Remarks made by Lim Guan Eng during a dialogue with Penang and University Of California students at Berkeley in San Francisco on Thursday, 10^th December 2009: 

Penang is willing to adopt World Bank’s recommendations outlining the 4 key thrusts that can transform Malaysia into a high-income economy 

Penang is willing to be the test-bed and adopt the latest World Bank’s recommendations outlining the 4 key thrusts that can transform Malaysia into a high-income economy. The 2009 World Bank Report had suggested an integrated strategy which requires sustained efforts in promoting further specialization of the economy, improving the skills base of the labor force, making growth more inclusive and bolstering public finances for Malaysia to become a high-income economy. The World Bank said,

“One, Specializing the economy further. Given limited resources—both public and private—and the need to achieve agglomeration economies, it is important to focus on a few high value-added, innovation-based sectors with strong potential. Agglomeration economies describe the benefits to urban economies such as towns and cities flowing from economies of scale and the close proximity that allows easy access or networking with each other.

Improvements to the enabling environment can facilitate this through the building of an internally-competitive and business-friendly economy and the provision of appropriate soft and hard infrastructure to support the knowledge economy. Focused technology, innovation and urbanization policies can nurture niches of growth by building on existing strengths in sectors such as electronics, resource-based industries, and Islamic finance.

Two, improving the skills of the workforce. Greater specialization will assist in accelerating growth and create demand for skilled labor—and increase social and private returns to education and skills upgrading. To ensure this demand can be satisfied—with skilled labor currently at only 25 percent of the labor force—simultaneous efforts are required to improve the quantity and quality of skilled labor. This requires attention to incentives, competition, and merit-based recruitment in education, as well as curriculum development, better teacher training, and leveraging efforts with the help of the private sector.

Three, making growth more inclusive. Inclusiveness policies are yet another building block of a competitive, dynamic and flexible economy. They not only help households cope with poverty, but are also essential in promoting entrepreneurship and risk-taking. Effective social insurance programs could help mitigate unemployment risks and ensure adequate pension coverage. Well-targeted social safety nets would protect the needy in times of adversity and reduce fiscal costs.

Four, bolstering public finances. Fiscal consolidation and reform will help address investor concerns about the rise in the fiscal deficit, broaden the narrow revenue base, lessen the significant role of subsidies in expenditures, and reduce the crowding-out of private initiative.”

On specializing, Penang has built its name as the Silicon Valley of Malaysia. The challenge is to be also the Software Valley of Malaysia, in essence be both the sweatshop and smartshop of the manufacturing and services factor. Penang should leverage on this built-in advantages by expanding the range of good and services that can be produced and supplied in the the existing specialized fields of high-tech, electronic industry, avionics automation, medical devices, green technology and professional services. Our wifi initiative to provide wifi free of charge aims to enable the people by providing mass broadband connectivity. Our aspirations of becoming the first green state in Malaysia with no plastic bag campaigns promotes a sustainable lifestyle that fights against climate change.

Two, improving the skillsets of the labour force requires both adequate facilities and a high degree of public-private co-operation. Expanding the Penang Skills Development Corporation renowned as the best training and retraining institute in Malaysia, establishing Centres of Excellence for specialized fields and a new 200 acre Education Hub provides opportunities for self-improvement and the correct matching of the skillsets of workers with industry needs.

On making growth inclusive, Penang has carried out several unique social initiatives to make growth more inclusive. From providing micro-credit loans to the poor to wiping out hard-core poverty within a year what could not be done by in 51 years by the previous government, granting water rebates for the lower and middle-class to RM 100 yearly payments to the senior citizens, allows everyone to have a share in the fruits of our labour.

Good governance helps to increase productivity and efficiency and support a knowledge-intensive industry. Penang’s good governance based on Competency, Accountability and Transparency has been commended by Transparency International The government’s careful and prudent budgeting has won praise from the Auditor-General Report for achieving a record surplus budget of RM 88 million in 2008 against an earlier projected deficit of RM 35 million. This RM 123 million turnaround constitutes 26% of the 2008 budget.

The business of government is to provide the incentives for private investment and private initiative to be one the sources and engines of economic growth. We need a clean efficient and competent civil service as well as a high degree of public private partnership to make our vision of transforming Penang into an international city and high-income economy come true – with full political rights and freedoms, equal economic opportunities and socio-economic justice.

*Lim Guan Eng, DAP Secretary-General & Penang Chief Minister; Member of Parliament for Bagan