Kedah's Industrial Boom: The Rise of Malaysia's Northern Manufacturing Powerhouse

Kedah, once overshadowed by Penang's established industrial zones, is emerging as Malaysia's next big investment destination. Fueled by massive foreign investments, strategic infrastructure projects, and competitive land prices, the state is transforming into a key player in Malaysia's industrial landscape.

Why Kedah? The Industrial Surge in 2024

1. Record-Breaking Investments

• RM34 billion approved investments in 2024, making Kedah the 3rd highest recipient after Selangor and Kuala Lumpur.

• Top sectors: Semiconductors, green tech, and rubber-based industries.

• Major investors: Infineon (Germany), éolane (France), Zhuhai CosMX (China).

2. Kulim Hi-Tech Park: The Crown Jewel

• World’s largest silicon carbide (SiC) power fab (Infineon’s RM30 billion plant).

• Phase 2 expansion: Additional RM5 billion investment expected by 2026.

• New players: Schott (glass tech) and PGF Capital (insulation manufacturing).

3. Kedah Rubber City: Diversifying Beyond Tech

• Expanded to include polymer, renewable energy, and machinery clusters.

• Targets RM10 billion investments by 2030.

Infrastructure: The Game Changer

1. Proposed Kulim International Airport

• Expected to boost aerospace and high-value logistics.

• Will enhance connectivity to Penang and Thailand’s Southern Corridor.

2. Northern Corridor Economic Region (NCER) Initiatives

• Dana Usahawan (DU@NCER): Funds for local industrial SMEs.

• NTEP: Upskilling programs to address labor shortages.

Industrial Property Market Trends

Metric	2023	2024	Change
Land Transactions	48 deals	58 deals	+20.8%
Average Price (psf)	RM25–RM35	RM30–RM45	+25%
Factory Rentals	RM1.80–RM2.50	RM2.20–RM3.00	+20%

Hotspots:

• Kulim & Bukit Kayu Hitam: Preferred for export-focused manufacturing.

• Sungai Petani: Affordable land for SMEs.

Challenges to Watch

1. Dependency on Penang

   • Many Kedah factories serve as suppliers to Penang’s E&E giants—any slowdown there could ripple into Kedah.

2. Infrastructure Delays

   • Kulim Airport’s approval is still pending. Without it, logistics remain reliant on Penang’s seaport.

3. Talent Drain

   • Skilled workers often commute to Penang for higher wages.

2025 Outlook: What’s Next?

1. More FDI Inflows:

   • Germany, China, and Japan are eyeing Kedah for EV components and advanced materials.

2. Industrial Land Price Growth (5–10%)

   • Limited prime land in Kulim will push prices up.

3. Risk: Global Trade Wars

   • If Trump imposes tariffs on Malaysia’s exports, Kedah’s semiconductor-heavy economy could suffer.

Conclusion: Kedah’s Time to Shine

Kedah is no longer just Penang’s "little brother." With strategic investments, improving infrastructure, and state-backed incentives, it’s set to become a self-sustaining industrial hub. Investors should act fast—land prices won’t stay low forever.

Key Takeaway:

• Buy: Industrial land in Kulim and Bukit Kayu Hitam.

• Watch: Kulim Airport’s approval (potential 2025 catalyst).

• Avoid: Older, non-certified factories (ESG compliance is rising).

Sources: MIDA, NCIA, Henry Butcher Research, NAPIC.