Chuping Valley Development Plan
The world’s supply of fossil fuels is expected to run out by 2088
(Figure 4.5); at which point alternate resources will have to be relied
upon. The continued depletion of fossil fuels has increased the need
for nations to shift towards a ‘Green Economy’; defined as an
economy that results in improved human well-being and social equity,
while significantly reducing environmental risks and ecological
scarcities6. Various countries have already made strides to try and
achieve this. Green stimulus packages7 have been implemented in
South Korea, China, Denmark, Germany and the USA to support
‘Green Economy’ development, having resulted in increased
employment in new Green sectors, and the establishment of a
competitive advantage; with these countries being seen as global
leaders with regards to environmentally considerate national growth8.
Given its finite supply, the Intergovernmental Panel on Climate
Change (IPCC) has indicated that the world must end its reliance on
fossil fuels such as coal, oil and gas by 2100 or the effects of climate
change will be “severe, pervasive and irreversible”9. These findings
indicate that it may be beneficial for countries to shift towards
increased Green Technology adoption (if feasible)10. The development
concept of Lembah Chuping is therefore in line with the creation of a
‘Green Economy’ for Perlis, possibly providing the state a competitive
advantage over other states, and potentially other countries given that
the adoption of Green technology is not yet widespread.
4.2 Summary of Industry Analysis
There were 3 industries clusters proposed for the development of
Lembah Chuping i.e. solar energy generation, green manufacturing
and Halal industries. These clusters were proposed in line with the
aspirations of the Federal and State Government to develop high
value adding sectors (including Halal) which could meet the “Green”
concept of Lembah Chuping, consistent with the requirements set out
by NCIA in the Terms of Reference to the Consultants. Such
aspirations were highlighted in the 10th Malaysia Plan and the
Rancangan Struktur Negeri Perlis 2030. The proposal also considered
the value chain support which could be provided to Lembah Chuping
by the surrounding establishments in Kedah and Penang. Agreement
has also been reached with the Perlis State Government and NCIA
that these clusters would be the key areas of development in Lembah
Chuping.
Industries were assessed using the following six (6) factors (under the
Porter Diamond model)11 to determine the viability of proposed
6 http://www.unep.org/greeneconomy/AboutGEI/WhatisGEI/tabid/29784/Default.aspx
7 Economic measures put together by the government to stimulate the adoption of green technology
8 http://www.oecdobserver.org/news/archivestory.php/aid/2928/The_green_growth_race.html
9 http://www.ibtimes.co.uk/ipcc-end-use-fossil-fuels-by-2100-climate-change-will-be-danger-world-1472729
10 http://blogs.lse.ac.uk/sustainability/2014/01/08/green_growth/
11 The Porter Diamond Model considers the relationship between different clusters in an industry’s
ecosystem, where competitiveness is related to the performance of all firms in addition to micro and
macroeconomic factors. This model is frequently used to evaluate the competitive advantage of nations.
In the context of this study, it will serve as a framework in assessing the factors that can influence an
industry’s success in a particular location, analysed through six (6) factors: Government, Factor
Conditions, Demand Conditions, Market Structure and Rivalry, Supporting Industries, and Chance.
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Chuping Valley Development Plan
industries should they be located in Lembah Chuping. The factors
are:
i) Government: Considers relevant government policies affecting
the proposed industries, in terms of potential industry growth
and available incentives.
ii) Market Structure and Rivalry: This factor considers the
potential competition faced by investors looking to invest in
these industries in Lembah Chuping.
iii) Demand Conditions: An assessment of market conditions,
including both current and projected future demand.
iv) Supporting Industries: Degree of support along the value
chain
v) Factor Conditions: Refers to the availability and suitability of
resources to support industry development, such as human
capital and physical characteristics of the area
vi) Chance: Risk factors which could hinder the growth of the
proposed industries
An overview of the elements considered in our analysis for each
industry is presented below. It should be noted that apart from the 3
proposed clusters, the development of services/supporting industries
clusters have also been considered in Lembah Chuping under private
finance initiatives; however, the services/supporting industries clusters
would not be covered under the industry analysis in this report.
i) Solar Energy Generation
Solar energy generation is proposed as one of the industries,
leveraging on the physical characteristics of Perlis. Perlis
receives among the highest levels of solar radiation in
Malaysia (an average of about 24 MJ/m2/day)12, compared to
the national average of about 20MJ/m2/day. In terms of
government initiatives, the Renewable Energy Act 2011 has
schemes such as the Feed-in Tariff to allow private energy
producers to sell energy to Tenaga Nasional Berhad (TNB).
Furthermore, the 10th Malaysia plan highlights the plan to
reduce the country’s dependence on fossil fuels by shifting to
renewable energy alternatives13.
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12 Megajoule per square metre per day (MW/M2/day)
13 Oil, Gas and Energy: Building Up Renewable Energy and Solar Power Capacity, Entry Point Project
(EPP) 10, (10th Malaysia Plan)
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Table 4.1: Industry Analysis Summary - Green Energy Generation
Evaluation of Factors (Solar Energy Generation)
Porter Diamond Points Indicating Industry’s Viability Points Indicating Industry’s
Model Factors Nonviability
Government • Effectiveness of Government Policies in Promoting
Renewable Energy
• Availability of Skilled Labour
The Renewable Energy Act 2011 and The Green
Technology Policy 2009 may have facilitated increased With the development of the Lembah Chuping,
investments in Renewable Energy (RE) and Energy Malaysia’s proportion of skilled labour may not
Efficiency (EE); 40% increase from 2012 to 2013 be adequate (28% of Malaysia’s workforce)
• Perlis Generates High Levels of Solar Radiation
Solar radiation on average in malaysia is 13-20mj/m2; Perlis
generates almost 24 mj/m2
Factor Conditions • Increase in Demand for Energy • Lack of Supporting Electrical Infrastructure
Demand Conditions Electricity demand expected to grow by 3% annually until
2030 Distance from a viable power source and
electrical grid connection may inhibit a stable
• Effective Government Policies supply of electricity
Government policies (5th Fuel Diversification Policy, 8th and
9th Malaysia Plans) may have contributed to the rise of • Negative Effects of Government Subsidies
renewable energy (hydropower, biodiesel, biomass energy Non-renewable fuel subsidies alone contributed
and biogas) to approximately 7.7% of the government’s
budget in 2015
• Domestic and Foreign Investment Facilitate Growth of • Industry Maturity
Renewable Energy Industry
Presence of only six (6) firms in Malaysia’s solar
A total of 49 renewable energy projects were approved in industry indicates a lack of market maturity
2013 with a total investment of RM1.7 billion; a 42% increase
Market Structure and in investment from 2012
Rivalry
• Lack of Competition
Only one solar park in the surrounding vicinity; taking up 25
acres with the capacity to generate 6 MW
Supporting Industries • Lack of Supporting Services
Limited number of service providers may serve
as a challenge as support services are limited;
potential investors may have to perform all
operations along the value chain
ii) Green Manufacturing
a) Green materials: Automotive components and building materials
b) Electricals and electronics (E&E): Semi-conductors, light-emitting
diodes (LEDs) and solar components
Aligned with the “Green” theme of the park, Green material firms use
renewable resources for value added manufacturing activities; while
Green E&E firms have resource efficient processes to limit harm to the
environment. In terms of government incentives, green technologies
are promoted under the 10th Malaysia Plan14; in addition to a range of
entry point projects (EPPs) promoting the E&E15 sector.
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14 Business Services: Jump-starting a Vibrant Green Technology Industry, EPP 4 (10th Malaysia Plan)
15 Electrical and Electronics: Developing Integrated Circuit Design Firms (EPP3); Supporting the Growth of
Substrate Manufacturers and Related Industries (EPP4); Growing Wafer and Cell Producers (EPP6);
Developing LED Front-end Operations (EPP8); Expanding LED Packaging and Equipment (EPP9) (10th
Malaysia Plan)
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Chuping Valley Development Plan
Table 4.2: Industry Analysis Summary – Green Manufacturing
Evaluation of Factors (Green Manufacturing)
Porter Diamond Points Indicating Industry’s Viability Points Indicating Industry’s
Model Factors Nonviability
• Government Policies Promoting Green Industries • Barriers to Green Building
Plans, policies, financing schemes and tax incentives all Top barriers include a lack of credit sources to
promoting the domestic adoption of Green Manfuacturing cover the upfront cost, the risk associated with
investment
Government • Promotion of Energy Efficiency via Cash Rebates
RM50.2 million invested into the Sustainability Achieved via
Energy Efficiency (SAVE); consumers who purchase
electrical appliances with a five-star EE rating will be given a
rebate of up to RM200
• Regional Trade • Availability of Skilled Labour
Thai border located 15km from Lembah Chuping; six (6) With the development of the Lembah Chuping,
freight forwarding companies in Padang Besar could facilitate Malaysia’s proportion of skilled labour may not
regional trade be adequate (28% of Malaysia’s workforce)
Factor Conditions • Availability of Logistics Infrastructure
Presence of Ipoh-Padang Besar Railway and upcoming
construction of Perlis Inland Port (PIP) could facilitate the
import and export of goods
• Substantial Acreage
Given the average size of manufacturing facilities in Penang,
land allotted in Lembah Chuping is sufficient to develop
manufacturing activities
Green • Increase in Number of GBI Certified Buildings
Building
Materials Green Building Index introduced in 2009, now there are 262
certified projects in Malaysia
Demand
Conditions • Trade Volume with Thailand
Thailand currently rely on the importing of building materials
from neighbouring countries
Green • Energy Efficient Appliance Trends
E&E
Production of energy efficient home appliances by large
electronics manufacturers (Electrolux, LG, Hitachi) may
indicate domestic and regional markets for these goods
• Increased Adoption of LED Lighting
Malaysian companies set to respond to increased regional
demand for LED products from China and Thailand
Market Green • Industry Maturity
Structure Building
and Rivalry Materials 131 green construction focused companies in Malaysia; 42%
of which offer architectural building materials
• Complementary Nature of Surrounding Estates
Surrounding estates may be able to use green building
materials for maintenance/expansion of facilities
Green • Growth Potential of E&E Sector • Potential Competition from Penang
E&E
Increase in investment from 9% (RM2.6 billion) to 18% (RM E&E products make up 60% of Penang’s
6.8 billion) of all domestic manufacturing investments manufacturing output (43% of all investments)
Supporting Green • Potential Value Chain Support From Penang • Lack of Sustainable Design Services
Industries Building
Materials Abundance of Electronic Manufacturing Service (EMS) A lack of sustainable design services may be
companies in Penang; offering component manufacturing, hindering the mass adoption of green building
Green OEM, design, testing and distribution services materials
E&E
iii) Halal Industries
a) Pharmaceutical product manufacturing
b) Food and beverages (F&B) product manufacturing
The halal industry is a developing market, with strong global demand
across a range of products. Halal F&B exports grew from 37.3% of
total exports in 2012, to 40.8% in 2013. Sources of international
demand include the Middle East and Africa16. Domestically, the halal
industry is being promoted through the Halal Industry Master Plan
(HIMP); initiatives include promotion of halal certifications through
greater certification and brand recognition, in addition to halal
research efforts17. Although halal industries may not be explicitly
defined as being Green, a study done by UUM (Universiti Utara
16 http://epaper.chinadailyasia.com/asia-weekly/article-2105.html
17 Halal Development Corporation (HDC) website
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Chuping Valley Development Plan
Malaysia) has found that certain criteria used by JAKIM to audit halal
companies are environmentally focused; a review of a company’s
waste management procedures and water (water supply and
drainage) processes in addition to its energy sources (products used
in lighting, ventilation and temperature control)18. This implies that
proposed halal industries could be in line with the Green criteria
outlined in Figure 4.6.
