Foreign Direct Investment and Development of Electric and Electronic Products Industry in Penang State, 1970–2007

The development of the industrial sector, especially Electric and Electronic Products (E E) has brought many changes to the structure of the economy, employment patterns and spatial development in Malaysia. This development has been attributed to Foreign Direct Investment (FDI) coming into the country since the early 1970s. The success of the E E industry in Malaysia then was dependent on locational advantages in attracting FDI. Although Malaysia has made an impressive development in E E industry, the reliance on E E production for export and investment of foreign capital has also caused the country to be impacted impact by global changes. Foreign domination in the E E sector is very significant especially in the State of Penang. The Bayan Lepas industrial area in Penang is known globally as a leading manufacturer of electronic products in Malaysia. It has a high reputation in E E industry and has also been integrated into the Global Production Network. This article discusses the development of E E industry in Malaysia in general and in Penang in particular, following the changes of the E E global industry that has led to an inflow of FDI into the country. Although the FDI has brought many changes to the state, there are weaknesses in the development that can affect the state development. As well there are challenges that must be overcome by the Penang State in an effort to remain as the regional hub for foreign investment.