Penang, the Malaysian State That Is Chonburi’s Economic Twin
By Longtunman
When people talk about Penang,
many may think of food, street art, and mountains.
When people talk about Chonburi,
many may think of Bang Saen, Pattaya, Koh Larn, Koh Sichang, and Sattahip.
Just from this, Penang and Chonburi seem to have almost nothing in common.
They are also tourist destinations with completely different styles.
But did you know that from an economic perspective,
the two are almost like twin cities ?
Their economies are similar in size.
And they also generate money from similar economic engines.
So in what ways is Penang’s economy similar to Chonburi’s ?
Longtunman will explain.
Actually, Penang and Chonburi have the same economic model.
Both have two main engines behind their growth.
The first engine comes from the service sector,
especially tourism, which plays a key role.
On Penang’s side, around 48% of its economy comes from the service sector.
And the main hero is, of course, tourism.
Each year, Penang is able to attract a large number of Malaysian tourists and foreign tourists.
That is because Penang’s strength lies in its perfect mix of Indian, Chinese, and Malay cultures.
This can be seen in everything from food
to architecture that has a very international character.
This is a legacy passed down from the British colonial period,
when Penang was developed into an international port city.
As a result, its buildings and food became magnets
that continue to attract tourists to visit and experience the city.
On Chonburi’s side, around 45% of its economy comes from the service sector.
It also has the same main hero that continuously attracts both money and tourists.
But Chonburi is different from Penang.
While Penang uses cultural heritage as its selling point,
Chonburi uses natural heritage, especially the sea,
as its main tourism selling point instead.
This story goes back to the Cold War period,
when American soldiers came to relax in the Pattaya area.
That gradually made Chonburi more well known
as a world-class resort destination.
But both Penang and Chonburi would not be able to build trillion-baht economies if they relied only on tourism.
The thing that helps both places generate much more money comes from the second engine: the industrial sector.
Today, Penang earns around 46% of its income from the industrial sector.
Meanwhile, Chonburi earns around 55% of its income from the industrial sector.
Many people may not know that Penang has a free industrial zone called Bayan Lepas.
It is located in the southern part of the island, next to Penang International Airport.
This industrial zone has been promoted since 1972
to attract foreign electronics companies to set up manufacturing bases in Penang.
What happened after that was not just the arrival of ordinary electronics companies.
Instead, world-class chip companies such as Intel started setting up factories in Penang.
At a time when the chip industry, the brain behind many of the world’s electronic devices, had not yet grown to today’s scale,
Penang was already able to get on board with this industry from the beginning.
As a result, Penang today has become home to many world-class chip companies,
such as Micron Technology and Texas Instruments from the United States, as well as Infineon Technologies from Germany.
The arrival of global companies also pulled in local companies that provide chip testing services.
This created a domino effect that has continued to generate another layer of growth for Penang.
Now let’s return to Chonburi.
In fact, the starting point of its industrial sector was quite similar to Penang’s.
Chonburi became part of a special economic development area, or the EEC, in 1980, similar to what Penang had done.
This was not too far from the beginning of Penang’s Bayan Lepas industrial zone, which started in 1972.
But Chonburi’s industry is different from Penang’s.
Today, Chonburi has become a manufacturing base for cars and auto parts, consumer goods, and electrical appliances.
This came from an important turning point in 1985.
Japan was affected by the Plaza Accord, which pushed up production costs inside Japan.
As a result, Japanese companies had to look for production bases outside the country.
In the end, many of them chose Thailand, especially for the auto parts and automobile industries.
This turned Chonburi into a production base for many Japanese car manufacturers.
Then came the development of Laem Chabang Port, which opened in 1991.
This further pushed Chonburi’s industrial sector to keep growing from that point onward.
Today, both Penang and Chonburi have developed their own industrial zones.
This has helped push their economies past the trillion-baht level.
Currently, Penang’s economy is worth around 1 trillion baht.
Meanwhile, Chonburi’s economy is worth around 1.2 trillion baht.
Both generate income from their twin engines: tourism and industry.
These two engines continue to drive growth for both Penang and Chonburi.
However, the real challenge lies ahead.
While Penang has been able to ride the growth wave of the global chip industry, Chonburi is facing a major new challenge in its industrial sector.
This includes the automobile industry, which is now transitioning toward electric vehicles, as well as other manufacturing industries that are facing growing competition from neighboring countries such as Vietnam.
This will likely become an important question for Chonburi :
How can it create a new ticket for itself so that it can ride the next wave of global growth,
just like its economic twin, Penang, is doing today ?