Kedah vs. Penang: The Battle for Malaysia’s Industrial Supremacy

For decades, Penang has been Malaysia’s undisputed industrial king, home to global semiconductor giants and a thriving tech ecosystem. But now, Kedah is rising fast—with cheaper land, aggressive incentives, and strategic mega-projects. Which state is the better bet for industrial investors in 2025?

Head-to-Head: Key Industrial Metrics

Factor	Penang	Kedah	Who Wins?
Land Costs (psf)	RM80–RM150 (Bayan Lepas)	RM30–RM45 (Kulim)	Kedah (50% cheaper)
Average Factory Rent (psf/month)	RM3.50–RM5.00	RM2.20–RM3.00	Kedah
Skilled Labor Pool	Deep (30+ years of E&E ecosystem)	Growing (relies on Penang talent)	Penang
Major Investors	Intel, Bosch, Micron	Infineon, Zhuhai CosMX, Schott	Tie
Infrastructure	Penang Port, Airport, LRT (2025)	Kulim Airport (proposed)	Penang (for now)
Government Incentives	Pioneer Status, R&D tax breaks	NCER grants, cheaper utilities	Kedah (cost edge)

Penang’s Strengths: Why It Still Leads

1. Unmatched Semiconductor Cluster

• Produces 15% of global semiconductor exports (MIDA 2024).

• Home to Intel’s largest overseas assembly plant and Bosch’s AIoT hub.

2. Better Infrastructure

• Penang Port handles 1.8M TEUs annually (vs. Kedah’s reliance on Penang/Butterworth).

• Penang International Airport expansion (2025) will boost cargo capacity.

3. Talent & Ecosystem

• 50,000+ skilled engineers in Bayan Lepas.

• Penang Skills Development Centre (PSDC) trains 5,000 tech workers yearly.

Kedah’s Advantages: The Challenger’s Edge

1. Land & Operating Cost Savings

• Factory rentals 40% cheaper than Penang.

• Electricity costs 15% lower under NCER incentives.

2. Greenfield Opportunities

• Kulim Hi-Tech Park Phase 2: 500 acres of new industrial land.

• No congestion (vs. Penang’s traffic-clogged Bayan Lepas).

3. Proximity to Thailand

• Bukit Kayu Hitam offers easy access to Thailand’s Southern Corridor (EV/auto parts demand).

Case Study: Infineon’s Choice

• Penang (1990s): Built its first Malaysian plant in Bayan Lepas for the talent pool.

• Kedah (2024): Invested RM30 billion in Kulim for land affordability and expansion space.

Lesson: Penang for R&D, Kedah for large-scale production.

2025 Predictions: Where to Invest?

• Choose Penang If You Need:

  • High-tech R&D (semiconductors, medtech).

  • Seaport/airport logistics.

  • Skilled engineers.

• Choose Kedah If You Want:

  • Cost savings (land, labor, utilities).

  • Green energy (Kedah Rubber City’s solar focus).

  • Future-proofing (Kulim Airport, EV supply chains).

The Verdict

Penang remains the gold standard, but Kedah is the value play. For manufacturers weighing costs vs. ecosystem depth, the smart move is:

• Headquarters/R&D in Penang.

• Production/warehousing in Kedah.

  
  

Watch Out For:

• Kulim Airport approval (could shift the balance by 2026).

• Penang’s Silicon Design Initiative (may reclaim high-value design work).

Which side are you on? Let us know if you’d like a deeper dive into tax incentives or success stories like Infineon’s dual-state strategy!

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