Table 4.3: Industry Analysis Summary - Halal Industries
Porter Diamond Evaluation of Factors (Halal Industries)
Model Factors
Points Indicating Industry’s Viability Points Indicating Industry’s
Government Nonviability
Factor Conditions • Healthcare Focused Government Policies • Extensive Process for Attaining Halal
Among all the Entry Point Programmes (EPPs) under the Certifications
healthcare sector, Malaysian pharmaceuticals are expected
to contribute to 48% of the healthcare GNI contribution in 7 step process to obtain a certification; average
2020 (among EPPs identified) processing time is 3-6 months
• Elligibility for Additional HDC Incentives • Costs of Obtaining Incentives
Halal certified firms are eligible for additional incentives if 15% of firm workforce must be halal industry
firms are located within a HALMAS accredited park knowledge workers of which three (3) must be
compliance officers.
• Availability of Logistics Infrastructure • Availability of Skilled Labour
Presence of Ipoh-Padang Besar Railway and upcoming With the development of the Lembah Chuping,
construction of Perlis Inland Port (PIP) could facilitate the Malaysia’s proportion of skilled labour may not
import and export of goods be adequate (28% of Malaysia’s workforce)
Demand Conditions • Increase in International Demand for Halal Goods
Market Structure and The global expenditure on halal food and lifestyle sectors is
Rivalry estimated to be worth USD1.62 trillion in 2012, and rise to
USD2.47 trillion by 2018
Supporting Industries
• Spillover Effects of Rising Incomes
Older population and rising incomes indicates that more
people are able to afford drugs and health supplements
• Lack of Competition from Surrounding Estates • Restrictions on Labelling of Prescription
None of the surrounding industrial parks are involved in halal Drugs
pharmaceutical product manufacturing, but there are three (3)
parks involved in conventional pharmaceutical product Logo for halal pharmaceuticals is only allowed
manufacturing to be placed on OTC products – could limit
market penetration
• Indsutry Effects of Company Research Agreements • Importing of Higher Value Added Products
Knowledge sharing by multinationals with local companies Reliance on imports to treat contemporary
through internships, research and educational grants diseases; 70% of local demand for
pharmaceuticals that treat these diseases
coming from international sources
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18 Universiti Utara Malaysia: ‘Is a Halal Certification Process Green?’ (The Asian Journal of Technology
Management, 2012)
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Chuping Valley Development Plan
A summary of the relevant points relating to each industry’s viability
can be summed up in the following diagram:
Porter Diamond Model Forces
Market Structure Demand Supporting Factor Overall Industry
Conditions Industries Conditions Viability
Government and Rivalry Chance
Demand for Limited availability of Physical Government support, demand
Policies Investments into renewable energy service providers in Characteristics Upcoming conditions and market structure are
seem to be the solar sector from is present the Northern Corridor There is currently foreign labour favourable for developing a green
effective – both domestic and a lack of adequate restrictions may energy sector, however the
Green Energy there has been foreign sources However, fossil supporting affect profitability in possible lack of market maturity
Generation an increase in increasing fuel subsidies are electrical the manufacturing and supporting electrical
solar hindering the Infrastructure in sector infrastructure may hamper industry
investment Despite solar adoption of Lembah Chuping viability in Lembah Chuping
over time component alternative Low quality of
manufacturing energy sources Availability of domestic Green Materials: Although
growth increased Human Capital education system favourable government policies,
production is in line Surrounding may hinder demand conditions and physical
with government institutions of graduate conditions support the development
initiatives higher education involvement in of green manufacturing, a lack of
and Perlis’ existing high-value added design services may be hindering
Green Policies Green Materials: Green Materials: Green Materials: workforce could sectors demand for green building
Manufacturing have been A large domestic Green building Lack of Malaysian supply talent materials
(Green Materials less effective supply of raw trends indicate companies offering However, skilled The trend in
because of the materials may help domestic and green building labour may lack government E&E: Despite the presence of
& E&E) risk associated to attract investors regional consulting/design industry-specific initiatives over the promoted sectors in Penang,
with green demand services expertise/training past 15 years favourable government policies and
technology E&E: indicates a further demand conditions support the
Sector has high E&E: Production E&E: Penang offers Logistics increase in development of these activities in
growth potential trends of energy support services for Infrastructure sophisticated Chuping Valley.
Penang’s close efficient appliances E&E (midstream and Existing and initiatives and
proximity could deter and LED lighting downstream) upcoming incentives Although demand conditions are
potential investors indicate transport favourable, the lack of supporting
from investing in opportunities infrastructure The appeal of industries and infrastructure in the
Lembah Chuping domestic and could facilitate the products from form of logistics support, R&D
regional markets flow of human established capabilities could hinder industry
capital and goods industries development.
Qualification Market Global halal trends Lack of domestic to and from (construction
for a halal penetration may be and domestic R&D capabilities Lembah Chuping materials, E&E and
certification limited; illegal to indicators indicate despite increased pharmaceuticals)
Halal may increase place halal logo on demand collaboration with may hinder the
Manufacturing costs prescription drugs large MNCs mass adoption of
(compliance) (pharmaceuticals) new offerings
Growing number Lack of Halal
of halal F&B Logistics companies in
companies, Malaysia
indicating demand
Figure 4.6: Viability of Proposed Industries in the Lembah Chuping
It was found that the proposed industries were feasible given the
following
i) Advantages
Support through government initiatives, as highlighted in
the 10th Malaysia Plan and Entry Point Projects (EPPs)
which target the growth of certain areas within the E&E
industry
Growth potential of industries, supported by current
demand and future industry growth, both domestically and
internationally
Environmentally sustainable industries19 which promote
environmental sustainability (limiting environmental effects
of industries) alongside industry growth
However, notwithstanding the above, there are several factors for
consideration:
ii) Considerations
The industries have room for further growth in Malaysia,
and are currently relatively undeveloped. Although this
means there is growth potential for the proposed industries,
it additionally means support industries along the value
chain are limited
Local infrastructure in Perlis and the Lembah Chuping
vicinity may need to be developed further (electricity and
water supply; transport infrastructure). To accommodate
19 Halal manufacturing firms with more Green processes can be selected for operation in Lembah Chuping
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Chuping Valley Development Plan
the growth of new industries, an adequate and stable utility
supply needs to be provided to support both existing and
potential firms; in addition to supporting the inflow of
employees
With that in mind, Chapter 5: Business Ecosystem will provide a
review of the available value chain support from nearby industrial
parks, as well as the available infrastructure support in the areas
surrounding Lembah Chuping.
4.3 Projected Economic Impact: GNI Contribution and Job Creation
Lembah Chuping is to be developed over two (2) periods of five (5)
years each; from 2016 to 202520. In Phase 1 (2016-2020), about 870
acres (54.5%) of total allocated land is to be developed; while the
remainder will be developed in Phase 2 (2021-2025) (45.5%).
Table 4.4: Development of Proposed Industries According to Land Allocation
Phases Proposed Industries Development (Acres)
Development
670
Phase 1 Green Manufacturing 200
GSroelaenr Energy Generation 870
80
Total Phase 1 (54.5%) 300
345
Phase 2 Green Manufacturing 725
Halal Hub Industries
SMEs
Total Phase 2 (45.5%)
Total for all Phases (100%) 1595
To estimate the direct impact of Lembah Chuping to the local
economy, two (2) parameters were considered:
i) Nominal Gross National Income (GNI): GNI is the sum of
value added by all resident producers (gross domestic product
or GDP)21, less primary income payable to non-residents, and
plus primary income from non-resident units (from abroad)22
ii) Job Creation: Number of jobs created from the new
industries, inclusive of all skill levels (low-skilled, semi-skilled,
skilled labour)
20 This is in line with Rancangan Struktur Negeri Perlis 2030; a plan of developing Perlis up to 2030. As
such, the development of Lembah Chuping may extend past the 2025, dependent on industry
development. (Perlis State Government website)
21 Nominal GNI is GNI at current market prices. (United Nations Statistics website) (UNICEF Website)
22 In this report, GDP is assumed to be equivalent to GNI on the assumption of no remittances of income. .
This is because the estimations are based on current industry figures (without actual knowledge of l
resident or non-resident firms who will be located in Lembah Chuping.)
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Chuping Valley Development Plan
4.3.1 Estimated Gross National Income (GNI) Contribution to
Perlis
Table 4.5: Breakdown of GNI Contribution from Proposed Industries
Estimated Gross National Income (GNI) Contribution: Methodology
Gross National Income (GNI) Approach
GNI is the sum of value added by all resident producers (gross domestic product or
GDP)23, plus net flow of primary income attributable to non-residents (from abroad).
However, for our purposes, it is assumed that GNI is directly comparable to GDP, as the
estimation is done assuming no international income remittances.
GNI Estimation: Production Approach to obtain GDP
The following GNI calculation was used, with the production approach used for GDP:
GNI= [Value added (i.e. Value of Output – Intermediate Inputs)]24 + [Net International
Income Remittances]
Assuming the lack of net international income remittances, under this approach, the GNI
(or GDP) contribution of a firm (or value add) is obtained by subtracting the value of
intermediate inputs from the value of goods produced by one firm25. For the estimation of
total GNI contribution of Lembah Chuping, the following steps were taken:
Steps:26
i) Estimate the value add produced per firm, from 2010 to 2025 A
ii) Estimate no. of firms in Lembah Chuping (by industry), according to phases B
iii) Total value add in any given year (GNI contribution) C =
(Value add per firm x No. of firms in operation)
Notes:
i) The average value add per firm (by industry) was obtained from the average
Malaysian manufacturing value add for 201027. To project future value add, the
average nominal GDP growth rate of the Malaysian manufacturing industry
(2005-2013)28 was applied to the 2010 manufacturing value add (year on year
change)29. 1
ii) The estimated no. of firms located in Lembah Chuping is based on land allocated
for industries in the park30, divided by the average acreage of firms (by
23 Nominal GNI is GNI at current market prices. (United Nations Statistics website) (UNICEF Website)
24 GDP by Production Approach: A General Introduction with Emphasis on an Integrated Economic Data
Collection Framework, Statistical Capacity Development in China and Other Developing Countries in
Asia, United Nations Statistical Division (UNSD), Vu Quang Viet (2009)
25 Intermediate inputs are the cost of input goods or services used in the production process
26 Note that Solar energy generation used a different method of calculation to the other industries, as
elaborated in “Notes” of this methodology
27 Economic Census 2011 (Manufacturing), DOSM
28 Nominal GNI not used since it takes into account international income remittances, of which we assume
is zero (0)
29 Gross Domestic Product 2005-2013, DOSM
30 Land is assumed to be not 100% utilised for direct productive (manufacturing) purposes, to include non-
productive uses (non-manufacturing such as parking spaces); a downward revision of 15% to allocated
land is made.
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Chuping Valley Development Plan
industry)31 2 . Firms per phase is estimated based on planned land
development32.
iii) For Solar Energy Generation 3 :
Based on the Kuala Perlis solar farm capacity of 6 mega watt (MW) over 25
acres33, it is assumed that Lembah Chuping could generate 40.8MW over the
allocated land.
1kilowatt (kW) of power can generate 1200kW-hours of energy (kWh) per
annum.34
Feed in tariff (FiT) rates are calculated based on an internal rate of return
(IRR) of about 11%; meaning profitability to firms is about 11%.35
iv) SME GDP contribution is estimated to be about 45.84% less than large
enterprises36. The GNI estimation for SMEs is based on large enterprise GNI
contribution (RM2.22 bil), scaled based on acreage of allocated land (productive
land)37 (293/1061.8) 4 38.
