Regional Development: The Malaysian Experience, ADB Economics Working Paper Series, No.520, December 2017

[2] Prema-chandra Athukorala, Growing with Global Production Sharing: The Tale of Penang Export Hub, Competition and Change, vol.18 (3), January 2011

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.