Speech by Lim Guan Eng at The World Chinese Economic Forum in Palace Of The Golden Horses Hotel on Tuesday, 17^th November 2009: 

Penang blueprint “11 points of light” for Penang’s development into an international city and a high-income economy 

I wish to thank ASLI, Country Heights Group of Companies and Tan Sri Lee Kim Yew for honouring me with an invitation deliver a special luncheon address “Investment Opportunities in Penang” at the World Chinese Economic Forum.

Best known as the Silicon Valley of Malaysia, Penang is described as the backbone of Malaysia’s industrial manufacturing revolution particularly in the electrical and electronics industry(E&E). Penang has progressed from an economy dependent on agriculture and trade to a state-of-the art manufacturing-based economy, driven by cutting edge technology.

The Penang GDP has grown from approximately RM1.3 billion in 1970 to RM21 billion to date and this increase is largely due to the expanding manufacturing sector that now accounts for 39% of Penang’s economy, with the services sector 57%. Penang has 1427 companies, of which 227 are Multi-National Corporations like Intel, AMD , Osram , B Braun and Dell, employing 202,000 workers where 50% of these workers work in the Electrical and Electronics industry. Penang’s contributes nearly 25% to Malaysia’s imports and exports both in value and volume.

In 2008, Penang attracted a record-breaking RM10.2 billion worth of investments. Not just volume but quality companies such as Honeywell Aerospace Avionics Malaysia, the leading avionics inventor; Ibiden Electronics Sdn. Bhd., a major Japanese electronics investor; and US-based National Instruments, with its R&D Operations facility in Penang.

What was notable was that despite the global economic crisis, none of these investments was cancelled, they were ramped and speeded up ahead of schedule reflecting confidence in the state government, Penang’s human talent, the supporting industries and supply chain network. These investments, like others in the past, augurs well for the State and its people as the new investments spur the economy and create spin-offs as well as employment opportunities.

Penang’s success in transforming itself was due to its ability to support various key manufacturing industries such as Semi-conductors, Electronic Devices, Data Storages, Photonics, Electronics and manufacturing services. In its efforts to diversify its economy, Penang has charted several new key areas where this could be another era of sunrise industries for the state. The industries include LED, Bio-tech, medical tourism, SSO (Shared services and outsourcing), software and e-solutions, creative multimedia, renewable energy, green industry, Halal Products and Avionics.

These and other recent investments are testimony to Penang’s capabilities in supporting higher value-add and knowledge intensive activities. Also for new emerging sectors, Penang was mentioned in this year’s KPMG professional service report as one of the 31 outsourcing hubs of the future in the world. This report listed as Penang as the only Malaysian city amongst 31 other cities in the world that can challenge existing outsourcing hubs in India or China principally due to our superior human resources and talents.

Local companies have been able to receive positive gains with the presence of multinational companies in Penang. In the beginning the local companies were involved in providing supporting and ancillary services to the electronics industry in the 1970s and 80s. However, through sustained learning, mentoring and nurturing, Penang’s local companies have accomplished the level of excellence to become global suppliers. Today, EngTek Globetronics Technology, LKT, Prodelcon and Vitrox Corporation, have become recognizable and respected names in the electronics manufacturing industry.

A vision without a tangible plan is a pointless exercise. That is why the present Penang State government has a detailed blueprint which will set motion a wave of much needed change that will benefit the people in Penang. At present, our main concern is to revitalize the State’s economy to its fullest potential.

Penang proposes a 3- pronged strategy:

1. Diversify the economy to high growth industries such as Solid State Lighting, Renewable Energy, Halal and Biotechnology

2. Revitalize and fully develop the services sector, particularly the tourism industry, which has long been regarded as a ‘cash cow’

3. Move up the value chain to support research and development and develop a foundation for a Knowledge Based Economy

Penang’s success in this arena is not coincidental. For the past 3 decades Penang has been honing its interdependencies, creating an environment and ecosystem that is conducive and appealing to investors. As a result Penang has retained its reputation as a world-class manufacturing center. Penang’s future lies in ensuring that its eight key essential qualities will remain to give the edge to any enterprise within our borders. The eight (8) key essential qualities are as follows:

1. The availability of highly educated, English-literate, and technically inclined workforce.

2. A robust supplier base that provides supporting and ancillary services to the MNCs locally and globally. Today, Penang’s local industry is not only capable of supporting the electronics and medical devices industry, but is capable of extending its expertise in higher value added activities like design and development.

3. As the 2nd largest city in Malaysia, Penang offers sustainable living with a quality lifestyle. Furthermore, Georgetown was rated the 9th best place to live in Asia (07-08) by ECA International; an improvement from 10th place in the previous year.