Proposed Industries A B Value Add per Industry
Solar Energy Generation 3 Operation
Value Add per Firm (RM '000) Est. No. of Firms in Operation
As at End of
1 2 (Excluding SMEs) Phase 1
2010 2020 2025 Phase 1 Phase 2 23,966
(40.8MW x 1000) x (1200kWh) x (RM0.55 x 89/100)
Electricals and Electronics (E&E) 49,668 89,791 120,728 12 2 1,077,490
7,372 13,327 17,919 18 3 239,882
Green Materials 4,815 8,705 11,704 0 70
3,064 5,539 7,448 0 60
Halal Industries Pharmaceuticals
F&B
SMEs 4 (45.84%) x (2,217,066) x (293/1061.8) 0
Totals 30 48 1,341,338
As mentioned, the development of Lembah Chuping will be in two (2)
phases. The following tables show the estimated nominal GNI that
could potentially be generated by each industry over the two (2)
phases of development39:
31 Average acreage of firms is based on samples of the Malaysian manufacturing sector; differing sample
sizes based on industry. (refer to appendix 1 for more information)
32 New entrant firms in each phase are assumed to enter in the first year of each phase
33 Cypark Resources Berhad (CRB) website
34 1kW is equals to 1200kWh/ kWp /year (based on SEDA FiT brochure). kWh is the kW produced per
hour. kWp is the rate of generation at peak performance.
35 The FiT rate chosen was in the power productive bracket above 1MW, up to 10MW (RM0.5472 with no
bonus FiT rates applied). Profit was assumed to be 11% (of the total 100% of revenue i.e. the FiT rate)
(SEDA Website)
36 Based on SME GDP contribution against large enterprise GDP contribution (Small and Medium
Enterprises 2005-2013, Department of Statistics Malaysia)
37 Land is assumed to be not 100% utilised for direct productive (manufacturing) purposes, to include non-
productive uses (non-manufacturing such as parking spaces); a downward revision of 15% to allocated
land is made
38 Note for SMEs, the calculation is for the beginning of Period 2; whereas the “As at End of Phase 2” figure
is adjusted based on a yearly growth rate of about 6.3%
39 Solar energy generation is assumed to reach its maximum capacity by 2020(maximum usage of
allocated land), after which expansion would not occur (same productive capacity of solar panels)
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Chuping Valley Development Plan
Electricals and Electronics (E&E) Green Materials
400
1800
EEssttiimmaatteeddGGDNPI CCoonnttrriibuution (RMM mmiill)) 1600 EEstsitimmatatededGDGPNICCoontnrtiribbutuitioonn((RRMMmimli)l) 350
1400
1200 300
1000
250
800
600 200
400
200 150
0 100
Phase 1: Phase 2: Phase 1: Phase 2:
RM 1.08 bil by 2020 RM1.70 bil by 2025 50 RM0.24 bil by 2020 RM 0.38 bil by 2025
12 firms in operation 14 firms in operation 21 firms in operation
18 firm s in operation
2016 2017 2018 2019 2022 2023 2024
0
2020 2021 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
EEssttiimmaatteedd GGNDIPCCoontntriribbutuitioonn((RRMM mmili)l) 30 EEstsitimmatateeddGGDNPI Contrriibbuuttiioonn (RM mil) 400 SM Es
Solar Energy Generation 350
300
25 250
200
20 150
100
15
50
10 0
2021
5 Phase 1: Phase 1: Phase 2:
RM0.02 bil by 2020 RM 0.02 bil by 2020 RM0.36 bil by 2025
40.8MW capacity 40.8M W capacity
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2022 2023 2024 2025
90000 Halal Pharmaceuticals 50000 Halal F&B
80000 45000
EEssttiimmaatteeddGGDNIPCCoonnttrriibbutuitioonn( (RRMM 'mi0l)00) 70000 Phase 2: EstEistmiatmeatdedGDGPNICCoontntrriibbuuttiioonn ((RRMM 'm0il0)0) 40000 Phase 2:
60000 RM0.08 bil by 2025 35000 RM0.04 bil by 2025
50000 7 firms in operation 30000 6 firms in operation
40000 25000
30000 20000
20000 15000
10000 10000
0 5000
0
2021 2022 2023 2024 2025 2021 2022 2023 2024 2025
Figure 4.7: GNI contribution by Proposed Industry
Overall, Phase 1 is expected to contribute about RM1.34 bil to
nominal GNI by 2020, while Phase 2 contribution is estimated at
RM2.58 bil by 202540. In period 1, the compound annual growth rate
(CAGR) of industries is about 6.46%, and about 6.06% in period 2.
This can be compared to the average GDP growth rate of Perlis
(2005-2013)41 at 5.9%; Lembah Chuping could assist in boosting the
Perlis economy to a rate greater than the current growth.
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40 The estimated contribution of the park is based on the assumption that the park will be fully utilised for
the proposed industries; realising the potential of the park.
41 Gross Domestic Product 2005-2013, DOSM
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Chuping Valley Development Plan
3000 Phase 2 RM 2.58bil
Phase 1 CAGR: 6.06% RM0.358 bil
RM0.024 bil
Estimated GNI Contribution (RM mil)) 2500 RM 1.34bil RM0.045 bil
RM0.082 bil
2000 RM0.024 bil RM0.38 bil
RM0.24 bil
1500 CAGR: 6.46% RM1.69 bil
RM1.08 bil
1000
500
0 2017 2018 2019 2020 2021 2022 2023 2024 2025
2016
Electricals and Electronics (E&E) Green Materials Halal Pharm aceuticals Halal F&B Solar Energy Generation SM Es
Figure 4.8: Estimated GNI Contribution of Lembah Chuping by 2025
Table 4.6: GNI Contribution of Proposed Industries
Est. No. of Firms in Operation (Excluding SMEs) Value Add Per Industry (RM '000) in Operation
Proposed Industries
As at End of Phase 1 As at End of Phase 2 As at End of Phase 1 As at End of Phase 2
Solar Energy Generation Solar farm capacity: 40.8MW 23,966 23,966
Electricals and Electronics (E&E) 12 14 1,077,490 1,690,195
Green Materials 18 21 239,882 376,290
Halal Pharmaceuticals 0 7 0 81,930
Halal 0 6 0 44,686
Industries Halal Food & Beverages
(F&B)
SMEs SMEs productivity: 45.84% of large enterprises 0 358,052
Total 30 48 1,341,338 RM2.58 bil
Of the proposed industries, green manufacturing (includes E&E and
green materials) is expected to contribute the most to GNI; 80.2% of
GNI generated by Lembah Chuping (total of RM 2.07bil generated),
with 47.0% of total land allocation for proposed industries. This is thus
expected to be the largest industry in Lembah Chuping.
As of 2014, Perlis generated about RM3.6 bil42 in nominal GDP; this
translates to about RM17,800 GDP contribution per acre of Perlis
land (total is about 202,456 acres)43. Based on allocated land and
estimated nominal GNI, Lembah Chuping could contribute about RM
1.76 mil nominal GNI per acre. Thus, the presence of the Lembah
Chuping is expected to boost the overall productivity in Perlis, in terms
of land use; whilst considering the preservation of the state’s
ecosystem.
Comparing the estimated GNI contribution of Lembah Chuping by
2020 (RM1.34 bil) to the estimated cost of infrastructure (RM 0.57 bil),
the GNI contribution for every RM of development cost (return on
investment or ROI) is about 2.33. This can be compared to other
projects around Malaysia. The Taman Industri Halal Gambang
42 KDNK Mengikut Negeri 2005-2013, DOSM
43 Rancangan Struktur Negeri Perlis 2030
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Chuping Valley Development Plan
(Pahang) is expected to have an ROI of 0.32 by 2020; the integrated
bio-methionine & thiochemical plant in Kertih Biopolymer Park at 0.88
by 2020; Taman Industri Malaysia-China Kuantan (MCKIP)
manufacturing higher value products at an ROI of 0.67 by 202044. As
can be seen, the development of Lembah Chupping can yield a
significant return on investment to the state; keeping in view that 2020
is midway through the development of the industrial park45.
4.3.2 Estimated Job Creation in the Perlis State
Table 4.7: Methodology for Estimation of Job Creation
Estimated Job Creation: Methodology
Job creation of Lembah Chuping was calculated based on four (4) variables:
A) Allocated land (acres): A downward revision of 15% was made to the allocated
land, as land is assumed to be not 100% utilised for direct productive
(manufacturing) purposes; includes non-productive uses (non-manufacturing e.g.
parking spaces)
B) Average land per firm (acres)46 : Based on samples from the Malaysian
manufacturing sector; sample sizes differ based on industry
C) Estimated no. of firms in Lembah Chuping: This is the number of firms that can be
accommodated in the park, based on average land size (per industry), and allocated
land in the park. An average was taken for solar components and E&E
D) Average employment per firm47
To calculate job creation, the following steps were taken (refer to table for details):
i) Estimate the no. of firms that will be operating in Lembah Chuping based on the
amount of allocated land and the average land taken up per firm: (A/B=C)
ii) Obtain an estimate of the average no. of workers employed per firm (based on
each individual industry): (D)
iii) Job Creation= No. of firms in operation (C) X average employment per firm (D)
Note: the estimation for solar energy generation and SMEs was calculated using a different
method:
i) Solar energy generation: the Sustainable Energy Development Authority (SEDA)
estimates 15 jobs are created per 1MW capacity, and the Kuala Perlis solar farm has
a capacity of 6MW over 25 acres.
ii) SMEs: According to the SME Master Plan 2012-2020, the productivity of a large
enterprise is about 3.15 times more than an SME. This could be attributed to the
fact that on average, SMEs are more labour intensive (which is less productive) as
compared to larger enterprises who employ a higher degree of capital. The SMEs at
Lembah Chuping are assumed to be in roughly the same industries as the proposed
industries, hence job creation estimates are based on the main proposed industries
(6781 jobs); which is scaled to the productive land size allocated for SMEs
(293/1354.8)
44 Pemandu website, ECERDC website, ECERDC annual report 2013
45 For the development of Lembah Chuping, 2020 is end of Phase 1; 2025 is end of Phase 2
46 Based on samples from the Malaysian manufacturing sector; sample sizes differ based on industry (refer
to appendix 1 for more information)
47 Refer to appendix 1 for more information
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Chuping Valley Development Plan
Job Creation Methodology: Industries and SMEs
Land (Acres) Firms
AB C DE
No Est. no. of Firms in
.
Industries Operation in Lembah Average Total
Chuping Employment Employment
Average Land per
*1 Allocated Land Firm (Acres) Phase 1 Phase 2 per firm
(Acres)
1 Solar Energy Generation 170.0 *2 [6 MW per 25 acres; 15 jobs per MW] 612
Solar Components 85.0 81.0
Waf er 42.0 19.0
Fabrication 85.0
E 0.8 12 14 231 3242
Green & Substrate 424.0
2 Manufacturing E Manufacturing 25.0
IC Design 0.1
Green Materials 20.0 18 21 111 2331
Pharmaceuticals 85.0 12.0 0 7 50 350
3 Halal Industries 170.0 26.0 0 6 41 246
293 5892
F&B (3.15) x (6781) x (293/1061.8)
4 *3 SMEs
Total job creation of Industries
Steps: i. (A/B)= C 12,673
4 Job Creation of Industries ii. (C x D)= E
Development Phases - Phase 1:2016-2020; Phase 2: 2021-2025; Total: 2016- 2025 Phase 1: 5,389
Phase 2: 7,284
Total: 12,673
*1 Land is assumed to be not 100% utilised for direct productive (manufacturing) purposes, to include non-productive uses (non-manufacturing such as parking spaces); a downward
revision of 15% to allocated land is made
*2 Assumption based on SEDA estimates of 15 jobs created per MW, and Kuala Perlis solar farm capabilities of 6MW over 25 acres
*3 According to the SME Master Plan 2012-2020,the productivity of a large enterprise is about 3.15 times more than an SME; implying SMEs possibly use less machinery and are more
labour intensive (which is less productive). The SMEs at Lembah Chuping are assumed to be in the same industries as the proposed industries, hence job creation estimates
are based on the main proposed industries (6781 job creation); which is scaled to the land size allocated for SMEs (293/1354.8).
