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Penang Reaches Across The Water...But Its Techies Like Life At Home (Int'l Edition)

International -- Spotlight


The lush forest covering Penang Island, Malaysia, is broken by large patches of red dirt. Soon, these clearings will give rise to condominiums, a marina, and a stadium that will help solidify Penang's position as the center of an economic zone extending well beyond its shores.

The state of Penang, which includes the island and a sliver of the mainland, is home to a mixture of ethnic Malays, Chinese, and Indians. In the past two decades, its primary commerce has advanced from trading goods and growing spices to manufacturing computer parts. Today, its vast, orderly plantations share the island with infinitely more orderly clean rooms and design centers.

But now, squeezed by a tight labor supply and limited land, Penang is spearheading a drive to create a "northern growth triangle," modeled by its planners on similar zones elsewhere in Southeast Asia. It would combine the strengths of Malaysia's manufacturing sector, Thailand's agricultural base, and Indonesia's rich natural resources and pool of workers. Penang hopes the regional grouping will help fuel its next phase of development.

MOVABLE FEAST. Penang wants to climb to the high end of electronics manufacturing, says Bruce Gale, Singapore regional manager of Political & Economic Risk Consultancy, a private research firm. The triangle "might encourage companies to move labor-intensive industries to its other parts and develop more of the higher-end products in Penang." Nevertheless, Gale notes that "electronics is a movable industry, and as soon as you move it elsewhere, there will be political pressure to source locally, as well. If Malaysia is going to succeed, it is going to have to convince Thailand and Indonesia that the triangle has as much to gain out of it as Malaysia does."

Officially launched in 1993, the triangle comprises Malaysia's four northern states, Thailand's five southern provinces, and Indonesia's North Sumatra. The entire area is 182,000 square kilometers and includes 22 million people.

Penang seems primed to lead the region's drive. It has racked up three consecutive years of 12% growth, the fastest of any Malaysian state. Its high-tech industrial zones, boasting such companies as Hewlett-Packard, Intel, and Motorola, are among the world's leading suppliers of computer disk drives and chips.

Bold action has been taken to boost regional trade. The three countries have signed agreements for some 40 projects worth $3.25 billion--mostly infrastructure. But executives warn that officials will have to overcome longstanding bureaucratic and cultural barriers. These include differences in taxation, foreign exchange rules, and investment laws. Markend Joshi, president of Penang's Malaysian Indian Chamber of Commerce & Industry, says of the triangle: "Conceptually, the idea is good. But in practice, we are not too sure."

Penang's spectacular environs--its beaches, rain forests, and cultural sites--and relaxed pace of life have helped slow a brain drain. While many engineers and technicians are still leaving for Singapore and Hong Kong, a growing number are opting to stay. They say their career opportunities are just as promising in Penang, where the cost of living is considerably lower and quality of life higher. Impressed by the caliber of engineers there, electronics giants such as Intel have shifted more design and testing facilities to the island, fueling a wage war for workers.

Penang is targeting tourist growth through niche markets, such as corporate-incentive tours that reward employees who reach goals. Kee Phaik Chee, Penang's tourism minister, hopes to attract more corporate visitors through theme parties held at cultural sites. One such banquet, in a square graced by a Chinese family temple, has guests dressed in traditional costumes and the company director carried in on an imperial sedan.

Ecotours visit the island's plantations of nutmeg, peppercorns, and other fruits and spices. One includes an all-you-can-eat bash featuring a fruit called durian. Considered a delicacy by locals, the fleshy fruit can only be eaten in small doses. Still, for visitors enchanted with Malaysia's plantation life, this is a taste of the best.EDITED BY HARRY MAURER By Helen Chang in Penang

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