Speech by Lim Guan Eng at an international conference on "The New Economic Vision for Penang and Malaysia" in Traders Hotel, Penang on Friday & Saturday, 5^th & 6^th December 2008: 

The new economic vision for Penang and Malaysia   

1. When I took over the helm of the State Government on March 9, 2008, I made a pledge to the people of Penang that we will be fair, just and not discriminate against anyone. The people of Penang had created history by allowing the opposition parties to form the State Government and we have formed a government based on unity and respect for basic human rights and political equity.

2. The new State Government will not disappoint the people of Penang and we want to turn a new chapter. We were determined to do better in drawing in more investments.
 

Projects Approved by State, 2008 and 2007 ( Ringgit Malaysia RM )

State	Jan - Sept 2008				2007
	No.	Domestic Investment	Foreign Investment	Total Proposed Capital Investment	No.	Domestic Investment	Foreign Investment	Total Proposed Capital Investment
		(RM)	(RM)	(RM)		(RM)	(RM)	(RM)
Sarawak	26	694,943,660	12,558,138,536	13,253,082,196	23	403,047,608	631,418,240	1,034,465,848
Johor	115	1,959,290,925	9,004,049,608	10,963,340,533	188	2,495,412,449	6,747,426,115	9,242,838,564
Pulau Pinang	106	4,790,192,785	3,212,567,554	8,002,760,339	134	1,625,246,462	3,143,414,785	4,768,661,247
Selangor	211	1,913,070,437	5,486,403,506	7,399,473,943	318	6,989,739,432	4,191,710,937	11,181,450,369
Melaka	25	106,866,838	3,443,249,216	3,550,116,054	38	1,618,503,951	2,219,208,654	3,837,712,605
Perak	33	580,851,452	2,368,599,206	2,949,450,658	59	651,687,036	1,382,919,999	2,034,607,035
Kedah	36	237,510,782	2,254,164,195	2,491,674,977	46	7,856,661,494	6,133,555,679	13,990,217,173
Perlis	2	949,229,755	327,520,127	1,276,749,882	2	7,110,000	-	7,110,000
Pahang	19	1,111,233,137	63,565,982	1,174,799,119	28	406,893,791	1,156,870,397	1,563,764,188
Negeri Sembilan	19	782,715,095	256,266,185	1,038,981,280	40	493,616,883	2,181,946,337	2,675,563,220
Sabah	30	576,698,827	273,120,185	849,819,012	41	1,080,883,461	2,176,661,327	3,257,544,788
Terengganu	7	634,276,230	118,482,997	752,759,227	11	2,772,157,162	3,391,072,131	6,163,229,293
Kuala Lumpur	11	94,018,240	23,438,350	117,456,590	12	52,761,459	39,594,450	92,355,909
Kelantan	2	-	66,000,000	66,000,000	9	52,576,800	30,090,000	82,666,800
Labuan	1	9,795,046	445,462	10,240,508	-	-	-	-
TOTAL	643	14,440,693,210	39,456,011,108	53,896,704,318	949	26,506,297,989	33,425,889,050	59,932,187,039

 

US - USD

State	Jan - Sept 2008				2007
	No.	Domestic Investment	Foreign Investment	Total Proposed Capital Investment	No.	Domestic Investment	Foreign Investment	Total Proposed Capital Investment
		(USD)	(USD)	(USD)		(USD)	(USD)	(USD)
Sarawak	26	199,124,258	3,598,320,497	3,797,444,755	23	117,165,002	183,551,814	300,716,816
Johor	115	561,401,411	2,579,956,908	3,141,358,319	188	725,410,596	1,961,461,080	2,686,871,676
Pulau Pinang	106	1,372,548,076	920,506,462	2,293,054,538	134	472,455,367	913,783,368	1,386,238,735
Selangor	211	548,157,718	1,572,035,388	2,120,193,107	318	2,031,900,998	1,218,520,621	3,250,421,619
Melaka	25	30,620,870	986,604,360	1,017,225,230	38	470,495,334	645,118,795	1,115,614,129
Perak	33	166,433,081	678,681,721	845,114,802	59	189,443,906	402,011,628	591,455,533
Kedah	36	68,054,665	645,892,319	713,946,985	46	2,283,913,225	1,783,010,372	4,066,923,597
Perlis	2	271,985,603	93,845,309	365,830,912	2	2,066,860	-	2,066,860
Pahang	19	318,404,910	18,213,748	336,618,659	28	118,283,079	336,299,534	454,582,613
Negeri Sembilan	19	224,273,666	73,428,706	297,702,372	40	143,493,280	634,286,726	777,780,006
Sabah	30	165,243,217	78,257,933	243,501,150	41	314,210,308	632,750,386	946,960,694
Terengganu	7	181,741,040	33,949,283	215,690,323	11	805,859,640	985,776,782	1,791,636,422
Kuala Lumpur	11	26,939,324	6,715,860	33,655,183	12	15,337,633	11,510,015	26,847,648
Kelantan	2	-	18,911,175	18,911,175	9	15,283,953	8,747,093	24,031,047
Labuan	1	2,806,603	127,640	2,934,243	-	-	-	-
TOTAL	643	4,137,734,444	11,305,447,309	15,443,181,753	949	7,705,319,183	9,716,828,212	17,422,147,395

2007 : US$1 = RM3.44 2008 : US$1 = RM3.49

3. For the whole of 2007, Penang drew in RM 4.77 billion in investments comprising RM 3.14 billion in foreign investments and RM 1.63 billion in domestic investments. We have exceeded that figure with RM 8 billion for the first nine months of the year comprising RM 4.8 billion in foreign investments and RM 3.2 billion in domestic investments (MIDA figures). Penang placed third this year as compared to 5th last year. Were it not for the global financial crisis. I am confident that we would have hit the RM 10 billion mark.

