Penang: a new industrial and logistics hotspot

Beyond its celebrated cultural heritage, Penang is emerging as Malaysia’s most dynamic hub for industrial and logistics activity. Strategically located along the Straits of Malacca and seamlessly connected to Malaysia’s national highway network, Penang offers direct port access via Penang Port and lies close to the Bayan Lepas International Airport. These connections reduce friction in both export and import flows, attracting supply chain operators, contract manufacturers, and multinational logistics companies. Recently, the “China Plus One” strategy adopted by global corporates has significantly benefitted Penang, as some companies diversify their manufacturing and sourcing operations beyond China to include at least one other country. This is especially the case in Electrical & Electronics (E&E), medical instruments, and precision engineering sectors. 

Penang’s industrial ecosystem has matured rapidly since the 1970s. The Penang Development Corporation (PDC) drives the planning and management of integrated industrial parks with readily available infrastructure. These industrial developments have become a magnet for high-tech investments, attracting global names. The park’s modern infrastructure and layout, focused on smart industry standards, set a benchmark for industrial development in Malaysia. The growing shift in industrial supply chains has intensified logistics requirements in Penang, driving demand for modern warehousing and distribution hubs. This is reflected in the substantial rental growth of the past few years, surpassing that of Kuala Lumpur.

Figure 1 – Penang industrial and logistics average prime rental trend

Source : JLL Research, 1Q2025

Throughout the years, Penang has consistently ranked among Malaysia’s top states for approved manufacturing investments, especially in the Electrical and Electronics (E&E) sector. This region is well-known for housing global semiconductor major players, including Intel Corporation, Hewlett-Packard, Osram, TF AMD Microelectronics. According to Invest Penang, the state recorded approved manufacturing investment worth RM17.3 billion in 2024. This is driven by the fact that more global third-party logistics (3PL) providers, cold-chain operators, and e-fulfilment specialists are establishing regional hubs in Penang, drawn by its growing consumption base and export orientation.

The federal initiative, Northern Corridor Economic Region (NCER), aims to accelerate northwestern Malaysia’s economic growth. In 2024, through close collaboration with the Penang government and the Malaysia Investment Development Authority (MIDA), Penang recorded realised investment of RM42.76 billion.

The prime logistics sector in Penang has experienced an upswing, propelled by the China Plus One strategy, alongside the growing trend of manufacturers leveraging 3PL operators to optimise their supply chains and enhance operational efficiency. This places unprecedented pressure on last-mile logistics, warehousing and smart inventory management, where Penang is scaling up rapidly. To accommodate this surge, the local government plans to expand the land bank by 3,000 acres, including logistics and distribution parks near the Penang International Airport and in the Batu Kawan area, between 2024 to 2028. Government incentives for automation, smart manufacturing, and digital adoption, such as Automated Storage and Retrieval Systems (ASRS) are being incentivised to meet the demand for efficient, high-volume handling.

Looking ahead, Penang is not merely reacting to global trends, but shaping them. With a supportive ecosystem, government intervention, future-proof industrial frameworks, and rising global visibility, Penang is poised to become the beating heart of Malaysia’s industrial and logistics economy.