Penang needs reclamation to address scarcity of industrial land

Published by The Malaysian Insight • 10/08/2019 • 07:00 am

Fishermen are against the reclamation project to build three islands waves in Teluk Kumbar as part of the Penang South Reclamation because it would affect marine life in the area. – The Malaysian Insight pic by Hasnoor Hussain, August 10, 2019.

PENANG’S three man-made islands being reclaimed under a controversial plan are to address the scarcity of industrial land in the Silicon Valley of the East, Deputy International Trade and Industry Minister Ong Kian Ming told The Malaysian Insight.

The state is already running out of space with more than 75% of land sold in its latest Batu Kawan industrial zone, he said, adding that land scarcity could prompt investors to look elsewhere to set up their operations.

“I think Penang is a very good example of how we have managed to up the value chain, especially in the electrical and electronics (E&E) sectors and now (we are looking at) medical devices and even manufacturing services.

“We will come to a stage where if there is no increase in land availability in Penang, these industries will look elsewhere to move to and this is one of the reasons this island reclamation project is necessary for Penang,” Ong said.

Two of Penang’s major industrial parks – the Bayan Lepas Free Trade Zone and Prai Industrial Estate –have been operating for decades.

With land in Bayan Lepas depleted, a third area, the Batu Kawan Industrial park, is growing rapidly.

Of the Batu Kawan Industrial Park’s 337ha, 243ha has been sold by the Penang
Development Corporation to local and foreign investors since 2008.

These parks are home to companies, such as AMD, Agilent Technologies, Intel
Technology, Renesas Electronics, Bosch and Osram.

Ong was explaining the Penang South Reclamation’s importance in the light of opposition from civil society groups, including fishermen’s associations, over the impact of the massive land reclamation project.

It will create some 1,800ha to be sold to fund the Penang Transport Master Plan, a RM46 billion infrastructure project aimed at easing traffic congestion on the island with an undersea tunnel link to the mainland, highways, a light rail transit system and monorail.

The E&E sector is targeted as one of the main industries for the three man-made islands.

Is Apple Inc coming?

Ong has said before that Malaysia stands to benefit in the E&E sector from the US-China trade war.

As such, MITI is working on how Malaysian E&E companies can become part of the value chain for big brands.

This comes amid talk that Apple may be eyeing Malaysia as a potential destination for diversification.

Malaysia will have to determine on how it can be a part of Apple’s supply chain, Ong said.

The US tech giant is not directly involved in the manufacturing of its phones, which is done by third-party companies. It owns the intellectual property for the phone and carries out research and development.

Taiwan-based Foxconn, which is the largest assembler of Apple product’s, is one example.

“What we need to realise is that we need to be strategic in where and how Malaysia competes in this value chain.”

One area of the supply chain with potential for Malaysian companies could be assembling and testing devices and components, Ong added.

There are already local companies which service Apple but Ong said such information is not made public due to non-disclosure agreements because to secrecy over its supply chain.

“We cannot be too open about it because it will affect the ability of these companies to get these contracts, but we are very aware of this.

“MITI recently hosted an E&E forum and I also went up to Penang recently to talk to selected E&E players to see how we can capture this value chain.

“We are doing things in this regard… it’s just that we cannot openly announce the details at this point of time.” – August 10, 2019.