Much has changed, but much remains the same


Why Penang’s economic future still lies in manufacturing and not the services sector.

Fifteen years or so ago, Malaysia’s Second Industrial Master Plan introduced the strategy of “manufacturing plus-plus” which was fondly described as the smiling-curve. This is the shape of the value chain diagram with value added on the vertical axis and the chain of activities required to put a product on the market along the horizontal axis. Fabrication and assembly, which make up the bulk of Malaysia’s manufacturing activities in these past decades, fall in the middle of the value chain and therefore are at the lowest points in terms of value added.

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