Penang: Malaysia’s Silicon Valley

Penang is more than an attractive vacation destination. In the past three decades an electronics industry has come into being there that encompasses some of the leading names in the industry such as Intel, Motorola, Dell and Seagate.

The 293 square kilometer island and its capital Georgetown reflect the wealth that foreign firms have brought in. First class hotels, well-tended parks, prosperous residential areas plus a modern airport with a 460,000 tonne per year cargo capacity and a 7 kilometer long bridge connecting the island to the mainland all testify to Penang’s success. The University of Science, which can accommodate 20,000 students, the Japan-Malaysia Technical Institute and the Penang International College ensure a supply of young recruits for the companies located there. In total 228 foreign companies and 406 locally based firms have set up 694 factories in the island’s industrial zones in recent years. The electronics giants form the backbone of this development. At the beginning of 2000 they employed 136,000 of the 187,000 persons who have found employment in the industrial zones designated as “Free Industrial Parks”. The phenomenal dynamics of this Mecca of microelectronics can be seen from the figures for the whole of Malaysia’s electronics industry: between 1990 and 1999 production increased sixfold, the average growth rate was 23 percent, exports expanded annually by 26 percent and the share of higher quality industrial electronics production went up in the last year to 45.4 percent. Statistics for approved projects continue to indicate a steep upward path in Penang – in spite of the worldwide correction to electronics share values on the stock exchanges. It is reported that 24 new projects involving a total of 30 hectares and 3,255 jobs were approved in the year 2000.