During my visit to Penang last month, I was pleasantly surprised by the development of its tech scene. Despite being known primarily as a tourist hotspot with its stunning beaches, colonial architecture and mouthwatering street food, Penang, situated on the Northwest coast of West Malaysia, has been actively attracting tech investments through various incentives, including tax exemptions and affordable land. As a result, many renowned international tech companies, such as Intel, have established factories in the region. About 350 multinational corporations and more than 3,000 manufacturing-related SMEs are currently based in Penang. I had the opportunity to visit some of these companies and was highly impressed by their operations.
The Malaysian state of Penang is geographically separated into two parts, namely the island and the mainland. What makes this state distinctive in Malaysia is its strong Chinese cultural influence. While the majority of Malaysia's population is made up of Malays (80%), who predominantly practice Islam, Penang Island has a Chinese population of around 65%, whereas the Penang mainland's population consists of approximately 45% Chinese and 43% Malays, with the remaining populace being of Indian origin and other ethnicities.
A prominent symbol of the Chinese cultural heritage in Penang is the breathtaking Kek Lok Si Temple, the biggest Buddhist temple in Malaysia. This temple not only serves as a significant site of worship for the local Buddhist community but also attracts pilgrims from Hong Kong, the Philippines, Singapore and other countries in Southeast Asia.
As a former British colony, Penang still bears the marks of that era, visible through landmarks such as the Queen Victoria Memorial Clock Tower in George Town and a seafront that harks back to that period.
Penang Hill, which sits at an altitude of 821 meters above sea level, was established by the British in the late 1700s as a cool retreat from the sweltering heat of the coastal region. The first Governor of Penang, Francis Light, also had a residence on the hill. During my visit, the train service to the top was out of service, so I had to take a treacherous jeep ride up the steep incline. However, the effort was well worth it as the summit offered an array of fascinating sights, including stunning panoramic views and a rich history that was evident in the presence of a British Victorian post box, old colonial houses, a mosque and a Hindu temple.
Penang's burgeoning tech scene is part of Malaysia's ongoing broader initiative to capitalize on the growth potential of the tech sector. The Malaysian government's recent five-year development plan, which was released in October 2021, outlines key goals such as enhancing export competitiveness, attracting foreign investment, particularly in tech-related ventures, and generating high-value jobs to bolster economic growth.
For several decades now, the semiconductor industry in Malaysia, for instance, has been primarily dominated by outsourced semiconductor assembly and test firms, which rely heavily on labor-intensive processes. It would be intriguing to observe how the country will endeavor to elevate the semiconductor industry up the value chain, steering away from its initial role as a low-cost manufacturing hub.