Penang Development Corporation Projects Back State Plan as Silicon Island's First Factory Targets 2028

The first factory at Silicon Island's 700-acre Green Tech Park in Penang, Malaysia, is expected to begin operations in 2028, with the sale of the first industrial plots scheduled to start as early as the first quarter of 2027. Chief Minister Chow Kon Yeow disclosed the timeline on Oct. 30, 2026, when he tabled the Penang Budget 2027 at the State Legislative Assembly. The announcement also outlined a pipeline of industrial, logistics and housing projects that the Penang Development Corporation (PDC) will drive.

Silicon Island Green Tech Park Timeline

Chow said the Silicon Island development would focus on attracting high-value investments in semiconductors, automated test equipment, integrated circuit (IC) design and medical devices. He said the aim is to position Penang as a green, smart and sustainable technology hub.

Reclamation works on Silicon Island had reached 500 acres as of October 2026, representing 39.4% of the 1,270-acre Phase One development. A 64.85-acre site was prepared in May 2026 for the Mutiara Line Light Rail Transit (LRT) depot.

The Green Tech Park covers about 700 acres, equivalent to roughly 30.5 million square feet, and is described as a 99-year leasehold industrial development. Construction is scheduled to begin in 2027. Phase One of the park is planned to use 100% renewable energy and include dual sewerage-treatment infrastructure. The overall Silicon Island project spans approximately 2,300 acres, or about 930.8 hectares.

"Silicon Island is not merely about providing new industrial land, but represents a long-term investment that will generate economic benefits for the local economy," Chow said.

As of Sept. 30, 2026, a total of 4,531 contracts worth RM1.92 billion had been awarded to local contractors and businesses, Chow said. The figure reflects the project's current economic contribution and is not equivalent to committed industrial investment or completed factory value.

Penang Development Corporation's Strategic Projects

The Penang Development Corporation will drive several strategic developments, according to the state's budget address. These include the Penang International Logistics Aeropark (PILA), the 1,578-acre Seberang Perai Tengah New Corridor, Batu Kawan Industrial Park 3 and Bandar Cassia Technology Park. Batu Kawan Industrial Park 2 in Byram is also being planned.

These projects will be complemented by Medi-City, Cassia Gardens workers' accommodation and the Bandar Cassia Reservoir Project. Rumah Bakat Madani developments in Bandar Cassia, Batu Kawan, and Lorong Tenggiri, Seberang Jaya, are intended to provide accommodation for professionals and skilled industrial workers.

In the halal sector, Penang Halal International and PDC have developed the Penang Halal Industrial Park at Penang Science Park and Penang Science Park (North), Bukit Minyak. Chow announced RM1.5 million for 2027 to promote the halal industry and attract domestic and international investment, particularly in pharmaceuticals, cosmetics and medical devices.

Semiconductor and Technology Initiatives

Chow said the state would continue strengthening high-value industries, including electrical and electronics, semiconductors, IC design, automation, digital technology and medical devices.

The Malaysia Automation, Test and Equipment (ATE) Campus in Batu Kawan is led by InvestPenang in collaboration with the Economy Ministry. The federal government has allocated RM25 million for the project, while the state is contributing 10 acres of industrial land worth approximately RM40 million.

Through Penang Silicon Design @5KM+, seven local companies have been approved for incubation incentives. The state's chip design ecosystem has grown from approximately 25 to more than 50 companies. The NCER Technology Innovation Centre (NTIC) in Bayan Lepas has trained 180 Penang participants as of September 2026, with eight companies in its Centre of Excellence initiative and six others matched within the industrial value chain.

Chow also highlighted the proposed Penang Technology Finance Centre (PTFC), supported by a RM100 million strategic investment partnership between the federal and state governments through Khazanah Nasional and InvestPenang. The state submitted a White Paper to the Finance Ministry on Sept. 23 and will submit its strategic and action plans by November 2026. It has requested that the Prime Minister expedite a joint federal-state working committee to coordinate policies, financing, incentives and investment facilitation.

"The success of PTFC must also translate into opportunities for young Malaysians to build their future in their own country, ensuring that local talent has reasons and opportunities to remain, work and grow in Malaysia," Chow said.

Penang Industrial Market Context

Penang had approximately 10,055 industrial property units in the first quarter of 2026, up from 9,974 units in 2025, while identified future supply was approximately 158 units, concentrated in Seberang Perai. The industrial market remains supported by manufacturing demand but is becoming more selective amid economic uncertainty, elevated construction costs and changing occupier requirements.

Current industrial asking rents range from approximately RM2.50 to RM4.50 per square foot per month in Bayan Lepas Industrial Park, RM1.80 to RM3.50 in Batu Kawan Industrial Park and RM1.30 to RM2.80 in Prai Industrial Park.

The Green Tech Park's 700 acres will likely be delivered in stages, so the headline acreage is not immediately available inventory. Silicon Island will compete with established locations including Bayan Lepas, Batu Kawan and Prai, as well as newer Seberang Perai projects. Execution risks include reclamation, transport connectivity, infrastructure delivery and the time needed to secure anchor occupiers.

Earlier project messaging referred to factory operations beginning in the second half of 2027. The latest state announcement places the first factory's operating date in 2028, which is the current expectation.

Digital, Aviation and Tourism Allocations

The budget also included RM4.5 million for 2027 through Digital Penang to implement the Penang Digital Economy Master Plan 2025–2030. Some 8,646 micro, small and medium enterprises have benefited from its capacity-building programmes, while 330 startups recorded estimated revenue of RM118 million and created approximately 1,720 jobs as of the third quarter of 2026. Penang's 4G coverage in populated areas reached 100% as of October 2026, while 5G coverage stood at 91.9%.

Penang International Airport recorded 5,427,535 passenger movements from January to August 2026, up 208,982, or 4%, from the same period a year earlier. The RM1.55 billion airport expansion aims to increase annual capacity to 12 million passengers. Its first package is complete, the second is underway, and the third, involving the main terminal, is at the pre-tender stage.

Penang's business events industry is expected to generate RM1.9 billion in economic impact this year, rising to RM2.2 billion in 2027. The Penang Hill Cable Car project, 32% complete, is scheduled for completion in August 2027 and full operations in the fourth quarter. A total of RM14.5 million has been allocated for 2027 to tourism-related state agencies and companies.

The next indicators for the Silicon Island project will be the start of industrial plot sales in the first quarter of 2027, the start of construction later that year, and the first factory's scheduled operation in 2028.

Sources

• Silicon Island: Silicon Island's first factory expected to operate in 2028