Penang is an island known for its strategic location. Located between the Indian Ocean and the South China Sea, Penang was one of the important trade exchanges between China and India since the 15th century. During the British colonisation from 16th century to 20th century, Penang was developed into one of the import export hub for the peninsular of Malaysia.
Industrialization in Penang was started since the independence of Malaya in 1957. The import substitution policy was implemented to encourage the growth of domestic industries. This resulted in the mushrooming of the local manufacturing activities in Penang. The domestic markets in Malaysia was very limited, the manufacturing activities have reached the saturation point in a very short time.
In 1970, Penang was facing a recession and its unemployment rate was a staggering 15%. The state government was struggling to find solutions. The import substitution policy was replaced by the export orientation policy. Penang was the first state to develop a free trade zone to attract foreign direct investment (FDI) in 1972. Since then, the economic development of Penang State has been tightly linked to the amount of FDIs in Penang.
There are a lot of debates on the pros and cons of FDIs in the academic world. In Penang the disadvantages are over weighted by the advantages. Penang is frequently cited as the role model for economic development through FDIs. The success of FDI policy in Penang is due to the spill over effects of technology brought by the MNCs. The Penang State government has been encouraging MNCs to local source their inputs and services.
Throughout 36 years of FDI in Penang, the Penang SMIs have built up their niches to be part of the value chain to the MNCs. Having served the MNCs for a few decades, Penang SMIs have gained technology competencies and competitive advantages in a few niche sectors such as precision engineering, automation, RF products, medical devices, pharmaceutical and biotechnologies, ICT and software development, etc.
Recently, there are a lot of emphases given to the development of clusters within a particular location whether it is a country, a state or region, or even a city. As pointed out by Michael E. Porter, professor of Harvard Business School, which the company’s competitive advantage in the globalized world, lies outside the company and even outside their industries. Companies that fit into the clusters in the locations where their business units are based, would benefit from efficient infrastructure, available suppliers, timely maintenance, increases innovation potential, strengthen negotiation power with the government, lower cost of specialized inputs such as components, machinery, business services and human resources, accessibility of information and knowledge, etc.
The importance of clusters to economic development for Penang is evidenced; the Penang State Government through investPenang has taken initiatives to further develop the clusters through setting up cluster groups for specific sectors. The clusters are: Penang Automation Cluster, Penang Radio Frequency Cluster, Penang Software Consortium of Penang, Penang TechBiz Cluster, Penang Biotechnology Cluster, and Penang Medical Devices Clusters. The clusters are set up with the industries as the driving force and backed by the Penang State Government through investPenang. The Clusters obtained an initial funding from investPenang to cover the setup cost. The main purpose of clusters in Penang is to help to develop the supporting industries for high technologies manufacturing. The clusters will organise their own promotion materials and activities. The Penang State Government will also benefit from the development of clusters because each cluster will attract foreign direct investment in the particular field into Penang. A summary of each cluster is given below.Penang Automation Cluster (PAC)
Penang Automation Cluster was lunched in December 9, 2005. PAC is the first cluster that was initiated by investPenang to promote automation industry in Penang. Automation and automation related industries such as metal fabrication, tools and dies, parts and fixtures etc. were the initial local industries that have experienced 35 years of technology spill over from the multinational corporations, when the MNCs awarded outsourcing contracts to local companies. Penang has developed into an efficient supply chain hub for automation and automation related industries to support the MNCs. PAC will focus on strengthening the competitive advantage that Penang has to promote Penang as the location of choice for industrial automation. Currently, PAC has a total of 61 members covering the major supply chain for automation industry.
Industrialization in Penang was started since the independence of Malaya in 1957. The import substitution policy was implemented to encourage the growth of domestic industries. This resulted in the mushrooming of the local manufacturing activities in Penang. The domestic markets in Malaysia was very limited, the manufacturing activities have reached the saturation point in a very short time.
In 1970, Penang was facing a recession and its unemployment rate was a staggering 15%. The state government was struggling to find solutions. The import substitution policy was replaced by the export orientation policy. Penang was the first state to develop a free trade zone to attract foreign direct investment (FDI) in 1972. Since then, the economic development of Penang State has been tightly linked to the amount of FDIs in Penang.
There are a lot of debates on the pros and cons of FDIs in the academic world. In Penang the disadvantages are over weighted by the advantages. Penang is frequently cited as the role model for economic development through FDIs. The success of FDI policy in Penang is due to the spill over effects of technology brought by the MNCs. The Penang State government has been encouraging MNCs to local source their inputs and services.
Throughout 36 years of FDI in Penang, the Penang SMIs have built up their niches to be part of the value chain to the MNCs. Having served the MNCs for a few decades, Penang SMIs have gained technology competencies and competitive advantages in a few niche sectors such as precision engineering, automation, RF products, medical devices, pharmaceutical and biotechnologies, ICT and software development, etc.