4. As it is Penang has already broken all records in attracting the highest number of foreign investments in history. And these investments are high quality investments focusing on the main high-tech sectors in electrical and electronics industry such as LED and wafer fabrication as well as biotechnology in genetic testing for cancer detection with branded companies such as Honeywell, National Instruments and Ibiden. On top of that we have existing foreign MNCs reinvesting billions of ringgit for expansion purposes.

5. We believe that the quality investments in Penang, whether new or existing ones In this regard we want to pull in investors that are capital intensive, offer high-paying jobs, high-technology focused, centered on knowledge workers in sunrise industries. To help us determine the type of investors we want, there are eight characteristics of highly successful companies we look out for that I describe as the 8S- Standards (in the forefront of creativity innovation and research), Segmentation(diverse products in the marketplace), Scalability, Service, Schedule Adherence, Security of products, Sustainability and Corporate Social Responsibility.

6. W realise that we Penang is a land and resource scarce state, we must focus on our human resources, our strong work ethic and human talents to grow and prosper. We are therefore pleased that software solution companies have made Penang their prime target such as thde No. 1 business solution provider SAP through their local franchise holder AXON has decided to to invest RM 100 million to create.250 high paying professional IT engineers in Penang.

7. We will continue such efforts which must be now redesigned and refocused to deal with the oncoming recession brought about by the global financial crisis. The Penang state government is adopting an expansionary budget for 2009 with a higher budget deficit of RM 39.4 million or 8.3% of the total budget as compared with 8.1% for 2008. The three key thrusts are pro-growth, pro-jobs and pro-poor.

8. With increased social programmes and public works, we will try to mitigate the effects of the economic slowdown. For a start, we aim to eradicate poverty in the State of Penang by March 2009, that is, a year after we have taken over the State Government. To achieve this aim, I would like to urge the private companies to join us as "Partners Against Poverty" through your companies' corporate social responsibility (CSR) programmes.

9. However, presently, we have more urgent matters at hand. The global financial system is in shambles and recessions in the United States and Western Europe now seem unavoidable. People will lose their jobs and it is anticipated that additional jobs will not be created even after a few quarters subsequent to the economic recovery.

10. This is indeed a challenging time for economic management in Penang, Malaysia as well as the rest of the world. As we have to identify appropriate short-term measures to offset the coming economic downturn, we should also treat this downturn as a wakeup call for us to reconsider our development strategies to ensure that the forthcoming strategies respond to the desired growth path for Penang.

Part II :

The future economic vision for Penang rests on continuing to develop our human resources, especially the cutting edge high-tech and computer segment. In other words, knowledge workers will be our key contributors of economic growth. This is in line with services sector contributing 57% of Penang GDP followed by 39.5% from the manufacturing sector.

If we can transform Penang’s economy from being a being a sweat-shop of the world to a smart shop, we have succeeded in moving up the value chain. We need to concentrate on the best knowledge-workers in Penang where we have the best engineers, doctors, nurses, accountants, pharmacists, lawyers, town planners, surveyors and architects. That is why Penang launched our free wireless initiative where we hope that in 2 years time, when you open your notebook or computer you can be connected to the internet, any time, any place, anywhere but only in Penang.

Making Penang a smart shop will go a long way towards transforming Penang an international city that is a location of choice for investors, a destination of choice for tourists and a habitat of choice for those who desire sustainable living.

For Malaysia to face the challenges of economic recession, we need an expansionary budget that is significant enough to make a difference. China’s foreign/international reserves are almost USD 2 trillion and yet they are willing to spend USD4trillion or double their international reserves to revive their economy and perhaps the world economy. In comparison, Malaysia’s foreign reserve is USD100 Billion and we are suggesting a USD2 Billion (Rm7Billion) economic stabilization plan which is only 2% of our foreign reserves. Why spend only 2% when China can spend double. Malaysia should spend RM50billion (USD14billion) of fiscal and monetary measures comprising

1. Financial aid to distressed families of RM6,000 annually for those earning less that RM6,000/month amounting to RM35billion

2. Monetary measures of cutting the corporate tax rate from 25% to 17% costing RM13billion

3. RM2billion spending to provide wireless services and facilities to all key towns and cities

We need a strong expansionary budget and ecconomic stimulus program to counter the economic slowdown and also improve our infrastructure and education fundamentals so that we can take advantage of any economic recovery. A bigger expansionary budget is necessary with the latest Bank Negara figures showing a negative portfolio inivestment outflow of RM41.3 billion for the first 9 monhs of the year.

An expansionary budget must be implemented in a manner that is significant and speedy or else it will help no one.

In close, we must look beyond the recession by boldly spending on job retraining, increase the number of knowledge workers, upgrade our ICT infrastructure and strengthen our education structure as a center of excellence. Make Penang the smart shop of Malaysia and the region – that’s our future.

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* Lim Guan Eng, DAP Secretary-General & Penang Chief Minister