PSDC’s Role Continues to Grow as Penang Celebrates 50 Years of Industrialisation

By Ooi Tze Xiong

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PSDC Building in 1989. Photo by: PSDC.

IT WAS IN August 1972 that then-Chief Minister of Penang Dr Lim Chong Eu stood in the paddy fields of Bayan Lepas and oversaw the groundbreaking ceremony which marked the start of the Bayan Lepas Free Industrial Zone (FIZ).

It was Penang’s first tentative steps towards high-tech industrialisation. Chief Minister Lim sought to steer the state away from its dependence on maritime trade – an Achilles’ heel made stark by the economic upheaval at the time.

By 1969, Penang had lost its free port status and unemployment was on the rise. Industrialisation was regarded as the silver bullet that would pull the state out of the doldrums, and Lim went on a mission to arrest Penang’s decline as he launched the new FIZs and worked tirelessly towards bringing in investors.

The two FIZs, at Bayan Lepas and Perai on the mainland, soon proved pivotal to the state’s fortunes. The Eight Pioneers – Intel, Robert Bosch, Hewlett-Packard (now Keysight Technologies and Agilent Technologies), Advanced Micro Devices (AMD), Clarion, Litronix (now Osram Opto Semiconductors), Hitachi (now Renesas Electronics) and National Semiconductor – were among the first to establish operations at the Bayan Lepas FIZ. Manufacturing rapidly grew as Penang’s economic mainstay, with Bayan Lepas becoming known as the Silicon Valley of the East.

However, the factories soon faced a manpower crunch. While Penang originally attracted companies relocating low-wage, low-skilled operations, industry captains also saw the importance of moving up the value chain. Standing in the way was the lack of skilled technicians.

During an American Business Council seminar in 1987, DJ Hill, the President of FREPENCA, a grouping of MNCs within the FIZs, highlighted the skills gap to the state government. With the assistance of the Penang Development Corporation (PDC) and Universiti Sains Malaysia (USM), two years later, the Penang Skills Development Centre (PSDC) was established. This non-profit organisation embodies the tripartite partnership between the private sector, government and academia, with the industries taking the helm.

The Chairmen of PSDC

Building from scratch

With limited resources, PSDC’s Management Council, led by its first Chairman Dato’ Tan Bian Ee (from 1989 to 1992; Managing Director of Hewlett Packard (M) Sdn Bhd), had to hit the ground running. From the get-go, Dato’ Tan endeavoured to build the brand - by placing two advertisements every month in newspapers, for instance.

Within its first year of operations, PSDC successfully trained 1,412 people through 11 customised and 21 generic training courses. Dato’ Tan shrewdly pushed the limits of the institute’s capabilities; during his tenure, PSDC opened its first computer centre as well as a Precision Machining Training Workshop (PMTW). These were achieved, in spite of financial constraints, through the support of member companies in assets and astute cost management, known as the 20/80 Rule.

The institute’s efforts also garnered the attention of the federal government, which granted PSDC official recognition as a National Skills Development Centre and tax exemptions under the Double Deduction Incentive (DDI) scheme. In addition to federal assistance, the state government too provided operating grants totalling RM1.1mil in 1989 and the 1990s. PSDC became financially self-sufficient by 1999 and continued to grow without further assistance from the federal and state governments.

PSDC Chairmen. Photo by: PSDC.

Room for Growth

“PSDC has influenced the understanding of learning. It reflects a consolidation of competitors for the overall betterment of the industries and community,” remarked Datin Ko Seok King (1992 - 1994; Managing Director of Motorola (M) Sdn Bhd), who succeeded Dato’ Tan as PSDC’s Management Council Chairman. PSDC’s physical capacity continued to grow during her two-year tenure, which also saw the launch of PSDC’s headquarters by then-Prime Minister Tun Dr Mahathir Mohamad.

The momentum for growth carried on under the helm of Christian de Faria, (from 1994 to 1995; Managing Director; Grundig (M) Sdn Bhd), PSDC Management Council’s third Chairman. The institute successfully secured grants from Germany under the GTZ scheme; de Faria played an instrumental role in aligning the interests of the German manufacturers already in Penang and those of the German government.

Rising intake for PSDC’s diploma and workforce transformation programmes necessitated further physical expansion, with the addition of a technical library and an advanced CNC machining laboratory. “It was the leadership of the centre which was able to drive PSDC home, and people saw and began to believe in the viability of the concept”, said de Faria.

The ‘90s – Opportunities and Headwinds

The 1990s saw the emergence of Penang-based SMEs, creating a greater range of opportunities in the industrial supply chain. Harnessing its existing networks to assist local enterprises, PSDC forged strategic partnerships with SME Corporation Malaysia and other external training providers under the leadership of Dato’ Alfred Teh (from 1995 to 1997; Group Managing Director of ENG Teknologi Sdn Bhd). A Centre of Excellence (CoE) was set up, pooling together content experts to assist in the transfer of best practices from the MNCs to local companies.