The estimated number of jobs created by the industries in Lembah
Chuping is 12,673 by 2025. The development of Phase 1 is estimated
to create about 5389 jobs (42.5% of total job creation) across a range
of skill levels. The majority of jobs created are to be from the green
manufacturing industry (green E&E and green materials) at 44.0%.
Table 4.8: Job Creation of the Lembah Chuping Development Phases
Proposed Industries No. of Jobs
Phase 1 Phase 2 Total
(2016- 2020) (2021- 2025) (2016-2025)
Green E&E 2,779 463 3242
Green Materials 1,998 333 2331
Solar Energy Generation 612 0 612
F&B 0 246 246
Halal 0 350 350
Industries
Pharmaceuticals
SMEs 0 5,892 5892
Total 5389 (42.5%) 7284 (57.5%) 12673 (100%)
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Chuping Valley Development Plan
The new proposed industries are expected to offer new jobs in a
range of manufacturing roles, and in relatively high value added
industries. Employees will learn new relevant types of skills, in line
with the Malaysian government’s push in these sectors48. This implies
growing relevance of skills learnt from these industries, as the
industries grow.
As of 2012, the number of employed persons in the manufacturing
sector in Perlis was about 659549. Rancangan Struktur Negeri Perlis
2030 is set on pushing for industrial growth through industry
clustering, with certain industries stipulated (e.g. chemicals and
plastics at the Jejawi industrial zone); the industries are targeted to
create about 13 jobs per acre by 202550.
Lembah Chuping is estimated to create an additional 6169 jobs in the
manufacturing sector (excluding SMEs and solar energy) by 2025,
over about 1050 acres (excludes solar energy generation and SMEs);
which translates to about six (6) jobs per acre. The park could
contribute towards reaching the employment target, and creating new
jobs for the local workforce.
14,000 5573 Jobs 612 Jobs 596 Jobs 5892 Jobs
12,000 (44.0%) (4.8%) (4.7%) (46.5%)
10,000
Estimated Jobs Created 8,000
12,673
6,000
2,331
4,000
5893
2,000 2,815
0 427 612 246 SM Es Total
Green Manufacturing 350 SM Es
Green Energy Halal Industries
Generation
Halal
Solar energy Solar energy pharm aceuticals
com ponents generation Halal F&B
E&E components
Green materials
Figure 4.9: Total Job Creation of Proposed Industries by 2025
Based on the job composition of the Malaysian manufacturing industry
in general, the number of skilled jobs expected to be created is about
48 National initiatives such as the promotion of the E&E sector and pharmaceutical sector (entry point
projects or EPPs in the 10th Malaysia Plan) show the Malaysian Government’s push for growth in these
key sectors (10th Malaysia Plan)
49 Report on the Survey of Manufacturing Industries (2012), DOSM
50 An average was taken between the 2020 and 2030 employment per acre estimates, to obtain 2025
(Rancangan Strucktur Negeri Perlis 2030)
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Chuping Valley Development Plan
1140; semi-skilled labour about 2154; and low-skilled at about 937851.
This means majority of jobs are that of low-skilled or semi-skilled.
However, this may not be a reflection of the composition of skilled
labour for Lembah Chuping, as the proposed industries are expected
to generate higher value added over time, and so may require more
skilled labour. Thus, the proportion of skilled labour generated may be
higher than the national average of 9%.
9%
17%
74%
Skilled Labour
Semi-skilled Labour
Low -skilled Labour
Figure 4.10: Lembah Chuping Skill Levels of Created Jobs
The development of Lembah Chuping could grant the state significant
benefits, in terms of GNI contribution and job creation. The promotion
of higher value added industries in the proposed manufacturing
industries and solar energy generation could grant the state growth
through diversification while positioning itself in line with national
initiatives. Additionally, growth would be achieved while limiting the
environmental effects of industries; in protecting environmentally
sensitive areas; business and environmental sustainability could be
achieved.
Future growth would also assist in job creation. Diversification of
industry implies introducing a new skill to the workforce; in this case,
skills in higher value added industries. Job creation also brings
spillover in terms of economic growth to the state; as higher income
levels mean increase consumption52 that benefit local businesses
(such as supporting industries like F&B outlets and healthcare
services) and promote positive spillover effects to bring a higher
quality of life for the people (positive externalities such as roads built
to accommodate new industries).
51 Skilled labour includes managers, professionals and executives; semi-skilled labour includes technicians
and associate professionals, clerical and related occupations; low-skilled labour includes elementary
workers, and plant & machine operators and assemblers. Economic Census 2011 (Manufacturing)
52 Growth Spillover Effects and Regional Development Patterns: The Case of Chinese Provinces, Xubei
Luo (2005)
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Chuping Valley Development Plan
4.4 Key Salient Points
The Rancangan Struktur Negeri Perlis 2030 highlights the Perlis State
Government plans of developing the state towards greater productivity
and innovation. Development is targeted to utilise state resources and
physical characteristics effectively, while ensuring the environmental
sustainability of industries. These state goals are aligned with
Malaysia’s goal of positioning the nation towards continued
development, while ensuring the environment is being conserved for
future generations53.
Lembah Chuping: Green Technologies and Green Processes
As such, the proposed industries of Lembah Chuping are to utilise/ be
involved in Green technologies and Green manufacturing processes
(along the value chain). Together with Malaysia, other countries (e.g.
South Korea, Denmark) are moving towards greater recognition of
Green initiatives, with the implementation of Green stimulus packages
(e.g. tax incentives). These incentives are to reduce reliance on fossil
fuels, as the supply of fossil fuels is expected to be depleted by
208854. Additionally, research has shown that energy efficient
processes (more efficient use of resources) can save costs for
industries (as seen from figure 4).The following three (3) main
industries are proposed for Lembah Chuping:
i) Solar Energy Generation:
Solar energy is proposed as Perlis receives among the
highest levels of solar radiation in Malaysia55
Presence of Government initiatives that promote the
industry such as the 10th Malaysia plan and the Renewable
Energy Act 201156.
ii) Green Manufacturing
a) Green materials: Automotive components and building
materials
b) Electricals and electronics (E&E): Semi-conductors, light-
emitting diodes (LEDs) and solar components
Aligned with the “Green” theme of the park, Green material
firms use renewable resources; while Green E&E firms
have resource efficient processes
Presence of Government incentives that promote green
technologies under the 10th Malaysia Plan57 as well as a
range of entry point projects (EPPs) for the E&E58 sector.
53 10th Malaysia Plan. The 11th Malaysia plan has a dedicated Green section “Moving Towards Green
Growth Section” to target growth in the Green sector
54 Adeco Solar website
55 An average of about 24 MJ/m2/day
56 Schemes include the Feed-in Tariff (FiT) which allows private producers of renewable energy to sell
energy to Tenaga Nasional Berhad (TNB)
57 Business Services: Jump-starting a Vibrant Green Technology Industry, EPP 4 (10th Malaysia Plan)
58 Electrical and Electronics: Developing Integrated Circuit Design Firms (EPP3); Supporting the Growth of
Substrate Manufacturers and Related Industries (EPP4); Growing Wafer and Cell Producers (EPP6);
Developing LED Front-end Operations (EPP8); Expanding LED Packaging and Equipment (EPP9) (10th
Malaysia Plan)
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Chuping Valley Development Plan
iii) Halal Industries
a) Pharmaceutical product manufacturing
b) Food and beverages (F&B) product manufacturing
Strong global demand, with sources of international demand
including the Middle East and Africa59
Promoted in Malaysia through the Halal Industry Master Plan
(HIMP); with initiatives including promotion of the halal
certification brand recognition60.
Promoted through the 10th Malaysia Plan (pharmaceuticals), to
increase the local firm development and partnerships.61
GNI Contribution and Job Creation
No. of Jobs GNI Contribution (RM mil)
Proposed Industries Phase 1 Phase 2 Total As at End of As at End of
Green E&E (2016- 2020) (2021- 2025) (2016-2025) Phase 1 Phase 2
2,779 463 3242 (2016- 2020) (2021- 2025)
1077.5 1690.2
Green Materials 1,998 333 2331 239.9 376.3
Solar Energy Generation 612 0 612 24.0 24.0
F&B 0 246 246 0.0 44.7
Halal 0 350 350 0.0 81.9
Industries
Pharmaceuticals
SMEs 0 5,892 5892 0.0 358.1
Total 5389 (42.5%) 7284 (57.5%) 12673 (100%) 1341.3 2575.1
Figure 4.11: Total Job Creation and GNI Contribution of Proposed Industries
The resulting direct economic impact of these industries in Lembah
Chuping to Perlis was assessed through an estimation of nominal GNI
contribution and job creation. The main industries of the Lembah
Chuping are proposed to be developed in two (2) phases:
As at end of Phase 1 (2016-2020): RM 1.34 bil GNI
contribution by 2020 (total 870 acres)62
As at end of Phase 2 (2021-2025): RM 2.58 bil GNI
contribution by 2025 (total 1,595 acres)
In Phase 1, the Green Manufacturing (89% of industry-specific
allocated land) and Solar Energy Generation (100% of industry-
specific allocated land) industries are to be developed. By 2020, the
GNI contribution is estimated to reach about RM1.34 bil; to about
RM2.58 bil by the end of Phase 2 (2025). These higher value added
industries are expected to lead the growth of the state in these
sectors; achieving both environmental and economic sustainability, in
line with state and national goals.
59 http://epaper.chinadailyasia.com/asia-weekly/article-2105.html
60 Halal Development Corporation (HDC) website
61 Healthcare: Malaysian Pharmaceuticals (EPP3), 10th Malaysia Plan
62 Note that these estimations are based on nominal GNI figures
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Chuping Valley Development Plan
In terms of job creation, the following number of jobs across a range of
skill levels is to be created:
As at end of Phase 1 (2016-2020): 5389 jobs by 2020
As at end of Phase 2 (2021-2025): 12673 jobs by 2025
The skills required would be in the new proposed industries, and the
relevance of these skills would increase as the industry grows.63 This
is in line with the Rancangan Struktur Negeri Perlis 2030, which aims
to improve the level of human capital and skills of the people.
The development of Lembah Chuping would introduce new industries
to Perlis; to bring economic benefits through estimated job creation
and GDP contribution. Lembah Chuping would achieve an effective
utilisation of land as targeted by the Rancangan Struktur Negeri Perlis
2030; in addition to being in line with National initiatives to promote
growth Green industries. Furthermore, these industries could promote
positive economic spill over effects (e.g. growth of supporting
industries such as healthcare and F&B services).
SUMMARY
i) The industrial development of Lembah Chuping should be positioned
towards a green theme to minimize the potential impact on the
environment
ii) This concept is in line with the government’s Green initiatives (Malaysia
Plans, Green Technology Policy)
iii) Based on the above, focus is recommended to be on three (3) industries:
solar energy generation, green manufacturing (green materials and
E&E), and halal industries (F&B; pharmaceuticals); as they would also
be in line with the respective EPPs of the ETP64, and the Halal Industry
Master Plan
iv) Matching the GNI contribution against the cost of investing is tabulated
as follows:
Description As at end 2020 As at end 2025
Investment in
Infrastructure RM 706 million RM 1,171 million
RM 1,340 million RM 2,575 million
GNI Contribution
GNI Contribution to 1.90 times 2.20 times
Investment Ratio
63 Calculated based on an average across the Malaysian manufacturing industry. Note that the skill-level
requirements of the industries may not be reflective of the skilled labour requirements of the Lembah
Chuping, and may require more skilled labour to provide for the higher value added industries (Report on
the Survey of Manufacturing Industries 2012, DOSM)
64 Electricals and Electronics (E&E) sector: Solar component manufacture- EPP6; LEDs- EPP8 and EPP9;
semi-conductors- EPP3 and EPP4
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5.0 BUSINESS
ECOSYSTEM
Chuping Valley Development Plan
5.0 BUSINESS ECOSYSTEM
5.1 Introduction
The goal of this Chapter is to develop a sustainable model in which
the proposed industries in Lembah Chuping, relevant supporting
functions, surrounding industrial estates, and Institutions of Higher
Learning (IHLs) will co-exist as part of a mutually beneficial network.
