Strategy For Moving Forward
The main strategy for manufacturing in the Northern Corridor will be two-pronged to increase investment in the manufacturing sector from RM15.6 billion in 2005 to RM24.3 billion by 2012. The first involves growing the GDP contribution of the existing E&E sector by increasing value-add, increasing the ability to source components and supporting services locally and stimulating the creation of offshoot industries like bio-medical devices. The second involves promoting the creation of new industries such as biotechnology, sustainable materials (including waste2wealth initiatives), oil and gas offshore structures and the processing of agricultural output into downstream products. In addition, since there is an existing automotive cluster in the Region, strategies identified in the National Automotive Policy will be reinforced.
Deepening industry linkage and increasing value-add
The Northern Corridor initiative shall aim to make Malaysia the centre of excellence for certain specialisations relating to the E&E sector, including silicon design, automation design, materials and packaging design and supply-chain management. The objective is to increase local capability to perform R&D in these areas in the Northern Corridor, thereby encouraging more companies to locate such activities in the Region or outsource such research from their global operations to centres of excellence established in the Region.
In addition, the Northern Corridor initiative shall reinforce the implementation of the Third Industrial Master Plan, which aims to move the E&E sector up the value chain from assembly and test activities, to cutting and polishing silicon wafers, chip design and wafer fabrication.
Promoting new industries
New sources of growth for the manufacturing sector will be created by promoting the setting up of new industries in the Region. These include:
Biotechnology
This sector has the potential to create significant economic contribution, as it is driven by high-value activities (e.g. R&D and clinical trials), generates significant industry linkage (e.g. when products that have been developed are manufactured on a commercial scale) and can improve the productivity of existing agriculture and industrial activities. The Northern Corridor has a number of advantages it can leverage to establish a biotechnology cluster. Universiti Sains Malaysia is a leader in biotechnology research in Malaysia and has established several industry-academia collaborations. In addition, early research has identified bio-diverse areas such as Belum, which will provide a pipeline to species on which bio-prospecting can be performed to discover potential active pharmaceutical ingredients. This is an advantage that will be leveraged by the soon-to-be-built Institute of Pharmaceuticals and Nutraceuticals in Pulau Pinang and the Indigenous Biotech Centre in Perlis.
Downstream agriculture
The Northern Corridor initiative aims to dramatically increase agricultural activity and productivity in the Northern Region, which will lead to increased agricultural output. The scale of the new agricultural activities will be increased to ensure it is sufficient to support downstream activities such as production of processed food and beverage as well as non-food uses including bio-fuels. In addition, as the Northern Corridor is strategically located within the IMT-GT, it can leverage on the Sumateran and Thai hinterland to obtain the supply of produce like coconuts, fruits and meats needed to support its industries.
Sustainable materials
With the increase in agricultural output, agricultural waste will also increase. Under the waste2wealth initiative, these waste products, such as empty palm oil fruit bunches and rice husks have the potential to be turned into fibre for use in the paper and packaging industry. In addition, commercial crops such as palm oil and corn oil can be processed into bio-plastics. High-value, high-tech applications such as speciality paper and fibre-plastic composites are under development and can be commercialised on a large scale to increase value-add from the Region’s agricultural produce.
Oil and gas
Tanjung Dawai shall host an oil and gas offshore structures fabrication yard for domestic and foreign customers. It is planned that the fabrication yard shall also be the first in Malaysia to have deep water structures fabrication capability.
Reinforcing the implementation of the National Automotive Policy
The Northern Corridor initiative aims to support the Government’s objective to transform the domestic automotive sector so that it becomes more viable and competitive by increasing the scale of operations (e.g. model rationalisation), being networked into the global industry (via joint ventures with foreign partners) and deepening domestic capabilities. The National Automotive Policy supports a cluster approach in the development of the domestic industry and Gurun, a town within the Northern Corridor has been identified as one of the clusters in which companies can be located to be eligible for incentives.