Week in Review: Penang no longer just about MNCs

By Karamjit Singh February 8, 2013

MNCs still dominate landscape, especially in electronics and electrical space
Exciting development is that local companies now fighting for top engineers too

Week in Review: Penang no longer just about MNCs I WAS filled with trepidation heading up to the northern state of Penang to cover the tech ecosystem in my home state. I knew all about the multinationals there, but what I wanted to discover was local engineering companies run by Malaysians with big dreams of conquering the world.

I found the multinationals, no problem – 10 of them, in fact. Nine were foreign and one was Malaysian, government-owned actually.

Did I find our big dreaming local companies? Out of the seven I met, perhaps one fits the bill. It claims to be a world leader in its space, a US$200 million niche within the semiconductor industry. Its founder’s main problem is that his people keep getting poached by the MNCs after they pick up leading-edge skills working with him.

Perhaps he should relocate to the mainland because one soft-spoken entrepreneur – who has no problem attracting graduates with masters and PhDs to join his research-focused company – seems to think that the answer lies in staying out of the radar of the MNCs by setting up on mainland Penang instead of the island.

A strong homing signal among mainlanders helps. “There are good schools here which produce a lot of students who get into universities, especially the engineering program of University Sains Malaysia at Nibung Tebal. And, upon graduating, most of them prefer to come back to mainland Penang to work,” he notes.

Week in Review: Penang no longer just about MNCs Apparently Penang island traffic scares them.

While I was not wowed by the global ambitions of any of these seven local companies, I was delighted to find that they took research and development (R&D) seriously and saw genuine value in investing in customer-focused R&D, which by the way, was what I heard from most of the MNCs too.

And it may be because the founders of six out of the seven companies had previously worked in MNCs. Speaking to them revealed to me that they had clearly lost none of the many leadership, management and process skills they acquired during their long and successful stints with their respective MNC employers.

And were now employing the skills in building their own companies into tomorrow’s MNCs of Malaysia.

Will they succeed? That depends on how successful they are in attracting young graduates to join them rather than the MNCs. And, it also depends on how successful they are in attracting the biggest secret of Penang, the senior talent pool in their late 40s to early 50s who are regularly released by the MNCs (with a golden handshake) who are always looking to trim costs while sharpening efficiency.

This pool of seasoned talent knows how the game is played and how to play to win. But it is not easy to attract them, as one CEO found out.

“One candidate just blew me away in terms of what he could do for me but when I asked him what package he wanted, he showed me his 2012 income tax statement and I was blown away because he earned over RM1 million last year,” says a CEO who could not even afford to match 40% of that.

What is also evident about these local companies is how they did not look for government help, especially from a funding point of view. They assumed the Government was only keen to help a certain set of entrepreneurs.

Yet thanks to government agencies that sought them out and provided various support, these companies are now charting exciting growth paths.

Starting from the week of Feb 18, Digital News Asia (DNA) will be bringing you their stories and those of the MNCs and Internet start-ups I met there, that's 20 companies! You will get to know about the tech ecosystem in Penang and how it is developing and perhaps you will see a role you can play there.

Previous Installments:

Week in Review: We’re all going to be watching Matt Chandran