4. A strong foundation in life sciences enables Penang to be in the forefront of biotech research and development. Universiti Sains Malaysia has achieved APEX status and has a strong historical ties with the Penang industry players.

5. The proven linkage and availability of world-class infrastructure such as airport, rail and highway networks; utilities that meets world standards; free Wi-Fi initiative throughout the State and competitive rates for Wi-Max under its Wireless@Penang initiative and well developed industrial parks.

6. Supportive Government policies and procedures that ensure an excellent delivery system that meets the needs of investors.

7. A very competitive ‘total cost of doing business’

8. An exhilarating and exciting Penang lifestyle steeped in culinary delights and cultural heritage. The recent award of Heritage City Status to George Town has helped to raise more prominence to Penang for what it can offer to tourists all over the world.

Where once, assembly and test activities ruled the extent of a multinational’s operations in Penang, today, technical prowess and intellectual property reign supreme with these multinationals now engaging in research, design and development work with increasing regularity. In fact some of the new electronic technologies invented in Penang is mind-blowing such as hanphone crypto technology using the Ghost platform, one of only three in the world. We hope to be both the sweat shop of the manufacturing sector and the smart shop of the services sector.

There is cause for hope for Penang. Earlier this month, B.Braun announced that they will invest EURO 100 Million for their R&D Center for the next 2-3 years in Penang. Penang still continues to be the preferred choice for investments but I believe our challenge today is to maintain Penang’s competitive edge by converting into a knowledge-based and innovation-driven economy.

The Penang state government is taking steps to improve both the quantity and quality of higher education and boosting technological readiness, particularly information and communications technology penetration. As a start, the proposed 200 acre Education Hub in Balik Pulau together with the expansion of the existing PSDC would serve as an incubator to develop knowledge, skills and human capital.

We have suggested the “11 points of light” as as the Penang Blueprint towards transforming Penang into an International city and high income economy.

• Capable, clean and efficient civil service;

• An over-riding commitment to economic growth; and

• High degree of public-private partnership(PPP).

• A people oriented government based on 3Es to Enrich the people for an equitable share in the economic cake, Empower the people with rights, opportunities and freedom, Enable the people with skills and knowledge;

• Development of human capital towards excellence, creativity and innovation. It has always been said that small minds discuss people, average minds discuss events and great minds discuss ideas and we need to grow great minds to make your dreams come true;

• Observing the rule of law to promote certainty, justice and public order;

• CAT (competency, accountability and transparency) governance to establish a leadership with integrity –Last year alone, 12 per cent of the state’s budget or RM36 million was saved due to the prudent cost savings deployed under this policy – a feat commended by the The 2008 Auditor’s General report also for promoting good governance within the state. For the first time for any government in Malaysian, Penang has been duly recognized by the Transparency International for our anti-corruption efforts such as punishing culprits and rewarding whistleblowers with our Integrity Award.

• Branding for Penang to ensure quality, reliability, safety, sustainability and integrity.

• Sustainable and balanced development that helps to achieve a green state. The recent announcement of Penang’s focus on ensuring GBI (Green Building Index) compliance has alleviated Penang’s development to be better in terms of environmental friendliness.

• Social cohesion and inclusion towards a shared society that allows democratic participation, respect for diversity and individual dignity, equal opportunity and prohibition of discrimination.

• Building reciprocity, reputation and trust through civic education and communications towards a civil society.

These are the 11Points of Light for Penang’s development into an international city and a high-income economy. To transform Penang into an international city we need not just world class facilities and world-class support with a culture of maintenance, we also need recognition by international organisations.

We are slowly becoming a location of choice for investors with CAT governance recognised by both Audtior-General Report and Transparency International(TI), the first time any state or federal government has been commended by TI. This has attracted not just renewed interest from investors but also from international tourists attracted by the inscription of George Town as a World Heritage City by UNESCO.

Penang's effort to become the first free WIFI and green state has attracted those who desire sustainable living with proposed adoption of Green Building Index for buildings, reduction of plastic bag consumption with NO PLASTIC MONDAYS and green industries such as manufacturing bio-degradable food containers so good you can eat. Let the 11 points of light shine the way forward for Penang.

Remember that even though Penang aspires to be an international city that is a location of choice for investors, a destination of choice for tourists and a habitat of choice for who desire sustainable living we have a heart for the people. We are a people oriented government that calls you our boss where Penang belongs to all of you. To let you see, feel and touch this sense of belonging this people-oriented government strives to enable the people with educational rights and skills, empower you with rights, freedoms and responsibilities and enrich you by allowing everyone a share in our success.

Thank you I am much obliged.

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