Tuesday, August 27, 2002
Malaysia to avoid tech price war against China Reuters Penang, Malaysia, August 27
Malaysia, one of Asia's top emerging technology hubs, will avoid a price war against lower-cost China but build alliances with it instead, a senior regional official said.
"We will minimise head-on, all-out competition especially in labour-intensive, low cost products and services," Koh Tsu Koon, chief minister of northern Penang state, told a conference to mark the island's 30th anniversary as a technology site.
Penang is the centre of Malaysia's electrical and electronics industry, which accounts for more than 60 percent of total exports.
Koh said the government would promote a "China plus One" (China and Penang) policy where Penang will be geared up as a base for product development before mass production in Asia's most populous nation.
Malaysia's position in the regional technology market, dominated by Singapore and Hong Kong, has come under the spotlight as some large foreign firms warned about a possible migration to cheaper sites like Shanghai. In recent months, U.S. giants such as Intel, Dell Computer and Motorola have forecast 2002 capital investment in Malaysia down to 1.5-2.0 billion ringgit ($395-526 million) from 2.3 billion ringgit in 2001.
"The reason why U.S. businesses came to Malaysia 30 years ago was for its low labour costs," said Bill Sullivan, chief operating officer of Agilent, who also spoke at the conference.
"But Penang has come a long way, and there is still a long way to go but the future is bright."
Flying with the dragon
Koh said it was time for Penang to rethink its strategy, announcing plans to explore new markets and alliances, reduce business costs, raise quality and productivity.
Applications for capital investment to establish electronics projects in Malaysia fell 7.3 billion ringgit in 2001 from 18.6 billion ringgit in 2000, though the figures partly reflected a global slump in the technology sector. "We will fly with the big dragon and build smart partnerships with China," Koh said. "We also plan to tap into ASEAN, India, the Middle East and African markets."
ASEAN stands for the Association of South East Asian Nations, which groups Malaysia with the countries of Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Bill Davidson, chairman of international consulting firm Mesa Research, said multicultural Malaysia was well-positioned to make inroads into China and emerging India.
Malaysia, where Islam is the official religion, has a population of 23 million. Malays account for the majority while Chinese and Indians together make up more than a third.
"China and India are two of the most populous nations in the world," Davidson said at the sidelines of the conference. "Because of its background, Malaysia has a unique advantage in bridging these two markets." ($1 = 3.8 ringgit)
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