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Penang, Malaysia: An Editorial Profile

Stars in
Their Eyes
Silicon Island of the East seeks higher- order ICT industries in biotech, medical devices and business process outsourcing.
Dell Computers is expanding its notebook plant in Penang, Malaysia, to meet growing demand, adding up to 600 more workers.


he welcome mat is out for upscale investors who want to set up high- value, knowledge- based operations in Penang, Malaysia. For everyone else:
   Labor- intensive and low- end manufacturing operations will not likely find the cost advantages in Penang they seek.
   That's the word from economic developers in charge of shaping the world- class knowledge economy envisioned for the increasingly industrialized coastal state of Penang. Industry recruiters are ready to shake the global ICT tree and bring home higher- value investments. They intend to exploit niches in biotechnology, pharmaceutical research, medical devices, precision electronics and business process outsourcing that Penang's higher- order ICT capabilities can foster.
   For more than three decades, Penang has served as an offshore base to, among others, Agilent, AMD, Dell, Intel, Motorola, Seagate and Sony. During the last five years, capital investment totaled US$3.7 billion, with US$2.9 billion in electrical and electronics (EE) alone. Expertise is emerging in total supply chain management for the semiconductor and electronic industries, leadframes, MEMS and flexcircuits, automation equipment, and precision engineering and manufacturing software applications.
   While multinationals in Penang are expanding their facilities with increasingly sophisticated operations, such as design and development and support services centers, the government is making long- term investments of its own to bootstrap Malaysia's Knowledge- Information Communications Technology (K- ITC) capacity.
   The primary initiative to encourage a wider diffusion of ICT is the Multimedia Super Corridor (MSC), which has expanded to include Penang from original zones in Kuala Lampur. The MSC is expected to further technological growth by promoting multimedia products and services and by bringing together a legislative framework and a next- generation
telecommunications infrastructure. Companies that receive MSC status qualify for a number of significant incentives, such as unrestricted employment of foreign knowledge workers.
   Penang's vision is ambitious, and it is needed to stay competitive as a business location, say long- established multinationals. "We have the 'who's who' of industry," says investPenang's CEO Wan Zailena. "At this point, we can be and have to be selective.
   "In the past, Penang welcomed all investors with open arms," she says. "Now we must do a lot more homework and map out the value chain in electronics, for instance, in a very targeted way."

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