Industrial estates and regional economic development: a case study of the Prai industrial area, Penang

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Date
1980-06
Authors
Chi, Seck Choo
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Publisher
Universiti Sains Malaysia
Abstract
Industrial estates can become effective instruments in industrial decentralization· strategies on the basis of their ability to act as economic.nuclei in less developed regions. The emerging importance of regional development planning for developing countries-implies the need to build more empirical studies which can describe and analyse how industrial estates can be particularly relevant as components in regional development. Malaysia, like most other developing countries, embarked on an ambitious industrial estate programme which in the 1970s became saddled with the issue of the dispersal and decentralization of industries. One significant aspect in the New Economic Policy is the attempt to redress spatial imbalances in the Malaysian space economy via the redistribution of industrial activities to "less developed areas". As industries are being dispersed to various industrial estates throughout Malaysia, the question still remains of their effectiveness in the economic and social development of the region within which they are located. A case study of the Prai Industrial Area in Penang shows that the industries locateq_.in industrial estates and Free Trade Zones extend limited regional linkages sectorally and spatially. Their local multiplier impact is small in magnitude and many of their activities are divorced from the needs and resources of the region in which these industries are located. The growth processes of the industrial estates are neither self-generative nor self-perpetuating and the industries are also not propulsive enough to lead the region forward in development.Among the reasons for the lack of effectiveness of industrial estates on r~gional development is the absence of a proper programme and strategy which can relate the industries to the regional economy. The over-independence on foreign firms and the retardation of the local manufacturing sector lead to organizational linkages which created extra-local multiplier impacts and which in turn link the industrial estates to the world economic order. There is a policy vacuum and the lack of strategic planning to make industrial estates more operative f.or regional development purposes. The thesis calls for a reformulation of the industrial estate programme as practised in Malaysia today. The programme must be purged of its many weaknesses and be radically reorganized with special emphasis on the need to create self-generative and self-perpetuating industrial development processes in indust~ial estates through the special nurturing of the local manufacturing sector. Only with such changes can industrial estates become effective components in the 'growthpole' approach to regional development.
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Industrial estate
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