Manufacturing
Current Situation
The manufacturing sector is envisaged to be a strong growth driver for the NCER. The sector was the second largest contributor to the Northern Corridor’s GDP, contributing to 34% of regional GDP in 2000 – comparable to the picture for Malaysia as a whole, where the sector contributed to 35% of national GDP1. It also employed 28% of the Region’s workforce in the same year2. However, manufacturing activities are unevenly distributed, being more concentrated in Pulau Pinang than the other states in the Region.
Manufacturing Contribution as a Percentage of GDP
in NCER States, 2005
Source: Respective State Development Corporations websites
(T): Total State
The Northern Corridor is home to one of the most important sectors of the Malaysian economy – namely the E&E products sector, mainly clustered around Pulau Pinang and Kulim. The E&E sector accounted for 64.1% of Malaysia’s manufacturing exports in 20053, and attracted 42.6% of Foreign Direct Investment (FDI) approvals in Malaysia in 20064.
The electronics industry has been established since the 1970s, and is now home to MNCs from the USA, Japan, Europe, Taiwan and Korea. Malaysia’s strength is indicated as it is the largest exporter of semiconductor devices and audio visual equipment.
The electronics industry in the Northern Region consists of:
- Electronic components manufacturing
The electronic components industry is dominated by MNCs mostly from the USA, Germany and Japan. Electronics component manufacturing is largely semiconductor manufacturing, with 53 companies in the production, assembly, design and testing of integrated circuits. - Consumer electronics manufacturing
The consumer electronics industry manufactures television sets, radios, camcorders and digital cameras. Due to the low margins in this sector, the lower value-add activities have moved to lower-cost countries while higher value-add R&D is carried out in Malaysia. - Industrial electronics manufacturing
The industrial electronics industry produces mostly ICT products and communications and networking products, and is dominated by MNCs.
Besides E&E, existing manufacturing sub-sectors in the Northern Region include automotive assembly (clustered in Gurun and Kulim), chemicals and fertilisers, petroleum derivatives and machinery and equipment.
- Source: National Physical Plan, 2005
- Based on the 2004 UNDP Report, manufacturing accounted for 14% of employment in Perlis, 24% in Kedah, 42% in Pulau Pinang and 21% in Perak in 2000. Using figures for respective states’ workforce size in the same year from the Department of Statistics, manufacturing accounted for 28% of employment across the 4 states
- Source: Third Industrial Master Plan, p. 7
- Source: MIDA website