Friday, January 6, 2006
The rise of Penang
ASIA FILE
Barun Roy / New Delhi January 05, 2006
How the Malaysian island is emerging as a major industrial and tourist destination
When Penang Bridge, connecting the island to the Malaysian mainland was commissioned 20 years ago, people regarded it as one of the then PrimeMinister Mahathir Mohamad's follies, as monumental as the Petronas TwinTowers. The leisurely ferry from Butterworth was thought good enough for what was then conceived as the island's needs as a laid-back tourist destination and a small-time industrial site.
Today, Penang's economy is the third-largest of all Malaysian states, after Selangor and Johor, and the island, once called the Pearl of the Orient, has come to be known as the Silicon Isle of the East because of a heavy concentration of electronics and IT industries. The ferry still exists, but the bridge, a magnificent 13.5 km stretch across land and sea, is already so stressed, with some 110,000 vehicles crossing it back and forth every day, that an expansion is underway and a second bridge is being actively considered.
The expansion, to cost some 585 million Malaysian dollar (M$), involves adding new lanes, building a second toll plaza, and providing for a new ramp from the bridge to the Prai Industrial Area. But it's the second bridge that everyone is looking forward to. A private company has offered to fund the entire cost of the project, estimated to be at least M$2.6 billion, after the government had shelved it last April, and negotiations towards an agreement are expected to begin soon.
At the same time, construction is due to begin in January of a major 17-km highway, called Penang Outer Ring Road, from Tanjung Bungah in the north of the island to the existing Penang Bridge at a cost of over M$1 billion. With four toll plazas and eight interchanges, the highway is designed to open up a part of the island that's famous for its beautiful beaches and where major resorts and hotels have sprouted.
Penang needs this boost as the government prepares to target an annual economic growth in excess of 9 per cent in each of the next five years. While existing manufacturing activities, dominated by the electronics sector that accounts for 85 per cent of Penang's total investments, will be further strengthened, new growth areas are to be explored. The 9th Malaysia Plan, to be unveiled next March, is going to emphasise such high value-added activities as biotechnology, automation, wireless technology, and medical equipment and software, and part of the business will surely flow into Penang. With it will increase the pressure on Penang's physical infrastructure.
The state government wants to see Penang as an automation engineering hub and projects a 30 per cent revenue increase from the automation industry in 2006. There are at least 200 big and small automation-related companies currently operating on the island, contributing some M$1 billion to the state economy.
The southern part of the island is highly industrialised, with high-tech electronics plants located within the Bayan Lepas Industrial Zone. Bayan Lepas, Malaysia's first industrial zone, recently became the country's second cyber city, after Putrajaya near Kuala Lumpur, when Mahathir's much-vaunted Multimedia Super Corridor rolled out to Penang in a second-phase expansion. Information and communication technology (ICT) companies will benefit directly from this development, and, with ICT spending in Malaysia forecast to grow by 10 per cent till 2008 above the $2.5-billion level reached in 2003, Penang's hopes are surely running high.
But Penang isn't all manufacturing. It's also tourism, the initial reason for its fame. The island's comfortable climate, beautiful beaches, multi-racial character, and diverse cuisine lured 15.7 million tourists in 2004, and this year the number is on track to rise even higher. Penang Port authorities have plans to build major tourist attractions on its facility, following what Singapore and Sydney have done, and a proposal has been made to redevelop the island's Swettenham Pier as an international cruise terminal. A M$44 million marina with 102 berths, able to accommodate up to 140 yachts, will be fully operational next year on 1.6 hectares of land next to the ferry terminal in Georgetown. It will have complete customs, immigration, and port clearance services.
But it's a different kind of tourism that Penang is becoming increasingly famous for. More and more foreigners are coming to the island on medical holidays, more specifically to have cosmetic surgery done. The lure is irresistible - quality treatment and recuperation combined with recreation (sailing, jet skiing, beach horseback riding, or simply sunning on a tropical beach or by a luxury hotel pool) at a fraction of what both would cost back home.
To an American, facial rejuvenation for an average of $9,000 is unbelievably cheap, when considered that the package also includes 14 nights at a five-star hotel and two nights in the hospital, plus the treatment, all fees, medication, island transportation, and follow-up consultations. Lasik costs no more than $2,500, and even hip replacement can be done for less than $10,000. It couldn't get any better.