Malaysia sees solar sector recharging economy

Country is third-largest maker of solar parts, with 11% of global market
Carolyn Hong, Straits Times 18 Sep 10;

KUALA LUMPUR: Amid the gloom of bad news on the stagnating Malaysian economy, the solar industry has become an unexpected bright spark.

In the last three years, foreign investments in this sector totalled RM12.3 billion (S$5 billion) and created 10,000 new jobs, Deputy Minister of International Trade and Industry Mukhriz Mahathir said.

'There is a lot of potential in this area as only a few countries have the manufacturing capacity. It is truly a sunrise industry,' he told The Straits Times.

He said that of the world's top six solar equipment manufacturers, three have set up plants in Malaysia.

'That was an unexpected achievement,' he said, adding that Malaysia had capitalised on its existing strengths in semiconductors.

Malaysia has identified the solar industry as a new growth sector following a growing global demand for clean sources of energy, rising costs of conventional fuel and technological improvements that helped popularise solar energy.

It is among the sectors earmarked to pull the manufacturing sector to a higher level, as part of Malaysia's drive to double incomes in 10 years and propel the country into the ranks of high-income nations.

Malaysia is now the third-largest producer of solar components, after China and Germany. It holds 11 per cent of the global market share.

This sector is part of the new economic roadmap to be unveiled by the government next week. The roadmap has identified 12 economic areas of focus, and 131 specific projects that can drive new economic growth.

The government is attempting to restructure an economy that has stagnated in recent years as Malaysia's low-cost model lost out to cheaper destinations.

Experts have said that Malaysia's headstart in manufacturing 25 years ago had failed to progress beyond the assembly plant process. It did not move into product development or upstream into building components, as it should have.

The United Nations' World Investment Report, released recently, shows that foreign direct investment fell by 80 per cent last year from the previous year. The figures have since picked up for the first half of this year.

Mr Mukhriz said a different approach is being taken now, as evident with the solar industry which was targeted by the government.

Foreign manufacturers are being encouraged to venture beyond the assembly process, and to collaborate with local universities on research and development.

The big global solar companies in Malaysia include First Solar, Q-Cells and SunPower. These firms are based in the United States, Norway and Germany, and their plants are in Kedah, Selangor, Malacca and Sarawak.

He said three new players have moved upstream to set up plants in material and wafer fabrication, and one has set up collaboration with a local university.

'It's a new technology, and the kind that we want,' he said.