His successor, Tan Thiam Seng (from 1997 to 2001; Managing Director of Komag, USA (M) Sdn Bhd), further built on the foundations set by Teh, by initiating the Global Supplier Program (GSP). It aimed to provide the necessary training and partnerships to transform local enterprises into global suppliers of materials and services.

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Following the 1997 Asian Financial Crisis, PSDC faced the unenviable task of transforming Penang’s labour force, by now inundated with unemployment and retrenchments. In response, Dato’ Robin Seo (from 2001 to 2004; Vice-President & Managing Director of Motorola Technology Sdn Bhd, Penang and Country Manager of Motorola Malaysia) launched the Graduate Reskilling Scheme (GRS) for fresh graduates. Funded by the federal government, it provided hands-on experience and industrial internships for graduates lacking technical skills. The programme’s success blazed the trail for the federal government to implement similar retraining programmes in the rest of the country.

Expansion and Going Global

The start of the new millennium also ushered in another period of physical expansion at PSDC. Under Dato’ Dr Mohd Sofi Osman (from 2005 to 2010; Vice President of Advanced Micro Devices Export (M) Sdn Bhd), a Shared Services Centre (SSC) was established, which contained an Electromagnetic Compatibility (EMC) Lab, a Radio Frequency and Wireless Technology Lab and an Embedded Systems Lab. Reflecting PSDC’s focus on technology sharing and its Blue Ocean Strategy of creating new areas for collaborations with the private sector, his successor, Dato’ Ooi Boon Chye (from 2011 to 2014; Senior Vice President, Global Operations of Avago Technologies (M) Sdn Bhd) expanded the SSC through various partnerships, in addition to the completion of a Precision Machining Tech Centre, a Prototyping Lab and a Rapid Model Development Lab.

Broadening its wings abroad, PSDC has built various partnerships with institutions and universities outside Malaysia. By the late ‘90s, PSDC was commissioned to assist in human resource development in developing countries, namely Bangladesh, Brazil and Madagascar.

These overseas outreaches also allowed PSDC to strengthen its capacity in human resource transformation within Penang itself. In 2018, Dato Dr Juergen Schloesser (from 2015 to 2018; Senior Vice President, Operations and Head of CoE Intravenous Access of B. Braun Medical Industries Sdn Bhd) oversaw the creation of the German Dual Vocational Training (GDVT) programme in collaboration with the Malaysian-German Chamber of Commerce and Industry. Structured as a hybrid of practical and classroom-based sessions, the programme includes on-the-job training at host companies such as B. Braun, Osram, Robert Bosch, VAT and Schott, while participants concurrently undertake theory courses at PSDC.

PSDC Building in now. Photo by: PSDC.

Under his successor, André Holzhausen (from 2018 to 2020; Management Board Member COO and Senior Vice President Operations APAC, Group Head of CoE Intravenous Access of B. Braun Medical Industries Sdn Bhd), PSDC intensified efforts to increase its global footprint. Inspired by the close partnerships between PSDC and its member companies, André sought to bring PSDC’s efforts into the limelight; the institute held its first Innovation Conference in 2019 and sponsored the first ever TEDxBayan Lepas within the same year. “I have never come across a set-up like PSDC anywhere in the world. It is truly unique where the industry leads a talent development institution independent from government agenda,” commented Holzhausen.

Since its establishment in 1989, PSDC has laid solid foundations for human resource transformation in Penang. However, more challenges await Penang’s industries, in the form of the Industrial Revolution 4.0 and the rise of regional rivals. The Covid-19 pandemic, too, wreaked havoc on the global supply chain. “While we re-adjust and re-adapt our business strategies to the new normal, PSDC managed to get the most out of the situation. Not only were we able to keep our courses running, we are also re-strategising towards an Outcome-Based Learning approach, via Workforce Transformation programmes and the School-in-Factory initiative,” said Christoph Mueller, Senior Vice President, Operations Asia Pacific and Head of CoE IVA as well as the current Chairman of PSDC’s Management Council.

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In spite of the disruption in businesses in the wake of the pandemic, PSDC remained steadfast in shaping workforce capabilities. “In 2021, we trained 8,124 participants through 453 courses, an increase of 43.6% in number of participants from the previous year, and 64.7% in terms of the total programmes,” added Mueller. As businesses pick up steam once again and more partnerships are forged, he foresees greater demand for specially curated skills programmes. “The potential for growth is there, as many companies pivot and adopt different business models in the new normal. Now that we have entered the endemic phase and businesses have resumed, correspondingly, they will allocate more resources in upskilling their workforce.”

As Penang looks back and commemorates its 50-year journey of industrialisation, PSDC, as one of the pioneers in transforming the state’s industrial workforce, continues to play a critical role in strengthening human capital resilience. “We at PSDC must stay true to our mission, which is to support the industry in the area of skills and talent development”.

Photos courtesy of PSDC.

Ooi Tze Xiong

a Xaverian, currently works at a multinational firm at Bayan Lepas. After years of sojourning in cities across Malaysia and Singapore, he eventually decided to call Penang home.