The ecosystem proposed seeks to facilitate the socio-economic
advancement of Perlis through higher value added activities and the
creation of job opportunities of various skill levels. The creation of the
ecosystem entails three (3) distinct steps (Figure 5.1):
Figure 5.1: Approach to Building Lembah Chuping’s Business
Ecosystem
Step 1: Propose Core Industries
As outlined in Chapter 4, three (3) core industries are proposed for
Lembah Chuping; namely solar energy generation, Green
manufacturing (Electrical and Electronics (E&E) and Green materials)
and Halal industries. In addition to our research, a focus group
discussion was also held on the 4th of March 2015, at the Georgetown
City Hotel in Penang to validate the feasibility of Lembah Chuping’s
concept. Attendees included representatives from relevant
government bodies, institutions of higher learning (IHLs), and the
private sector. A detailed list of attendees, description of our
methodology and survey results can be found in Appendix 6.
Step 2: Develop Industrial Park Support Functions
Having identified the core industries for Lembah Chuping, the next
step is to detail the development of services and systems that could
support the operations of the proposed industries; both internal (within
the industrial park) and external (in the vicinity) (Figure 5.2).
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Chuping Valley Development Plan
Figure 5.2: Industrial Park Supporting Functions
The supporting functions can be broadly categorised into four (4) main
areas:
i) Lifestyle Infrastructure: Essential services (e.g. healthcare,
financial), and housing
ii) Transport Infrastructure and Services: Transport systems
and connectivity
iii) Human Capital Development and Requirements: Industry-
academia collaborations and human talent development
iv) Other Supporting Functions: Business matching and
advisory, as well as utilities
Step 3: Surrounding Institutions/ Establishments
Once park supporting functions have been analysed, relationships
between surrounding institutions/ establishments will be examined.
These establishments will be evaluated based on their ability to
complement industry operations in Lembah Chuping. This will be
measured based on their ability to provide value chain support to the
industries in Lembah Chuping (Figure 5.3). Value chain support will be
defined as the provision of upstream1, midstream2 and downstream3
support.
1 R&D, component production, procurement of raw materials, inbound logistics
2 Material processing, testing, packaging, manufacturing and assembly
3 Outbound logistics, sales, marketing and distribution (component or end product)
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Chuping Valley Development Plan
Figure 5.3: External Ecosystem - Surrounding Institution
5.2 Park Supporting Functions
This Chapter explores the development of services and systems
(through an analysis of benchmarked industrial parks) which could
support the operations of the proposed industries; both internally
(within the industrial park) and externally (the vicinity). The following
benchmarked parks were chosen given the following criteria:
i. Techpark @ Enstek (Malaysia)
Largest no. of halal manufacturers in Malaysia
ii. Kulim High Tech Park (KHTP) (Malaysia)
An established tech park with achievements in solar energy PV
manufacturing
iii. Singapore Science Park (Singapore)
Efficient use of available resources to maximise use of limited
land area
iv. Hsinchu Science and Industrial Park (Taiwan)
One of the oldest tech-based parks in Asia, with substantial
government involvement
v. Eco World Styria (Austria)
One of the most established parks in Europe, with a proven
record of implementing green technologies
5.2.1 Lifestyle Infrastructure
Lifestyle infrastructure is an important consideration in
determining standard of living
Lifestyle infrastructure supports the well-being of the
population, and includes basic necessities. To assess lifestyle
infrastructure, two (2) factors were analysed:
i) Housing
ii) Lifestyle services (e.g. healthcare services)
The need for housing is an important factor when addressing
the needs of the workforce in an area; including attracting
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Chuping Valley Development Plan
human talent4. Housing should be within an adequate distance
to enhance the well-being of employees to be accessible5.
Lifestyle services also enhance the liveability of an area; they
improve the quality of life of an area, and are an important
factor for businesses considering where to locate their
operations (especially when firm performance is less
dependent on location of operations, such as R&D labs)6. In
addition to attracting firms, the quality of life in an area also
assists in attracting and retaining skilled knowledge workers7.
Lifestyle services should be both accessible (in terms of
distance) and available (in terms of numbers) to cater to the
needs of consumers in the area.
Lifestyle services consist of four (4) main categories:
i) Financial services: includes banks and automated teller
machines (ATMs)
ii) Educational services: includes primary, secondary and
tertiary education, language institutions, kindergartens,
etc.
iii) Health services: includes clinics, hospitals, dental
practices, pharmacies, etc.
iv) Food and beverage (F&B) services: restaurants, cafes,
snack shops, etc.
Methodology: Availability and Accessibility of Lifestyle Services
1. Identify centrally located businesses and services
i) Benchmarked industrial parks: Hsinchu Science Park, Singapore Science Park,
Ecoworld Styria, Kulim Hi-Tech Park, Techpark@Enstek
ii) Businesses in the benchmarked industrial parks were identified through the
use of business directories, and other relevant sources.
iii) Central areas (focal points) were chosen based on density of companies and
businesses. Multiple focal points were chosen for an industrial park if the park
was extensive (multiple phases spread over a large area), and an average was
calculated.
2. Calculate average distance of lifestyle services to central areas
i) Based on the proximity of the closest 20 (if available) businesses and services
(sorted according to type of lifestyle service) to central areas, an average was
calculated across benchmarked industrial parks
3. Apply the average distance calculated to central areas to obtain number of
lifestyle services
4 Attracting and Retaining Knowledge Workers in Knowledge Cities, Journal of Knowledge Management
11(5), Yigitcanlar et al.
5 The distances from benchmarked industrial parks to the central area of nearby towns were assessed. It
is assumed that the population of the towns include employees of the industrial park (due to proximity),
and could assist in catering for existing and future employees of the park.
6 The Importance of Quality of Life in the Location Decisions of New Economy Firms, Centre for Urban
and Regional Studies, University of North Carolina at Chapel Hill, David Salvesen and Henry Renski
(2003)
7 Residential Location Choice of Knowledge-Workers in a “Startup Metropolis”: The Role of Amenities,
Workplace, and Lifestyle, Edward Bendit, Sigal Kaplan et al. (2011)
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Chuping Valley Development Plan
i) For each industrial park, apply the average distance of lifestyle services to
obtain the number that fall within the range; as a gauge for availability of services
that are centrally located
1 Identify Businesses 2 Calculate Average 3. Apply Average
Distance
# Industrial Park No. of
Businesses Healthcare Education services
that fall in
F& B Financial
the
distance
range
Figure 5.4: Methodology for Availability and Accessibility of Lifestyle Services
Kangar can be a source of lifestyle infrastructure...
The Kangar district is the state capital of Perlis, with Kangar
town being the most populated town in the state. As such,
Kangar town contains about 62% of residences8 among major
towns in the state9. Containing both a relatively large
proportion of residential properties and the population among
larger towns, Kangar town is the most developed town in the
state.
4%
5%
9%
10% Total Residences
10% of M ajor Tow ns:
5290
62%
Kangar Town Simpang Empat Pauh
Arau Padang Besar Kuala Perlis
Source: Population and Distribution by Local Authority Areas and Mukim 2010, DOSM
Figure 5.5: Number of Residences, Perlis (2010)
Located about 20km away from Kangar town, the Chuping
area is mostly used for planting sugar cane crops10;
developments are scarce, indicated by having only about 2.2%
of total registered existing residential properties11 in the state.
8 Residences are living quarters, inclusive of detached/semi-detached/link housing, townhouses, flats,
improvised huts, hostels, etc.
9 A point to note is that unregistered (squatter) housing is not reflected in this statistic
10 The Star Website (http://www.thestar.com.my/News/Nation/2014/07/30/Sweet-news-for-hot-Chuping-
New-growth-centre-in-land-of-sugarcane-and-tasty-mangoes/)
11 Residential Property Stock Table (2014), Property Stock Report (2014), Pusat Maklumat Harta Tanah
Negara (NAPIC), Jabatan Penilaian & Perkhidmatan Harta (JPPH)
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Chuping Valley Development Plan
There is a planned PR1MA project12 in relatively close
proximity to the Lembah Chuping (about 3km away), over 20
acres and includes 231 terrace houses, and lifestyle facilities
such as a kindergarten, but it may be insufficient to cater to the
total workforce of the Lembah Chuping. Kangar can be a
source of housing for employees of Lembah Chuping,
since there is a lack of housing in the Chuping area.
Planned PR1M A Housing:
i. 231 units of terrace housing
ii. 20 acre development
iii. Proposed facilities to include a mosque, playground and
kindergarten
Source: Perumahan Rakyat 1Malaysia (PR1MA) Website
Figure 5.6: Planned Perumahan Rakyat 1Malaysia (PR1MA) Housing in
the Chuping Area
Also, comparing the accessibility and availability of lifestyle
services across benchmarked industrial parks (average)13 to
Kangar town, it can be seen that there is a relatively high
number of centrally14 located lifestyle services in Kangar, more
than the average (with the exception of health services) of
benchmarked industrial parks15.
12 PR1MA housing pre-requisites for purchase include being a Malaysian citizen, being above 21 years of
age, earning within a certain age bracket and not owning more than 1 property. Eligible candidates are
then chosen through a balloting system.
13 Taking the 20 closest lifestyle services from the central areas of the benchmark industrial parks, an
average distance was calculated per lifestyle service. The average was then applied to the benchmark
industrial parks to obtain the number of lifestyle services that were within the average distance range.
(Refer to appendix 2 for more information)
14 Central areas (focal points) were chosen based on density of companies and businesses. Multiple focal
points were chosen for an industrial park if the park was extensive (multiple phases spread over a large
area)
15 Note that the average was for calculated for industrial parks, whereas Kangar is a town.
June 2015
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Chuping Valley Development Plan
No. of Lif estyle Services 50
45
40 Health Services F&B Services
35
30
25
20
15
10
5
0
Financial Services Educational Services
Kangar Lifestyle Servies Average No. of Lifestyle Services
(Industrial Park Average)
Figure 5.7: Kangar Lifestyle Services
...However, the distance of Kangar from Lembah Chuping
may limit accessibility
In terms of accessibility of housing, distances of residences to
industrial parks were observed to obtain an average across
benchmarked parks; the average was found to be about 9.9km
(adequate distance). Kangar might have an adequate level of
residences to support park employees, but a relatively close
proximity may be an important factor as well (accessibility to
housing). Compared to other industrial parks, Lembah Chuping
is located the farthest from the nearest town (Kangar), nearly
double the average distance of benchmarked parks (19.4km
against 9.9 km average)
25.0
Distance (KM ) 20.0
19.4
15.0 15.0 15.0
Average: 9.9km
10.0
9.0
5.0 6.5
4.0
0.0
Hsinchu Science Singapore Science Ecow orld Styria KHTP Techpark @Enstek Lembah Chuping
(Kulim )
Park Park (Graz) (Nilai) (Kangar)
(Hsinchu City) (Bukit Merah,
Queenstow n)
Figure 5.8: Average Distance of Industrial Parks to Nearby Towns
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Chuping Valley Development Plan
Source: Google Maps, KPMG Analysis
Figure 5.9: Distance of the Chuping Area to Kangar
Lifestyle infrastructure to be developed in the Lembah
Chuping should consider both accessibility and
availability
Based on the average distance of lifestyle services to central
areas16, an adequate distance was obtained for each type of
lifestyle service (e.g. 4.1km for financial services); the number
of services within this range was averaged across industrial
parks (e.g. average of 16 for financial services). More services
within the average range means a relatively higher availability
of accessible services.
