Adopting the Crowd Sourcing approach in seeking inputs from experts and the public to the Penang Paradigm 2013-2023 Report
At the time of the formation of Malaysia in 1963, Malaysian per capita income was 13.6% of US income, whereas Korea and Taiwan per capita incomes were both lower at 10.7% and 12.6% respectively. We were clearly ahead of both Korea an Taiwan 50 years ago. Today, Malaysia is way behind being only half as rich as Korea and Taiwan. While Korea and Taiwan have made the leap into high income economies, Malaysia has been stuck in the middle-income trap despite its obvious natural advantages compared to those countries.
For this reason, the Penang Institute, led by world renowned economist Executive Director Prof Datuk Woo Wing Thye(Economic Advisor to US Treasury An, has drawn up a 10-year comprehensive development plan the "Penang Paradigm", in order to make Penang No. 1 in Malaysia by 2023. The Penang Paradigm seeks to:
restore economic dynamism to Penang;
upgrade significantly the liveability of Penang, and the sustainability of its natural environment; and
accelerate social development in Penang to entrench social harmony and to widen social inclusion.
We believe that the key policies proposed for Penang are also applicable to the rest of Malaysia. After all, what is good for Penang is also good for Malaysia, being that Penang is a significant contributor to the national economy, making up nearly half of total electrical and electronics exports and 9% of the country's GDP.
For this reason, we have decided to also launch the Penang Paradigm in Kuala Lumpur, not only to share our development plan but also to gather feedback from other stakeholders beyond our State in order to improve the plan. In other words, the Penang state government is adopting the crowd sourcing approach by considering changes from feedback to this Penang Paradigm Report. This novel crowd sourcing approach and willingness to concede to superior proposals and policies are new and unlike previous development plans which are implemented without genuine public engagement and consultation.
In the last few years, the Federal Government has introduced an alphabet soup of programmes such as the Economic Transformation Programme (ETP), Government Transformation Programme (GTP) and many others in order to free Malaysia from the middle-income trap. Unfortunately, none have been successful for the simple reason that they are superficial remedies that have largely ignored the fundamental reasons for our economic malaise, which are:
the abuse of socio-economic policies and the use of relationship instead of performance in government selections that have caused massive brain drain and huge capital flight;
the over-centralization of power at the Federal level that is preventing the local governments from providing the necessary infrastructure to support local development; and
the lack of transparency in Federal government operations, such as closed, negotiated government contracts which breed incompetence and corruption.
The negative effects on GDP growth from the the above factors were not clearly visible prior to 1995 because they had been more than offset by massive inward Foreign Direct Investment or FDI, and by large state and GLC investments funded predominantly by the post-1974 growth in oil and gas revenue.
However, the post-1990 expansion of globalization to other parts of Asia has caused the proportion of global FDI received by Malaysia to drop significantly. This drop in Malaysia's share of global FDI share, together with the weaker financial strength of the Federal Government and of the GLCs after years of mismanagement, have brought about an investment collapse in the 2000s, thus miring Malaysia in the middle-income trap for the last decade and a half.
Since March 2008, the Penang state government has put into place three sets of policies to reduce the deleterious effects of the Federal policy regime on Penang:
replacing crony capitalism with fair competition, e.g. having open competitive tenders for public projects;
beginning the process of decentralising decision-making, e.g. pushing for local council elections; and
stopping the decline in the quality of government services, e.g. using CAT (competency-accountability-transparency) principles in governance.
The Penang Paradigm
The operational component of the Penang Paradigm is divided into strategies and targets for (i) economic dynamism, (ii) liveability and sustainability, and (iii) social development and inclusion. All three systemic properties are interdependent, in which the viability of each property requires the existence of the other two.
The Penang Paradigm seeks to strengthen the process of restoring economic dynamism by proposing specific policy measures to boost:
the growth of high-tech manufacturing and of the high-tech bio-agro sector, e.g. the expansion of the electrical and electronic sector, the medical device industry, the halal food industry, and the aquaculture industry;
the emergence of high-value modern services activities e.g. becoming a global centre for outsourced business processing (OBP);
the blossoming of high-yield tourism, e.g. becoming the regional medical centre, and becoming the preferred winter retreat for residents in the temperate zone;
the establishment of a regional educational hub;
the transition of SMEs to world-class exporters i.e. to replicate the Taiwanese experience;
the provision of high-quality infrastructure services, e.g. supplying superfast internet to support the OBP centres, and being the international port to serve the logistical needs of the IMT-GT; and
the development of a centre of excellence in science and technology.
The success of the above seven areas is dependent on the availability of sufficient human talent. Thus, the Penang Paradigm also presents practical suggestions on how to train, retrain, retain and attract the required human talent to Penang.
Liveability and Sustainability
Among the key policy recommendations on "Liveability and Sustainability" are measures:
to make housing affordable to all by reforming development guidelines, introducing incentive-based zoning and building affordable housing through open tender;
to reduce traffic congestion and improve connectivity by aligning land-use planning with transport planning, favouring mixed-use developments where people can live, work and play, encourage cycling and walking, and to construct strategic bypasses to ease congestion, as well as a third link between Northern Seberang Perai and the Island;
to improve the quantity and quality of open public space by restructuring open space requirements, creating coastal linear parks in new reclaimed land, adapting under-utilised land for public use such as the proposed Prangin Heritage Square and engaging the local business communities in urban regeneration; and
to enhance the sustainability of the natural environment by requiring GBI certification, greening urban areas, designing new draining and water-harvesting plans, and reducing water demand through education and pricing.
Social Development & Inclusion
Thirdly, the Penang Paradigm will also aim to speed up social development and broaden social inclusion in Penang by implementing concrete programmes:
to combat poverty, inequality and discrimination by ensuring a minimum household income of RM770 a month, expanding micro-credit schemes to the poor, facilitating mobility and accessibility for senior citizens and the disabled as well as to establish a Social Inclusion and Equal Opportunities Committee;
to strengthen family and community support by expanding access to childcare and elderly care, establishing a network of community centres, improving preventive care, setting up mobile community clinics, providing assistance for "stateless" Malaysians and establishing a unit under the Penang Women's Development Corporation to provide child welfare and protection;
to promote economic empowerment through education by setting up a One-Stop Centre and forming Public-Private Partnerships for establishing preschools and early childhood education, starting creative learning programmes, providing alternative education pathways and expanding the agenda to train, retrain, retain and attract human talent; and
to institutionalise democratic empowerment by mandating compulsory asset declarations of all state legislators, implementing the Freedom of Information Enactment, providing greater public access to state information, decentralising and rationalising powers between all three levels of government and improving public consultation processes.
In short, the Penang Paradigm is a framework for creating a balanced society: one that is economically dynamic, one that is liveable and sustainable, and one that provides democratic empowerment and social justice for all. Only by achieving this would Penang be able to fulfil the threefold "choice", that is, to be the habitat of choice for residents, the destination of choice for tourists and the location of choice for investors in setting up business.
The ultimate outcome of the Penang Paradigm is to make Penang No. 1 in Malaysia as a balanced society and in international and intelligent State. We believe that if implemented nationally, Malaysia too will be able to escape the middle-income trap and become an international and intelligent country.