Penang’s Electrical & Electronics (E&E) Industry – Economic Update 2021
Given that Penang is an international city, the city isn’t able to completely avoid negative economic repercussions caused by the covid-19 pandemic especially in the services sector, such as tourism, hospitality, leisure and medical tourism. However, the positive impact from the buoyant Electrical and Electronics (E&E) sector has managed to offset the negative impact from the services sector.
Malaysia’s Electrical & Electronics (E&E) industry is one of the largest foreign direct investment recipients, contributing a trade surplus of RM134 billion or 74% of the total trade surplus of RM185 billion for the country.
Most of the E&E companies in Penang form part of the integrated global supply chain for E&E products, which are given special permission to continue operating albeit with stronger social distancing and personal hygiene Standard Operating Procedures (SOP).
Penang’s Bayan Lepas Free Trade Zone is an established Electrical & Electronics hub (E&E) and is home to over 300 multinational corporations, including Intel, Bosch and AMD, and over 3,000 small medium enterprises. The reorganization of business arising from the US-China trade war and the surge in global demand for computer servers, storage media, mobile phones, video games and other supporting products as a result of working from home have spurred the E&E industry in Penang.
In 2020, Penang emerged as the top investment destination for manufacturing in Malaysia, securing RM14.1 billion investments of which about 75% was contributed by foreign direct investment. This is largely due to the strong supply chain system, talent pool and infrastructure in Penang.
In June 2021, INTEL Technology Sdn Bhd and Intel Microelectronics (M) Sdn Bhd, both wholly-owned subsidiaries of a Fortune 500 listed company, announced that it will be investing MYR4.4 billion in Penang, and creating some 1,593 new job opportunities. Intel has invested over US$7 billion in Malaysia since 1972. Malaysia is Intel’s largest offshore location with manufacturing, product design, global shared services functions and regional sales and marketing. It has over 12,000 employees in Malaysia. Intel is also one of the country’s largest exporters contributing 10% of Malaysia’s total Electrical and Electronics (E&E) exports annually.
In addition, local company Greatech Integration (M) Sdn Bhd will be investing an additional MYR1.6 billion in a new operations facility in Penang. Greatech’s investment is set to create 450 new job opportunities in Penang.
Malaysia has an edge over other Southeast Asian countries due to its young & multilingual talent pool, supply chain ecosystem, and infrastructure. With China’s Made in China 2025 plan that seeks to transform China from being a low-end manufacturer to becoming a high-end producer of goods, a number of new Chinese investment and business collaborations have occurred in Penang.