- This space intentionally left blank -
16 Refer to the appendix 2 for more information, including methodology, and sources of information.
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Financial Services 40 Health Services
30 Average: 16
No. of Lifestyle Services 35 Average distance: 3.6km
25
No. of Lifestyle Services
30
20 Average: 16 25
15 Average distance: 4.0km 20
15
10
10
5
5
00
No. of Lifestyle Services Educational Services No. of Lifestyle Services 120 F&B Services
100
40 Average: 38
35 Average distance: 3.3km
30
25 80
Average: 19
20 60
Average distance: 3.5km
15
40
10
5 20
00
Hsinchu Science Park Singapore Science Park
Eco World Styria Kulim Hi-Tech Park
Techpark @ Enstek
Figure 5.10: No. of Central Lifestyle Services of Industrial Parks
45
40
35 38
(3.3km)
No. of Lifestyle Services 30
F&B Services
25
20 19 16
(3.5km) (3.6km)
15
16
10 (4.0km)
5
0
Financial Services Educational Services Health Services
Adequate distances
in brackets
Figure 5.11: Level of Lifestyle Services Lembah Chuping Should Achieve
Based on the average level of centrally located services
calculated from the benchmarked industrial parks, the above
chart shows a possible appropriate level of central lifestyle
services which should be provided for employees in Lembah
Chuping. It should be noted that the number of lifestyle
services above merely provide an indication, based on what is
provided in other parks without taking into account the size of
the population in surrounding areas. Another point to note is
that the above is to be developed over the time; i.e. the two
development phases of the project. In terms of accessibility, it
is found that on average, these services are located either
within the park, or within a distance of 4km away from the park.
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Chuping Valley Development Plan
5.2.2 Transport Infrastructure & Services
Public Transport: Importance of Convenience and Accessibility
In the study “Valuing Convenience in Public Transport”17, a convenient public
transport is defined as a service to take commuters where they want to go, when
they want to travel, while providing reliable services and comfort for passengers.
Convenience was analysed through 6 factors, and the relative level of importance
was compared:
• Waiting /walking in Intermediate • Having to transfer
crowded areas Importance during a journey
• Walking requiring high • Walking and waiting in • Provision of transport
effort levels non-crowded situations information
• Punctuality of service • Standing w hile Least
travelling Importance
Highest
Importance • Travel time of service
Source: Valuing Convenience in Public Transport, Richard Anderson et al. (2014),
International Transport Forum, OECD
Figure 5.12: Public Transport Convenience Factor Ranking
As seen by the transport convenience factors of highest importance, ease of access
to and from transport services is a major factor. The first last mile problem is the
issue a commuter faces when travelling to and from a transport station, en route to
the final destination; a destination relatively far away might mean walking is not an
option, so other modes of transport must be found. This implies the requirement for
public transport connectivity to be extensive (within 1km of end destinations) to cater
for commuter needs.
First M ile PublicTransport Use Last M ile
Total Commuter Journey
Source: First Last Mile Strategic Plan & Planning Guidelines, Los Angeles County Metropolitan
Transportation Authority, Southern California Association of Governments (2014)
Figure 5.13: First Last Mile Problem for Public Transportation
17 Valuing Convenience in Public Transport, Richard Anderson et al. (2014), International Transport Forum,
OECD
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Chuping Valley Development Plan
Benchmarked industrial parks place emphasis on
accessibility and connectivity to transport networks.
The Singapore Science Park is located strategically between
two (2) major road routes, the Ayer Rajah Expressway (AYE)
and the West Coast Highway. The park offers a free shuttle
bus service that operates within and connects the two (2)
phases of the park. In line with the emphasis on ease of
access, the shuttle bus stops in the park are within 1km of the
facilities and developments as shown in the figure below. Bus
arrivals are every 15 minutes throughout the day, to promote
availability and ease of access in the park.
Singapore
Science Park 1
Singapore
Science Park 2
Singapore Science Park 1
Singapore Science Park 2
Singapore M ass Rapid Transit (M RT).
Located w ithin 1km proximity of Singapore Bus Service (SBS) stops;SBS
buses run operate in and around the science park (fee charged)
Singapore Science Park shuttle bus service
Source: Singapore Science Park Website
Figure 5.14: Singapore Science Park Mass Transport Connectivity
To further bolster transport connectivity, the Singapore Bus
Service (SBS) operates within and around the park, although a
fee is charged for use. The SBS system links the park with the
nearby Mass Rapid Transit (MRT) stations; both SBS and
MRT transport services connect employees of the park to other
areas of the country.
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Chuping Valley Development Plan
Legends
Shuttle Bus Route Red Line
Green Line
Transport Hub: City Bus; Shuttle Bus;
Intercity Coaches
Shuttle Bus Stop
City Bus Connection: Link to Hsinchu City
Source: Taiwan Tourism Board website, Hsinchu Science Park website
Figure 5.15: Hsinchu Science Park Shuttle Service Connectivity
The free Hsinchu Science Park shuttle service runs throughout
the park, shown by the Green and Red service lines. The
shuttle bus stops throughout the park are extensive, within
1km of each other. The shuttle bus service links commuters to
the Citybus, which is connected to Hsinchu City, Taipei, and
other districts/cities18; the Citybus is also connected to the
Taiwan Railway.
The centrally located transport hub is a major transport station,
linked by the shuttle bus, the Citybus and intercity coaches.
Additionally, the transport hub is located next to the Sun Yat-
Sen Freeway; a major road connecting North Taiwan to the
South19. Similar to the Singapore Science Park, there is
emphasis on transport connectivity between cities/districts, and
integration of different transport networks.
The Cyberjaya Flagship Zone (CFZ) in Cyberjaya is a 7000
acre hub for the local information and communication
technology (ICT) industry; to promote growth of the local ICT
industry while attracting foreign ICT firms20. To improve upon
the ease of access to and from Cyberjaya, the Cyberjaya
Dedicated Transportation System (DTS) was introduced in
2007; a shuttle bus service with daily 24-hour operations, with
bus arrival frequency every 15 to 45 minutes. The Cyberjaya
18 Hsinchu City Bus website; Hsinchu City Government Bureau of Tourism website
19 Taiwan Area National Freeway Bureau website
20 Multimedia Super Corridor (MSC) website
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Chuping Valley Development Plan
DTS is a form of mass transport, being comparable to public
transport21.
Route 2
Route 1
Route 9
Route 8
Route 7
Route 3
Route 4
Route 6 Route 5
Located in close proximity to train station (LRT/KTM )(w ithin 1km)
Located in close proximity to other bus stop routes (w ithin 1km)
Source: Cyberjaya DTS website
Figure 5.16: Cyberjaya Dedicated Transportation System (DTS)
External Connectivity
The service offers a non-crowded service (standing not
allowed), with each bus installed with a GPS device for
tracking punctuality. The service consists of 9 routes sourcing
from a range of locations; locations are in close proximity
(within 1km22) to either a train station (KTM/LRT) or with other
bus routes, or both. The Cyberjaya DTS is designed to connect
with other transport networks, with connection to bus/train
stops for transit stops to other bus/train routes, as well as
connection to transport hubs such as KL Sentral, and Terminal
Bersepadu Selatan23.
21 Public transportation is defined by the American Public Transportation Association (APTA) as a form of
mass transport offered to the general public on a regular ongoing basis, owned privately or publically.
The Cyberjaya DTS service is owned by Cyberview Sdn Bhd, a government- majority held private
company, whose mass transport service is offered on a regular basis. However, a point to note is the
service being offered to only members of the public who have signed up with the service prior to use; fee
of RM250 a month charged (APTA website) (Cyberview website)
22 The first-last mile problem is the difficulty of passengers getting to and moving from transport stations.
The maximum suggested distance a passenger is willing to walk to and from the station is about 1km.
(The Half Mile Circle: Does It Best Represent Transit Station Catchments?, Eric Guerra et al., Institute of
Transportation Studies, University of California, Berkeley (2011))
23 These transport hubs are major transit stations for both the Rapid Bus and Rapid Rail (LRT) network
June 2015
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Chuping Valley Development Plan
Businesses, universities, public services w ithin 1km of bus stops
Destinations exceeding 1km of bus stops
# Bus stop for outgoing route $
# Bus stop for incoming route
Source: Cyberjaya DTS website
Figure 5.17: Cyberjaya Dedicated Transportation System (DTS) Inner-
park Connectivity
The transport system in the Lembah Chuping vicinity is
currently limited, but there are existing transport networks
which could be expanded on
1 Transport Netw ork in Perlis:
1. Intercity rail
2. Intercity coach
2
Kangar Express
Bus Terminal
Keretapi Tanah Intercity Bus
M elayu Berhad Terminals
(KTM B) Intercity
Stations
Source: Google maps, Express Bus Malaysia website, MYPublicTransport website,
Keretapi Tanah Melayu Berhad (KTMB) website, KPMG Analysis
Figure 5.18: Existing Transport Networks in Perlis
The existing inner-state transport networks in Perlis are
currently limited. However, there are inter-state networks in
place, although the extensiveness of the services could be
expanded. The Keretapi Tanah Melayu Berhad (KTMB)
June 2015
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Chuping Valley Development Plan
Intercity rail service currently has only two (2) stations in Perlis,
and there are two (2) bus terminals for interstate travel located
near Kangar and Kuala Perlis.
Inner-state public transport could assist in alleviating the need
for residential properties in close proximity to Lembah
Chuping, as other areas of the state would be more easily
accessible.
In line with the Green Industrial Park concept, a shuttle
service could aid in improving park accessibility, while
reducing total emissions
Transport accessibility is an important factor when considering
the needs of employees, which is in turn a key consideration in
the development of Lembah Chuping. This could be achieved
by having a shuttle service (dedicated mass transport system)
in and around the park. Based on benchmarked parks, four (4)
key elements in transport infrastructure were identified:
i) Shuttle bus stops are within 1km apart and less than
1km from major businesses/ facilities
ii) Minimal fees are charged for use, to promote use of
public transport
iii) Bus services operate throughout the day at frequent
intervals (15-45 mins apart)
iv) Presence of a central transport hub in the park that
links to other major external transport networks
Accessible bus Frequent shuttle
stops (close to arrivals
major businesses)
Proposed
Shuttle Bus
Service
M inimal fees Transport hub
located in park
Figure 5.19: Key Characteristics of Proposed Shuttle Bus
Service
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Chuping Valley Development Plan
5.2.3 Human Capital Development and Requirements
While institutions of higher learning (IHLs) in the Lembah
Chuping vicinity can support the human capital
requirements of the proposed industries; a service
matching supply and demand of human talent could be of
assistance...
The courses offered in institutions of higher learning in the
Lembah Chuping vicinity were observed to assess the
adequacy of graduates in meeting the human capital
requirements of manufacturing firms (and solar energy
generation) in the relevant industries24. It was found that the
surrounding IHLs offer courses that can cater to the proposed
industries.
No. of Relevant Courses 100 49
90 95 30
20
80
Halal Industries Green Materials Solar Energy
70 (F&B, Generation
60 Pharm aceutic als)
50
40
30
20
10
0
E&E
* Courses include both
undergraduate & post-
graduate courses
Figure 5.20: Industry Human Capital Requirements & Education
Courses near Chuping Area
For the proposed electrical and electronics (E&E) industry in
Lembah Chuping, only certain areas of the E&E value chain
are to be focused on25; which are wafer fabrication, substrate
manufacturing, integrated circuit (IC) design, and solar energy
components. Hence, the courses relevant to the areas above
are examined:
24 The courses related to halal industries were engineering (i.e. manufacturing, product design,
biotechnology), food technology, medical, bio and health sciences, chemistry; green materials were
engineering (i.e. materials, environmental); solar energy generation were engineering (E&E, electrical
systems, environmental). Refer below for E&E course criteria. Refer to appendix 8 for methodology and
sources of information.
