Keynote address by Lim Guan Eng at the Penang Outlook Forum 2010 in Singapore on Thursday, 3^rd June 2010: 

Penang's focus on Penang's human resources to propel Penang forward as an international city, high-income & knowledge economy with a GDP of RM45 billion and per capita income of RM50,000 by 2020 

Salutations

Distinguished participants, ladies and gentlemen.

Good morning.

Let me first record my deepest appreciation to the organisers of Penang Outlook Forum 2010, the Institute of Southeast Asian Studies (ISEAS), Singapore, and Socio-economic and Environmental Research Institute (SERI), Penang, for inviting me to deliver the keynote address this morning.

The theme of today's forum Penang in Asia is timely as it comes at the heels of the State trying to emerge stronger after the recent crisis that decimated the global financial and property sectors and crippled global trade and economic growth. The fall in investments was made more challenging by the centralised nature of Malaysia's growth model that gives little discretionary spending powers to the state.

However before we peer into the future, let us understand our past. For almost 3 decades, the landscape of Penang's economy has been transformed from a sleepy agricultural economy to a thriving manufacturing industry. The Penang GDP has grown from approximately RM1.3 billion in 1970 to RM33 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 a history of economic success in becoming a middle-income economy. The presence of a world-class electrical and electronics industry populated by practically all the global brands and augmented by a growing cluster of bio-tech companies is reflected in Penang's share of Malaysia's electronic exports of 49% and total exports of 31% in 2007.

This history of success and continued growth can not be sustained if we do not escape the middle-income trap. With new emerging economies such as Vietnam and India fast becoming major competitors to Malaysia, Penang must develop a tangible plan that provides a vision for the state.

This industrial blueprint must develop a positive environment that will attract the investments required for sustaining growth and revitalizing the State's economy to its fullest potential. There are 11 strategies or "11 points of light" of the Penang Blueprint which focuses on efforts to transform Penang into an International city and high income economy.

1. Capable, clean and efficient civil service;

2. An over-riding commitment to economic growth;

3. High degree of public-private partnership (PPP);

4. 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;

5. Sustainable and balanced development that helps to achieve a green state;

6. 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;

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

8. CAT (competency, accountability and transparency) governance to establish open tenders and a leadership with integrity;

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

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

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

Penang as an international city

Our vision to transform Penang into an international city that is the location of choice for investors, destination of choice for tourists and also a habitat of choice for those who desire sustainable living is premised on our human and communications connectivity.

For this to become reality, Penang must step up regional engagement, cooperation and collaboration. Penang’s economy can only flourish when it is intertwined with the rest of the world. In fact, in this global age, Penang must foster many new kinds of collaboration. We must work across borders between governments, industries and even academic institutions.

We must embrace agglomeration city-economies by taking full advantage of economies of scale, specialization and networking. We are not under the illusion that we have all the time in the world. We are looking at 2015 as too long a time-frame would not lead to a realistic appraisal in view of changing circumstances.

Our challenge today is to maintain Penang’s competitive edge by converting into a knowledge-based and innovation-driven economy. The proposed 200 acre Education Hub in Balik Pulau, the formation of an industry-driven Penang Science Council to establish Penang as a talent pool for scientific and technological excellence together with the expansion of the existing PSDC would serve as an incubator to develop knowledge, skills and human capital.

To be able to sustain our growth objectives, there must first be economic innovations that would encourage us to think globally but act locally. Penang is a state without natural resources we can only rely on our human talents and intelligence. Our success is greatly dependant on our ability to harness the three types of intelligence mentioned in standard literature:

• Human intelligence of an individual basis;

• Collective intelligence to harness the benefits of synergies and networking;

• Digital intelligence by making Penang the first wifi state in the country;

But we need to have institutional intelligence and integrity intelligence in place so that institutions such as government and the private sector can craft policies that chart the future for the benefit of all, including our future generation. All our efforts will be futile if we do not have intelligent leaders with integrity as can best be shown by the sterling performance of Singapore.

If there is anything we can learn from Singapore, it is that institutions must be properly grounded and manned by properly trained leaders, technicians, bureaucrats and administrators. The recent demise of Singapore’s Dr Goh Keng Swee, the architect of so much of Singapore's successful institutions, comes as a much needed reminder to all of us of that simple fact.

Education is where Penang has always had an advantage with some of the brightest people with the best educational insititutions in Malaysia. This is attested by the brain drain, how Penang has always exported its educated people overseas, especially Singapore. We are a very generous state on that score.

But jokes aside, we should perhaps also look at this positively, that Penang can position itself as a training ground to train and retrain talent. The issue of education also includes our industrial workforce. Some of the factories located in Penang already have world-class R&D.

For this reason the Penang Science Council is tasked with establishing the Innoplex(Innovation Complex) to showcase the amazing inventions and products done in Penang as well as being an incubator for R&D work. This is expensive but a necessary public good. Just as talent breeds talent, innovation also feeds innovation.

Apart from the development of education and manufacturing sector, where we should be able to quickly enhance our relative advantage, there are many other areas that the Penang State government has identified for immediate development.

One is of course Tourism. Penang, like Singapore, has always been a popular port of call for tourists from all corners of the world. With the UNESCO World Heritage listing for Geroge Town, Penang offers tourists a nostalgic glimpse of our past and a taste of the rich cultural diversity that is both timeless and unforgettable. Heritage preservation is based on the simple principle of doing as much as you can by changing as little as possible. Come to George Town so that you can see, touch and feel its distinctive character and soul that makes it a Unesco World Heritage site.

Medical tourism is a growing sector where many Singapore companies have benefited. Penang draws two thirds of Malaysia's total medical tourism receipts of RM 300 million. Penang intends to have more private hospitals to meet the shortage of hospital beds due to the increasing demand.

To be a truly international city, there must be sustainable living where the problems of cleanliness, crime and traffic congestion are dealt with. On that score, Penang has made progress with ECA International upgrading Penang from No. 9 to No.8th most livable city in Asia last year – on par now with Kuala Lumpur. We will continue to do more with "No Plastic Bags" campaign in our efforts to make Penang the first green state in Malaysia.

My government is trying to make Penang more appealing with CAT governance centered on competency, accountability and transparency. We have managed to turnaround our projected deficit Budgets with the largest budget surplus of RM 88 million in 2008 and RM 77 million in 2009. Such success was based on open tenders and cost cutting as well as increasing revenue collection from RM 374 million in 2007 to RM 462 million in 2008 and RM 539 million in 2009. Transparency International praised Penang's CAT governance, the first time any Malaysian government Federal or state has received this accolade.

Finally investments - the driver of Penang's and even Malaysia future economic growth. Penang's share of Malaysia's exports have grown from 31% in 2007 to more than two thirds now. From March 2008 when the we took power till February 2010, Penang has attracted investments of RM9 billion. We target ourselves investments of RM 4.2 billion this year.

We recognise that Penang's attractiveness is due to the availability of talented workforce, reliable logistics hub, competent supply-chain management, livable city where creative and innovative people desire to stay, Intellectual property protection and good governance. We need to sustain that.

In other words, Penang's focus would be on our human resources to propel Penang forward as an international city, high-income & knowledge economy with a GDP of RM 45 billion and per capita income of RM50,000 by 2020.

Developmental work is never easy. But it is essential, and somebody has to do it. For now, that has become the fate of my administration. And I can promise you that we will be doing our best, and to do our best, we need the best from our friends as well.

Before I end my address, I would like to take this opportunity to thank ISEAS and SERI for organising this forum. I am cognisant that some of the work being done here will help put in place building blocks that will lead to a better Penang. On that note I wish you a successful forum.

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