Recently, there are a lot of emphases given to the development of clusters within a particular location whether it is a country, a state or region, or even a city. As pointed out by Michael E. Porter, professor of Harvard Business School, which the company’s competitive advantage in the globalized world, lies outside the company and even outside their industries. Companies that fit into the clusters in the locations where their business units are based, would benefit from efficient infrastructure, available suppliers, timely maintenance, increases innovation potential, strengthen negotiation power with the government, lower cost of specialized inputs such as components, machinery, business services and human resources, accessibility of information and knowledge, etc.
The importance of clusters to economic development for Penang is evidenced; the Penang State Government through investPenang has taken initiatives to further develop the clusters through setting up cluster groups for specific sectors. The clusters are: Penang Automation Cluster, Penang Radio Frequency Cluster, Penang Software Consortium of Penang, Penang TechBiz Cluster, Penang Biotechnology Cluster, and Penang Medical Devices Clusters. The clusters are set up with the industries as the driving force and backed by the Penang State Government through investPenang. The Clusters obtained an initial funding from investPenang to cover the setup cost. The main purpose of clusters in Penang is to help to develop the supporting industries for high technologies manufacturing. The clusters will organise their own promotion materials and activities. The Penang State Government will also benefit from the development of clusters because each cluster will attract foreign direct investment in the particular field into Penang. A summary of each cluster is given below.Penang Automation Cluster (PAC)
Penang Automation Cluster was lunched in December 9, 2005. PAC is the first cluster that was initiated by investPenang to promote automation industry in Penang. Automation and automation related industries such as metal fabrication, tools and dies, parts and fixtures etc. were the initial local industries that have experienced 35 years of technology spill over from the multinational corporations, when the MNCs awarded outsourcing contracts to local companies. Penang has developed into an efficient supply chain hub for automation and automation related industries to support the MNCs. PAC will focus on strengthening the competitive advantage that Penang has to promote Penang as the location of choice for industrial automation. Currently, PAC has a total of 61 members covering the major supply chain for automation industry.
Penang Radio Frequency Cluster (PRFC)
Penang Radio Frequency Cluster was established in 2006, as the initiative of Penang State Government to promote cluster development in RF industry in Penang. Penang is one of the world high technology manufacturing centres, with more than 35 years of experience in design, manufacturing, assembles and test of Radio Frequency products. The first encounter that Penang has with RF was when Hewlett Packrat set up its RF chip assembly plant 35 years ago. Since then, the RF industry has grown into an industry cluster which covers the full supply chain of design and development, production and manufacturing, and assembly and test.
Penang Radio Frequency Cluster was established in 2006, as the initiative of Penang State Government to promote cluster development in RF industry in Penang. Penang is one of the world high technology manufacturing centres, with more than 35 years of experience in design, manufacturing, assembles and test of Radio Frequency products. The first encounter that Penang has with RF was when Hewlett Packrat set up its RF chip assembly plant 35 years ago. Since then, the RF industry has grown into an industry cluster which covers the full supply chain of design and development, production and manufacturing, and assembly and test.
Software Consortium of Penang (SCoPe)
Software industry in Penang is mostly involved in the support industry for Software, IT, Electrical and Electronics sector. Started from 2003, Penang State Government encouraged the software companies to form a consortium to promote high value added activities which is based on knowledge economy. Software Consortium of Penang was born in March 2006. A total of 70 companies have joined the consortium as at Dec 2009. The consortium is to promote joint ventures or strategic alliance for the members.
Software industry in Penang is mostly involved in the support industry for Software, IT, Electrical and Electronics sector. Started from 2003, Penang State Government encouraged the software companies to form a consortium to promote high value added activities which is based on knowledge economy. Software Consortium of Penang was born in March 2006. A total of 70 companies have joined the consortium as at Dec 2009. The consortium is to promote joint ventures or strategic alliance for the members.
Penang Bumiputera ICT Cluster (TechBiz Penang)
This is another initiative from investPenang to develop and promote the Penang Bumiputera technopreneurs in Penang. Penang Bumiputera ICT Cluster also called TechBiz Penang is formed in March 2007 with 50 active members sharing knowledge and experience among each others.
This is another initiative from investPenang to develop and promote the Penang Bumiputera technopreneurs in Penang. Penang Bumiputera ICT Cluster also called TechBiz Penang is formed in March 2007 with 50 active members sharing knowledge and experience among each others.
The above is referred from Mr Chong’s blogsite. Mr Chong is the investment manager for invest-in-penang berhad, it’s a state government agency to promote investment into Penang.
This entry was posted
on Wednesday, January 13th, 2010 at 5:00 pm and is filed under Association.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
Leave a Reply
You must be logged in to post a comment.