25 Refer to the “Value Chain Support and Competition” Chapter for more information
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Chuping Valley Development Plan
35
No. of Courses Applicable to E&E 30
25
20
15
10
5
0 Wafer Fabrication Assembly, Packaging & Testing
Chip Design
UniMAP, Perlis USM, Penang UUM, Kedah * Courses include both
AIMST University, Kedah KDU College, Penang Segi College, Penang undergraduat e & post-
UiTM, Perlis PTPL College, Penang
graduate courses
Figure 5.21: Breakdown of E&E Relevant Educational Courses near Chuping
Area
Similarly, it was found that a range of courses were applicable
to the E&E sector human capital requirements (according to
the proposed value chain involvement). However, even with
the availability of courses offered at IHLs, the supply (IHLs)
and demand (firms) for human talent still should be matched
(i.e. matching human talent to human talent requirements). An
industrial park talent matching service to match IHLs to firms in
the park could help firms source human talent according to
needs, while expediting the flow of human talent into the
workforce. The Singapore Science Park offers a talent
matching service, which works together with recruitment firms
and IHLs to source human talent according to firm
specifications26.
...and the development of an internship programme could
also assist firms with the acquisition of human talent,
while providing industrial experience.
An internship programme can allow graduates/students to
obtain work experience in their industry of interest, while
allowing employers to identify potential future recruits (a
platform to assess the abilities of interns). The programme
gives industrial work experience, to both improve employability
of students, and better meet the industry requirements of
human talent27. Instead of merely matching human talent
supply and demand, an internship could also assist in bridging
26 Ascendas (firm managing Singapore Science Park) website, Singapore Science Park website
27 Undergraduate Business Internships and Career Success: Are They Related?, Jack Gault et al., Journal
of Marketing Education vol. 22 (2000)
June 2015
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Chuping Valley Development Plan
the skill mismatch28 between graduate education and on-the-
job requirements.
Universiti Utara M alaysia Universiti M alaya Perlis Universiti Sains M alaysia
(UUM ), Kedah (UniM AP) (USM ), Penang
Compulsory internships Compulsory internships Compulsory internships
for courses include: for courses include: for courses include:
i. M anagement i. Engineering i. Accounting
ii. Social Sciences ii. M anagement
iii. Computer Science
Figure 5.22: Internship Examples at Nearby IHLs
The Singapore Science Park collaborates with IHLs such as
the Nanyang Technological University (NTU) to assist in both
internships and job placements. For example, at NTU, an
internship can last up to 24 weeks, depending on the course
studied29. Lembah Chuping could have an industry-academia
collaborative unit, for the purposes of facilitating job
placements and internships.
Based on feedback obtained during the focus group session
conducted in Penang, locating potential collaborators is an
issue hindering internship collaborations. In being the
facilitator between firms and IHLs, a human talent
development park service could assist in locating potential
collaborators.
- This space intentionally left blank -
28 Skill mismatch can be defined as the mismatch between the skills obtained/learned by a person and the
skills required for a job; meaning a person might be under skilled for a job. (OECD skills website)
29 Ascendas website, Nanyang Technological University (NTU) website
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Chuping Valley Development Plan
Focus Group Scores 20
18
16 Locating Potential Internal Processes Others
14 Collaborators
12
10
8
6
4
2
0
Adequate financing
Figure 5.23: Main Challenges of Collaborative Efforts (KPMG
Focus Group Feedback)
Additionally, during the focus group30, firms stated that a lack
of industry experience was the greatest inhibitive factor related
to human capital. Education might not grant individuals enough
industry-specific knowledge31 (more theoretical than practical)
for their jobs. This problem could be assisted through
internship programmes (industry experience).
16
14
Focus Group Scores 12
10
8
6
4
2
0
Lack of industry Obtaining/ Skill Mismatch Language skills Others
experience Retaining Human
Talent
Figure 5.24: Human Capital Challenges (KPMG Focus Group
Feedback)
30 The focus group was held on the 4th of March 2015 in Penang. Attendees were given survey forms to fill
out; questions included topics such as industry supporting function requirements, human capital
requirements, and industry-academia collaborations. Focus group scores for each question were out of
three (3), with three (3) being the highest score (comparatively highest priority/ most important). Refer to
appendix 6 for more information
31 Focus group scores for each question were out of three (3), with three (3) being the highest score
(comparatively highest priority/ most
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Chuping Valley Development Plan
Vocational and technical education (VTE) can assist in
improving the skills of the workforce, from low-skilled to
semi-skilled
A form of semi-skilled training is vocational and technical
education (VTE); it prepares students for direct entry into
specific occupations32, where skills learnt are relatively more
practical and less theory-based (as opposed to universities).
An example of a successful VTE institute is the Institute of
Technical Education (ITE) in Singapore, which was developed
in 1992 and focuses solely on VTE courses. The ITE has
developed and collaborates with VTE institutes and other
institutions around the world to develop the depth and breadth
of the courses on offer.
Vocational and Technical Education (VTE): Institute of Technical Education (ITE),
Singapore
The Institute of Technical Education (ITE) in Singapore was established as a post-
secondary education institution in 1992, under the Ministry of Education33. The institute
offers vocational and technical education (VTE)34 covering a range of study areas;
about 101 courses.
Applied and
Health Sciences
(11)
Businesses and Institute of Electronicsand
Services (22) Technical Info-
Education
Design and M edia (ITE):Areas of communications
(12) Technology (20)
Study
Engineering (30)
Hospitality (6)
Source: Overview of Institute of Technical Education, ITE website
Figure 5.25: Courses Offered by Institute of Technical Education (Singapore)
The purpose of the ITE was to shift segments of the low-skilled population towards
higher skills, by offering the option of being trained into semi-skilled labour (vocational
32 OECD stats website
33 Institute of Technical Education (ITE) website
34 The education of the ITE is focused at about: 70% on practical training, 30% on theory (Toward a Better
Future: Education and Training for Economic Development in Singapore since 1965, Lee Sing Kong et
al., World Bank (2008))
June 2015
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Chuping Valley Development Plan
training). The goal was to enable the work force to shift towards a higher skill level
while improving the employability of individuals35.
Source: Google maps, ITE website, KPMG analysis
Figure 5.26: Location of the Institute of Technical Education (ITE)
The ITE headquarters and one of its campuses36 are located in relatively close
proximity to the Singapore Science Park. In terms of industry-ITE collaborations,
the Traineeship programme was set up to improve industrial experience and
employability of students (similar to internship programmes). Benefits to firms are
the steady stream of labour whose skills could be moulded according to the
required skills of firms.
Additionally, the ITE launched the Certified On-the-job Training Centre (COJTC);
firms tailor-make their in-house training with the assistance of the COJTC (the
COJTC offers advisory support and guidance). This initiative aims at assisting the
human capital development of the existing workforce. In this way, the workforce
could be trained without necessarily needing the direct involvement of the
COJTC37.
In the development of the course curriculum (in terms of both subjects on offer and
covered information), the ITE collaborates with other VTE institutes, government
agencies, polytechnics and universities around the world. An example of
curriculum development is the inclusion of environmental sustainability in all
courses38.
This promotes constant improvements through knowledge sharing practices.
Through collaborative efforts with firms and foreign institutions, the ITE has
developed into a respected and developed VTE institute that focuses on the
development of semi-skilled labour39.
35 Toward a Better Future: Education and Training for Economic Development in Singapore since 1965,
Lee Sing Kong et al., World Bank (2008)
36 There are 3 ITE campuses located around Singapore
37 ITE website
38 Environmental sustainability refers to three (3) areas: Awareness of Environmental Issues &
Development; Responsible Environmental Practices; Ready & Competent for Green Economy (Eco ITE
website)
39 Meaning training of skilled labour is left to be conducted by Singapore universities instead, such as the
National University of Singapore (NUS)
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Chuping Valley Development Plan
Figure 5.27: International Collaborators of the ITE
Locating a VTE institute in the Lembah Chuping can assist
in improving the skill-level of the workforce in the area,
while meeting firm demand for semi-skilled labour
A VTE institute in Lembah Chuping could be the source of
semi-skilled labour for industries in the vicinity. As with the ITE
in Singapore, the VTE institute could eventually provide both
training to new students, and also guide firms in training their
existing workforce. This could assist in shifting the low-skilled
workforce in the area towards being semiskilled and improve
income levels.
As seen from the average income levels of the domestic
manufacturing sector, higher skilled labour earn considerably
more then unskilled labour. If the VTE institute could shift a
person from low-skilled to semi-skilled, the person’s income
could increase almost two (2) times.
RM16,691
RM31,630
RM 89,231
Skilled Labour (65% )
Semi-skilled Labour (23% )
Unskilled Labour (12% )
Source: Report on the Survey of Manufacturing Industries 2012, DOSM
Figure 5.28: Manufacturing Sector per Annum Incomes by Skill
Level
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Chuping Valley Development Plan
Hence, it is proposed to have a VTE institute in Lembah
Chuping. In line with the Green theme of the park, the courses
can be moulded to include an element of Green
sustainability40. This can include vocational training in
addressing or adhering to Green sustainability; an example of
vocational training with a Green theme being the Grid-
Connected Photovoltaic (PV) Systems Design Course offered
by SEDA41. The training covers both theoretical and practical
sessions (design of PV systems and related equipment, PV
system requirements). As is the case with new technologies
such as Green Technologies, the handling of it may be more
unfamiliar than with conventional techniques42. In this way, the
VTE institute could equip graduates with skills that are in
scarce supply (more specialised), and relevant to Lembah
Chuping.
5.2.4 Other Supporting Functions
A business matching and advisory unit in the park could
assist in linking industries in Lembah Chuping with
surrounding industrial estates to obtain value chain
support
According to the Porter Diamond model, it is essential that an
ecosystem (or cluster) of firms/ institutions be supported by a
range of support industries43; this can be in terms of support
services, or value chain linkages. Activities in surrounding
industrial parks may complement the industries in Lembah
Chuping44; a business matching service may facilitate such
links in the value chain.
Hence, it is suggested that a business matching and advisory
service be set up for the Lembah Chuping. As this may require
a developed level of expertise and a developed network of
contacts to assist firms, this should be developed in later
phases45. Of note, in our benchmarked parks, a business
advisory service is provided to assist firms.
40 Green industry is defined by the United Nations Industrial Development Organisation (Unido) as an
environmentally sustainable method of growth, possibly promoted through public investments and
policies; for firms it means more resource efficient productivity and a change in production processes.
(UNIDO Website)
41 The length of the training is 7 days and costs about RM5,500. Sustainable Energy Development
Authority (SEDA) website
42 The Risks of Green Buildings: Why Moisture and Mold Problems are Likely, Florida Engineering Society
Journal (2008), J David Odom et al.
43 Clusters and the New Economics of Competition, Harvard Business Review (HBR) 1998, Michael E.
Porter
44 See Chapter “Value Chain Support and Competition: of this report for more detail
45 A point to note is that different firms will have different needs, based on type of industry and size. As
such, different skills for advisory, in terms of range and depth will be needed. This is where the network
of contacts would be useful; connecting the demand to the supply of knowledge.
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Chuping Valley Development Plan
Business Matching and Advisory Services: Benchmarked Industrial Parks
1. Singapore Science Park
Business matching and business advisory
The network of contacts of the park manager is used for a few purposes; linking
firms to other institutions that can provide value chain support, and providing
business advisory solutions across a range of applications46.
