[Malaysia terlalu bergantung kepada sektor elektronik kini semakin tergugat oleh kemelesetan permintaan dunia. Wawasan perdana menteri nampaknya tidak lagi menjadi asas kepada kemajuan tetapi asas yang semakin membimbangkan.... Dana negara dibelanjakan sakan seolah-olah wang tidak akan kehabisan. Sekarang terpaksalah termenung sendirian dilamun kutukkan kerana tiada siapa pun yang waras sudi menghulurkan pertolongan...... walaupun dikempen dengan bon yang berbunga-bunga di masa depan kerana janji royalti pun sanggup dimungkirkan.
- Editor]

http://news.catcha.com/my/content.phtml?1&010&&afpnews.cgi& cat=malaysia&story=010701072806.ilpgy73q.txt

Sunday July 1, 3:28 PM

Malaysia's 'silicon island' tightens belt amid global electronics slump

KUALA LUMPUR, July 1 (AFP) - Penang, Malaysia's "silicon island", home to hundreds of electronic companies, is bracing for a lean year amid a global slump in electronic sales but remains optimistic it will weather the bad times.

Regional chief Minister Koh Tsu Koon, in an interview with AFP, said the major challenge faced by his government was to ensure minimum impact of the global slowdown on the people.

The recent economic downturn had adversely affected the Information Communication Technology (ICT) sector in the United States' Silicon Valley, he said.

"Some (investors) cautioned that this may lead to restructuring of their workforce (in Penang)."

Koh said Penang had be ready to take its chances and be mindful of regional competition, especially from China, and remain cost competitive.

"We have to ensure that the impact of this global slowdown will be minimally destructive to the livelihood of our people and to work with our partners to reaffirm their commitment to the state," he said.

Among top electronic giants on the northwest Malaysian island -- once filled with coconut palms and now also a major tourism centre -- are Intel, Dell, Acer, Agilent, Sony, Bosh, Solectron and Altera.

Koh said one of the immediate impacts of the slowdown on Penang's economy had been a loss of jobs as multinational companies reorganized themselves and local firms responded to reduced orders.

From January to mid-May this year, a total of 4,283 workers had been retrenched by 42 companies, he said, amid falling investments.

"Although we are still in the process of compiling investment numbers for this year, we do anticipate a slowdown as compared to 1999 and 2000."

Nizam Idris, regional economist with Singapore-based IDEAglobal, said job cuts were unavoidable to cut costs as there were no signs of a US economy rebound.

"There is still some sizeable inventory in the US. It has to be drawn down before we see fresh orders coming in," he told AFP.

Nizam predicted recovery could take place between six to 12 months down the road.

A decline in electronics and the electrical sector would have a noticeably negative impact on Malaysia's growth because it consists about 60 percent of Malaysia's exports, he said.

"A slowdown will have an effect on the economy. It is a major engine of growth," Nizam added.

Koh said Penang anticipated investments would slow down in 2001 and 2002 but begin to pick up again in 2003 as the ICT sector bounced back.

As Penang's strategy to beat the slump, Koh said, the island would redouble its efforts to further improve the skills of its workforce.

"Penang's highly trained and innovative workforce, the hallmark of our success so far, will continue to be the key to our continued success.

"Just because we are experiencing a slump presently does not mean we have to replace completely a formula that has taken us this far," he said.

There are presently two free trade zones (FTZs) and six industrial parks built by the Penang Development Corporation. The two FTZs are located on Penang island and house 83 factories.

In Prai, on the mainland, there are 37 factories. They provide a total of 91,000 jobs, of which 75,000 are from the information technology sector.

Koh said Penang was exploring new niches to capitalize on its assets and to strengthen local entrepreneurial capability and broaden its economic base.