The Announcement Of The Industry Led Penang Automation Cluster Sdn.Bhd. & Purchase Of Land Batu Kawan Industrial Park

Speech by Chief Minister of Penang

At The Announcement Of The Industry Led

Penang Automation Cluster Sdn.Bhd. & Purchase Of Land Batu Kawan Industrial Park

8 February 2017

 

It is my pleasure to announce the Penang Automation Cluster, which is the first world class SME Precision Metal Fabrication / Automation Cluster in Malaysia. This Penang Automation Cluster is expected to be a one-stop metal component supply chain hub for multinational companies (MNCs) and local large companies (LLCs) to further support and enhance the existing supply chain ecosystem of industries and services in the State, primarily those in semiconductor, E+E, medical devices, LEDs and avionics.

Penang’s semiconductor/ E&E industries

The electrical and electronic industry (E&E) remains as among the most significant contributors to Penang’s economy. This sector also contributes 36.7% of the total Malaysia’s exports in January – November 2016, an increase of 1 percentage point, year-on-year, against the Malaysian export in the corresponding period in 2015. Semiconductor Equipment and Materials International (SEMI) recently forecasted that semiconductor market is expected to grow by 11% in 2017 to reach USD41.1 billion, while the global automation market is expected to exceed USD350 billion in 2020. These augurs well for Penang’s key manufacturing sectors which also include medical devices, LEDs and avionics.

Penang Automation Cluster

In line with the growth in these global markets, I am pleased that ViTrox Corporation Berhad, Pentamaster Technology (M) Sdn Bhd and Walta Engineering Sdn Bhd has formed Penang Automation Cluster Sdn Bhd (PAC), a joint venture partnership.

The cluster aims to create a first world-class SME precision metal fabrication cluster zone in Malaysia as a one-stop metal parts supply chain hub through collaborative efforts between local large companies (LLCs) and small medium enterprises (SMEs), which will attract attention of multinational corporations (MNCs) into this one-stop metal parts supply chain hub.

This will then enhance ecosystem for precision metal fabrication and accelerate development of SME capabilities to support the supply chain ecosystem of the industries, with better productivity, efficiency and capability expansion.

Mr. Chu, CEO of Vitrox will present the business model and framework of the cluster in his speech later.

I would like to commend the effort of ViTrox Corporation Berhad, Pentamaster Technology (M) Sdn Bhd and Walta Engineering Sdn Bhd, the LLCs which have committed to ‘mentoring’ the SMEs.

The three companies are established companies which will enhance the capabilities of our local SMEs. Some notable points of these companies include:

Vitrox has a sustainable record of 15 years of profitability and is committed to launch at least 2 new or enhanced products into the market every 6 months.
Pentamaster’s Intelligent Automated Manufacturing System is in line with Industry 4.0 and has strong execution in engineering design and new product development;
Walta has over 24 years’ industry experience and has diversified products over the years from products for hard disk drive industry to automated equipment for the oil and gas and automotive segments.

Investments

A total of RM63 mil investments is expected from this cluster project, with RM23 mil coming from PAC and the other RM40 mil from the 18 SME cluster companies. Separately, complementing this cluster, the 3 main locomotive companies are also expanding their operations to the Batu Kawan Industrial Park:

- RM120 million new ViTrox Campus 2.0
- RM50 million new facility by Pentamaster
- RM50 million new facility by Walta

Government and industry collaborative effort

PAC is another industry led initiative in the State which has the full support of the Government to assist local SMIs to accelerate capacity and capability growth as well as local and global market access. In line with the state government’s belief that “the business of government is not to get into business”, but to facilitate the growth of businesses and to provide a conducive environment, the State has offered to PAC a 5 acre plot at SMI Village Batu Kawan Industrial Park, at discounted price, with the aim that Vitrox, Pentamaster and Walta as established local companies with global markets for their “Powered from Penang” products, will be the locomotives to spur further growth for other SMEs, especially in the precision metal fabrication within the automation cluster. MIDA is also expected to offer tax incentive and grants for training, R&D, equipments, tools and shared services facilities for this cluster.

Expected Outcome

It is estimated that the cluster will achieve a total local large companies's revenue of RM980 million by 2021, and the spillover effect to the 18 SMEs under the cluster is estimated to be more than RM118 million.

In terms of jobs creation, PAC will create an estimated 500 skilled jobs, and qualified employees will be given the opportunity to attend the German Dual Vocational Training (GDVT).

The Penang State Government has invested RM6 million for the GDVT programme, the first of its kind programme in the Malaysia’s skills training programs.

The first phase of PAC will be developed on a 5-acre land, within the 20-acre SME Village with construction is expected to begin by 2nd half of 2017 and targeted to commence its operations by first half of 2019.

Closing

The State Government looks forward to the local SMEs and local large companies to make full use of the Penang Automation Cluster to tap into the opportunities in the global automation market. The expansion and building of new facilities by Vitrox, Pentamaster and Walta are clear indications of the investors’ confidence to continue to invest and expand in Penang. It also shows the local large companies commitment to provide a platform for our local SMEs to tap into the growing opportunities in the supply chain in the industry, a ‘prosper thy neighbour’ philosophy. We will need all the cooperation and support to grow in these challenging times.

Once again, congratulations to the Penang Automation Cluster. I would also like to take the opportunity to thank InvestPenang, Penang Development Corporation (PDC) and other agencies for their continuous effort to make Penang a destination of choice for investors.

Thank you.