2. Eco World Styria
Business advisory47
This support service includes identifying partners for innovation advancements;
consulting for business strategy, and methods of funding (e.g. choosing
investors)
3. Hsinchu Science and Industrial Park
Business advisory for startups and firm operations
Provides startup assistance and operations support, inclusive of advice for
audits, certifications (for equipment and tax deductions), logistics and
manpower sourcing.
All three industrial parks offer services to assist in the development of industries, with some
services for more developed firms (e.g. innovation support and marketing), while others
would be more relevant for smaller, startup firms (e.g. licensing and regulatory adherence
support). The support provided also ranges across different stages along the value chain;
from R&D to logistics.
There also may be a need for further utilities development
in the future, in the form of power supply and waste-to-
resource facilities
For benchmarked industrial parks without an internal power
plant, it was found that the distance from the parks to an
external power plant was about 23.5km on average. In Perlis,
the nearest power plant to Lembah Chuping is in Simpang
Empat, Perlis; approximately 34.9km away48. This is above the
average for parks without an internal power plant. While there
are plans for using solar energy as an alternative power source
for the park, as it is envisaged that the energy requirements of
the park may substantially increase with growth.
46 This includes models for business viability and sustainability across a range of applications, such as for
startups, and innovations for more established firms. Assistance is from both in-house consultants and
from their contact network. ( iAxil website)
47 Handbook for Cluster Optimisation, Cluster and Network Cooperation for Business Success in Central
Europe (CNCB) (2013)
48 Teknologi Tenaga Perlis Consortium (TTPC) website, KPMG analysis
June 2015
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Chuping Valley Development Plan
40
Approximate Disance (km) from Park to External Pow er Plant 35
34.9
33.4
30
29.5 29.1 Average distance: 23.5km
25
25.3
20
15
10
5 6.3
0
Kulim Hi-Tech Park Hsinchu Science and Singapore Science Techpark @Enstek Eco World Styria Chuping Green Valley
(KHTP) Industrial Park Park
Available pow er plant in park No pow er plant in park Chuping Green Valley Average distance of external pow er plant
to industrial park (no pow er plant in park)
No pow er plant in park
Figure 5.29: Distance of External Power Plants to Benchmarked
Industrial Parks
In Perlis, water treatment plant (WTP) capacities are at 289
million litres a day (MLD), with production at 218 MLD;
meaning a reserve margin of 24.5%49. This is above the
average in Malaysia of about 17.6%, indicating the adequacy
of current WTP facilities in meeting state water treatment
requirements.
However, with the development of new industries in Lembah
Chuping, additional WTP capacity (expansion/new WTP) might
be required to cater for industry requirements; in addition to
possible inflow of employees into the state.
Table 5.1: Water Treatment Plant Capacities and Production in Malaysia (2013)
Water Treatment Plants (WTPs)
States No. of WTPs Capacity (MLD) Production (MLD) Reserve Margin (%)
1497 988 34.0
P. Pinang 10 1789 1215 32.1
906 638 29.5
Perak 46
289 218 24.5
Terengganu 13 1986 1508 24.1
1529 1165 23.8
Perlis 5 556 487 12.5
1286 1132 12.0
Johor 44 1300 1065 18.0
480 430 10.3
Sarawak 85 793 736 7.2
4606 4563 0.9
Melaka 8 1300 1326 0.0
Average 17.6
Sabah 67
Pahang 80
Kelantan 32
N. Sembilan 22
Selangor 34
Kedah 36
Source: Malaysian Water Industry Guide (MWIG) 2014, The Malaysian Water Association
(MWA)
49 The reserve margin is the difference between maximum capacity of the water treatment plants, and the
current production.
June 2015
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Chuping Valley Development Plan
Currently, there are 10 acres allocated in Lembah Chuping for
a water treatment plant. A point to note is that there can be
different grades (classes) of recycled (treated) water; each
grade with different possible functions (due to level of water
pollution/cleanliness)50.
Depending on the level of technology used and the scale of the
WTP, the treated water of the park can eventually shift towards
a cleaner output with possibly more functions. In this way, the
WTP can shift towards being more than just waste treatment;
towards a waste-to-resource function51.
Water Treatment Process: Hsinchu Science Park
Water treatment in the Hsinchu Science Park undergoes two (2) levels of
filtration/treatment:
i) Wastewater discharged by firms: Must meet a standard set by the park
administration52 before drained into the sewers.
ii) Water treatment plant in the park (about 165 MLD)53: Goes through multiple
levels of treatment54
Physical filtration
Biological treatment (use of microorganisms)
Chemical treatment
This dual method of treating water assists in ensuring that discharged water will be of a
certain standard; limiting pollution to the environment. Also, a portion of the costs is
passed onto firms, rather than being absorbed by the park administration. This provides an
incentive for firms to limit the quality of water from production processes; more water
treatment is required if the water by-product is more polluted.
As a result of water treatment, product of the processes (waste-to-resource) are55:
i) Recycled water (industrial uses)
ii) Recycled sludge, which can be used as raw materials in the manufacture of bricks
The importance of utilities was further validated during the
focus group held in Penang. Firms stated that infrastructure
was a key supporting function required in the operations. A
stable utility supply was the most important factor, followed by
transport, telecom, and waste management56.
50 The definition of these water grades (classes) will differ based on institution, an example being the
Environmental Protection Authority (EPA) of Victoria, Australia; classes range from A to D. Class A has a
range of uses, including watering crops and toilet-flushing. Moving down the classes means the recycled
water has less allowed functions (more polluted/ less treated). (Guidelines for Environmental
Management: Use of Reclaimed Water, 2003)
51 Dependent on the capabilities of the industrial park, and its development.
52 Regulation for the Use and Management of Wastewater Treatment and Sewage System in the Science-
based Industrial Park, Hsinchu Science Park Bureau, Ministry of Science and Technology Taiwan (2010)
53 Hsinchu Science Park Bureau website
54 Emerging Organic Pollutants in Waste Waters and Sludge (vol2), Damia Bercelo (2005)
55 Hsinchu Science Park Bureau website
56 A point to note is that a score of zero (0) doesn’t imply low importance, just relatively less importance
compared to the other potential answers.
June 2015
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Chuping Valley Development Plan
Focus Group Scores 8
7
6
5
4
3
2
1
0
Utility Supply Transport Telecom Waste
Infrastructure Infrastructure Management
Figure 5.30: Industry Infrastructure Requirements (KPMG Focus
Group Feedback)
5.3 Value Chain Support and Competition
In addition to developing park-specific supporting functions to enable
efficient operations within Lembah Chuping, mutually beneficial
relationships can also be established between the newly proposed
industries and surrounding establishments in Perlis and Kedah;
namely companies within surrounding industrial estates. This will
facilitate both the provision of industry support and the establishment
of potential markets for goods produced in Lembah Chuping.
The Significance of Proximity
In today's economy, a total-cost perspective has become increasingly
more important in supply chain management, as compared to
choosing a manufacturing location solely based on cost (in terms of
labour and raw materials)57 — especially since increasing energy
costs have pushed up transportation, logistics, and distribution
expenses58. This has given rise to the concept of “profitable proximity”-
a comprehensive approach to procurement that requires companies to
consider total supply chain costs and lead times when determining
suppliers. Currently, Malaysia is among the nations with the highest
logistics costs (10.7% of GDP) (Table 5.2). These costs may
potentially be minimising the gains made from traditional low-cost
value chain strategies59, hence increasing the importance of having
suppliers within close proximity.
Table 5.2: Global Logistics Costs as a Percentage of GDP (2012-2013)
Country Logistics Cost (as a % of GDP)
China 18.0
India 13.0
Mexico 12.0
57 http://www.supplychainquarterly.com/topics/Global/scq200803nearshore/
58 http://talkinglogistics.com/2015/02/18/financial-dimension-supply-chain-visibility-episode-highlights/
59 Leveraging value chain support elsewhere as a result of lower costs; labour, materials, compliance costs
June 2015
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Chuping Valley Development Plan
Malaysia 10.7
Thailand 10.7
Vietnam 10.7
Indonesia 10.7
Australia 10.5
Spain 9.7
Italy 9.7
France 9.5
Canada 9.0
South Korea 9.0
Taiwan 9.0
Singapore 8.5
Japan 8.5
UK 8.3
US 8.3
Source: Armstrong & Associates via World Bank, IMF World Economic Outlook
Furthermore, a recent study done by electronic component specialist
TTI Market Eye shows that the average lead times60 for passive E&E
component61 manufacturing have decreased globally over the past 4
years (Figure 5.31); which could be in response to increased product
demand putting downward pressure on lead times for finished E&E
goods. This may indicate that E&E manufacturers require components
to be delivered for end-product assembly in an increasingly timely
manner.
Source: MarketEYE
Figure 5.31: Average Global Lead Times for Passive Electronic Components
(2010-2014)
The trend above indicates that profitable sources of value chain
support for certain technology-based industries may be from
organisations within close proximity to a firm’s operations; given that
support in the vicinity will require less expenditure on logistics, and
facilitate smaller lead times. The fact that various technology and
60 Defined as the time elapsed between the initiation and completion of a production process
61 Those devices or components which store or maintain Energy in the form of Voltage or Current
(Electricaltechnology.org)
June 2015
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Chuping Valley Development Plan
consumer goods companies have already adopted practices in line
with profitable proximity indicates that this concept may be relevant to
Lembah Chuping 62.
Overview of Surrounding Industrial Parks in Malaysia
The following industrial parks have been chosen based on two (2)
criteria. Firstly, as explained above, they are within close proximity of
Lembah Chuping (approximately within a 2 hour drive). Secondly, their
business activities serve to complement Lembah Chuping’s proposed
industries63. Each park’s complementary nature will be evaluated
based on the number of firms available the park to provide value chain
support to the industries proposed. Other supporting factors that are
considered are capabilities of these firms, in addition to the extent of
value chain support required based on each industry’s requirements.
The industrial parks being considered in this Chapter are (Figure
5.32):
Kulim Hi-Tech Park
Bukit Kayu Hitam
Sungai Petani Industrial Estate
Kuala Ketil
Bayan Lepas Free Industrial Zone
Prai Industrial Estate
Figure 5.32: Map of Complementary Industrial Estates
62 http://www.supplychainquarterly.com/topics/Global/scq200803nearshore/
63 Value chain support for E&E (Semiconductor, LED and Solar Component Manufacturing), Green
Materials, Halal Manufacturing and Solar Energy Generation
June 2015
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Chuping Valley Development Plan
5.3.1 Green Materials
Figure 5.33: Green Materials Manufacturing Value Chain
For Lembah Chuping, the products for Green materials include
natural composite fibres and renewable polymers; high-
strength filaments produced by refining, blending, and
compounding kenaf and vegetable oils. This Chapter will focus
on the midstream applications of these materials within the
construction and automotive sectors, and surrounding
industrial estates will be evaluated based on their ability to
provide value chain support (Figure 5.33). For the purpose of
this Chapter, the Green materials value chain support is
defined as follows (Table 5.3):
Table 5.3: Value Chain Definition - Green Materials Manufacturing
Stage of Value Chain Description
R&D Research into innovative processes and
technologies using plant-based materials
Procurement of Raw Materials Supply/distribution of raw plant-based material
(Kenaf, Jute, Hemp etc)
Inbound Logistics Receiving, warehousing of raw materials,
distribution of materials to manufacturing
facilities
Material Processing Processing of raw material into a useful form
for manufacturing
Manufacturing & Assembly
Outbound Logistics Production of finished goods
Sales, Marketing & Warehousing and distribution of finished goods
Distribution
After-Sale Services Wholesale/retail distribution, and installation of
finished goods
Source: US Department of Energy
Replacement/maintenance of finished goods
June 2015
Page 5-30
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