Reasons behind Malaysia's Surprising Success in Solar Industry beating larger rivals USA and Japan

Every Country has tried to promote Green Industry but with varying Success

Malaysia is set to become one of the largest solar panel producing nations overtaking much larger rivals USA and Japan as world class companies start/expand capacities in Malaysia.Every country is trying to promoter Green Industry in the fight for leadership of this new age industry and to create high paying green jobs.Billions of Dollars in Green Stimulus has been doled out by governments but with varying degrees of success.USA has managed to squander most of its Green Subsidies despite possessing a very strong technological base as US Companies shutter US factories to outsource production to Asia and Mexico.European Countries have seen a similar phenomenon as their high costs force domestic companies to shift to Asia for their survival.China and Taiwan are the largest solar cell producers in Asia due to their low costs,good infrastructure and massive government support.Taiwan has also been able to leverage its semiconductor strengths with companies like TSMC and AUO expanding into solar energy.However Malaysia has been a surprise winner as well.It is important to understand the reasons behind Malaysia’s success as it has beat countries with much larger solar energy markets like USA and Japan.It also has no massive semiconductor industry like Taiwan which can redeploy its skills.It has only recently introduced a Feed in Tariff Policy to promote Renewable Energy.

Reasons behind Malaysia’s Surprising Success

The Reasons behind Malaysia’s Success is government support in the forms of tax breaks,loans,simple regulation and low labor costs.While many of these subsidies have been given by other countries like Singapore,Malaysia has done it with a finesse and dedication that has made it a winner.Many world class companies have started solar manufacturing operations in Malaysia like Flextronics,Q-Cells,Sunpower and First Solar.Note First Solar was the first big catch for the Malaysians and other companies soon followed the lead of the Solar Leader.Here are the following reasons for Malaysia’s success

1) 15 Year Tax Holiday for Solar Company Profits – The 15 Year Tax Holiday is one of the most generous subsidies in the world and had made it irresistible for companies.In fact it has become a big factor in First Solar’s business model to lower its costs.

2) Low interest Loans – The Government has given large quantum of low interest loans to companies like Sunpower to expand their capacities in Malaysia.An attractive option for capital constrained companies looking for money to expand

3) Good Infrastructure – The Country has built excellent infrastructure facilities like the Kulim Hi-Tech Park to attract companies.Besides Solar Manufacturers,the country has attracted top notch semiconductor producers like Applied Materials,ASML etc to build facilities in the country

Summary

Malaysia has been a solar success mainly because of very focused government support and incentives.Despite not having any local champions like Taiwan,this small South Eastern Nation has managed to attract billions of dollars in investments.It serves as an example on how to attract and retain top technology companies in this highly competitive world.Despite having disadvantages like a very small market,little local technology and much larger rivals,Malaysia has become a Green Success by being being focused and persistent in its approach.The country also keeps raising its ambitions planning to become the No.2 solar producer by 2020.