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Sensing an urgent need to climb the technology tree amid intense competition from its ASEAN neighbors and other Asian countries, Malaysia has unveiled a series of initiatives to expand investment and attract more advanced manufacturing activity.

January 28, 2010

4 Min Read
Malaysia seeks advanced 
manufacturing role

Sensing an urgent need to climb the technology tree amid intense competition from its ASEAN neighbors and other Asian countries, Malaysia has unveiled a series of initiatives to expand investment and attract more advanced manufacturing activity.

High on the list of moves made is the East Coast Economic Region (ECER) located along the relatively underdeveloped eastern shore of peninsular Malaysia. The initiative’s objective is to create 560,000 new jobs via cumulative investment of around $35.5 billion through 2020. A fair proportion of this investment will be in manufacturing, and plastics processing is not missing out.

Natural gas resources in the area attracted raw material suppliers to the region even before ECER was mooted, and already polyethylene, PVC, acrylic, polyacetal, polyester, and PBT are available locally from Malaysian and global suppliers such as joint venture Toray BASF (Kuantan), Japan’s Polyplastics (Tokyo), and Eastman Chemical (Kingsport, TN).


Kertih Polymer Park targets investments globally.

Next on the agenda is further development of the Kertih Polymer Park. Phase I of the park spans an area of 90 hectares, with Phase II set to occupy another 50 hectares. Eventually, the developers are targeting revenue of approximately $600 million and creating 7000 jobs at the park. Investing companies can enjoy incentives such as a 10-year income tax exemption, and Mohd Fadzil Abdul Latif, branding manager at park developer ECER Development Council, says, “Processors from all over the world can enjoy these benefits. We welcome any investment from abroad.” Further, processors will not be without technical support, with leading local resin supplier Petronas (Kuala Lumpur) locating an R&D and technology center within the park.

One of the first investors in the park was Malaysian wire and cable producer Hi Essence Cable (Puchong), which has invested around $25 million in a manufacturing facility. Latenfield Pipe Industries, meanwhile, has ploughed close to $12 million into its PVC pipe processing operation there, while FMD Polypipes Industry is spending $6 million on its pipe extrusion operation.

ECER also plans to develop the Pekan Automotive Industrial Park, positioning it as a manufacturing, assembly, and R&D hub. Around $1.2 billion in investment is targeted. Malaysia recently partially liberalized its automotive sector. It now allows 100% foreign ownership and offers a 10-year tax break, training and research grants, and excise duty exemption for assemblers and manufacturers of hybrid and electric vehicles and components. The luxury vehicle segment has also been liberalized.

Malaysia is also aggressively developing South Johor’s Iskandar zone, which is home to various manufacturing and petrochemicals activities. The government expects it to create 800,000 jobs and attract around $100 billion in investment over 25 years. Key economic activities currently found in the zone include general manufacturing, chemicals and chemical products. Besides development of manufacturing, investment in infrastructure there is set to boost demand for plastics processing.

Local electronics expertise
Electronics also remains a strong component of Malaysia’s manufacturing sector, contributing significantly to the country’s manufacturing output (30%), exports (56%), and employment (29%). “There is still a lot of commitment to the electronic and electrical industry in Malaysia,” says Tan Wee Ming, managing director of processor Prestige Dynamics Industries (Penang). “While we are in fact a quite mature industry, we can handle sophisticated production and fast turnarounds with our expertise built up over many years that may not be possible in China.” In Tan’s view, Malaysia can provide low volumes, speed, and high technology, while China is better suited to high volumes.

Prestige Dynamics is also a strong player in the power tool segment, where its particular forté is two-shot molding of housings. “We work together with one of our key customers to develop tooling,” says Tan. Not resting on its laurels though, Prestige Dynamics is increasing its role in the medical segment, which currently accounts for 10% of turnover.

For example, the processor currently ships around 200 oxygen dispenser housings per month to a medical device manufacturer in Europe. “We can compete with local [European] molders because we can build the tool for half the price,” says Tan. Prestige is also leveraging its two-shot molding prowess in the medical sector, but standards are much more stringent than electronics or power tools. “You have to guarantee 20 years of color stability, for example,” says Tan. His company, and others in the country, say they welcome the challenges. —Stephen Moore

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