Penang Small and Medium Enterprises: Struggle, Accommodation and Challenges

The ASEAN Free Trade Area (AFTA) agreement has come into effect in Malaysia since January 2003 and the rapid process of globalisation has forced the opening up of national economic boundaries according to the rules of the World Trade Organization (WTO). These raise questions on whether the local companies are able to face up to the new challenges. What will happen to the wellbeing of the Penang people if the local manufacturers are not able to withstand these challenges? The manufacturing sector contribute 40 percent of the total employment in Penang. Will Penang suffer a slow death? This article will analyse the experience of Penang SMEs in meeting the challenges of AFTA and WTO.