Speech by Lim Guan Eng at the Transparency International Occasional Talk in
Corus Hotel, Kuala Lumpur on Thursday, 11th September 2008:
Reinventing Penang State Administration
A good government that works better and
1. The need for effective and good governance has led to calls for
reinventing government, which reduced to simple terms is a government
that works better and costs less. The mechanism of a public-private
partnership or PPP would help to reinvent government to improve the
lives of the people.
2. More so when faced with the last 10 years of neglect, mismanagement
and misrule by the Barisan Nasional coalition led by Gerakan. This call
for change and reinvention has come from none other than the electorate
itself in the recent elections who gave an overwhelming mandate to the
DAP-led Pakatan Rakyat state government.
3. Penang which was once a leading state in Malaysia with an
international presence and outlook has suffered an alarming drop in its
position within Malaysia. Penang’s FDI’s dropped from RM 3.9 billion in
2006 or No.2 amongst states in Malaysia to RM 3.1 billion in 2007 or No.
5 amongst states such as Johor RM 6.7 billion, Kedah with RM 6.1
billion, Selangor RM 4.2 billion, Terengganu RM 3.3 billion.
4. Apart from the economic lethargy, there was also a sense of drift in
the political leadership when the BN government appeared to be held
hostage by a few extremist and racist UMNO politicians. Do not forget
that the current actors in the “Chinese are squatters and therefore do
not deserve equal rights” controversy, were also the same as those who
destabilized the previous Gerakan-led BN government with threats and
5. Not only was the previous state government not decisive, this was
translated to economic policy when rules could be arbitrarily overturned
and procedures manipulated. Exposes uncovered included the infamous
secret rezoning of the RM 25 billion Penang Global City Centre project
that allowed an instant revaluation profit of RM 1.5 billion and the
hundred million ringgit land scams. Despite denials by the previous
state government, the new state government was vindicated when the land
scams were validated by the 2007 Auditor-General’s Report.
6. This political gridlock and economic malaise was best exemplified by
the massive daily traffic jams in the Penang Bridge, which was only
somewhat but not completely alleviated when the new government boldly
took the step to ban heavy vehicles from using the bridge during peak
7. Malaysians are therefore indelibly shaped by the political tsunami
March 8 2008 whose awesome force cleansed the nation of its political
decay by recording a series of “firsts”. For the first time, Malays,
Chinese and Indians voted strongly for the opposition parties and across
ethnic lines, thereby denying BN a two-thirds majority. For the first
time, the Pakatan Rakyat is governing five states in the country. In
Penang specifically, it is the first time an Indian in the country has
been appointed as a Deputy Chief Minister. The first Malay has been
appointed as Chairman of InvestPenang and there is a strong commitment
by all quarters towards a multi-racial agenda with an emphasis of
solving real problems faced by real people for public interest and not
for private interest for the few.
8. For instance, I can never understand why in 50 years of Merdeka,
Penang can still allow hard-core poverty where 500 families, nearly all
Malays, have a monthly household income of less than RM 400. My new
government is committed to wiping out hard-core poverty in Penang in 1
year what BN can not do in 50 years.
9. Some may say that an effective and good governance can be achieved
with small government whereby a government governs best which governs
least. I do not quite agree because there are many areas of public
policy that requires active governance but I do hold to the view that
the business of government is to get out of business.
Increasing costs of Federal and State Government bureaucracy
10. Reinventing government to make a government that works is therefore
necessary to improve our lives. Despite the explosion in size and cost
in the civil service, public perception is that there is no
corresponding and commensurate increase in quality and efficiency of
service. The increasing size of our government bureaucracy ballooning
from 850,000 civil service and a RM 68 billion annual budget in 1998 to
1.3 million civil service and a RM 207 billion 2009 budget is a case in
point. In per head terms, the cost doubled from RM80,000 each in 1998 to
RM 159,230. A similar case in point is the Penang civil service that
rose from less than RM 14,000 per employee in 1998 to RM 27,000 per
employee in 2009. But do we get value for money?
11. For instance, the GNP of Penang in 2007 comprises of services 56.9%
manufacturing 39.5%, construction 2.6% agriculture 0.8% and mining 0.1%.
And yet we spend nearly 5% of our annual budget on agriculture when it
comprises only 0.8%. Is this a case of misplaced priorities?
12. There can be a positive synergy between citizen participation and
governmental effectiveness. This is why planners place so much attention
on citizen participation. Planners make more policy decisions. They put
more social and economic institutions into motion. Some even do more
regulating. Rather than hiring more public employees, they make sure
other institutions are delivering services and meeting community's
needs. This is how we wish to plan Penang such as our determination to
eradicate the shame of hard-core poverty in Penang in one year what BN
can not do in 50 years.
13. The Penang Government does not have a choice but to adopt CAT
principles. While Penang may be among the wealthier states in Malaysia,
the state derives its revenue strictly from land related transactions,
and given its size, it's annual budget is limited to less than RM350
million per annum. That is a fraction of the average RM8 billion budget
for each Ministry at the Federal Government level.
14. The small budget is amplified by the misallocation of resources
through abuse and incompetence which has resulted in significant losses
for the state government. A RM30,000 project for example may only
deliver RM10,000 in value.
15. Therefore, by strictly adopting CAT principles, we hope instead to
punch above our weight by doing the reverse of what the previous
administration did, that is to deliver RM30,000 in value for every
RM10,000 spent. It is no easy task, but we are certainly hell-bent on
achieving this objective. We want to create a Government which works
better but costs much less.
16. In executing our CAT principles, we fully recognise the limitations
of the Government and the role it should play. We believe that the
Government's role is to create a conducive and efficiently regulated
business environment for the private sector to take the lead, and then
let business do what it does best – make profits without social
disruption and environmental degradation. Competition will hence be
promoted fairly, without government created distortions, to ensure that
standards are raised, and the best quality products and services are
17. Penang has become the
first state to implement the e-tender system of requiring government
procurement and contracts to be carried out through the internet. For
the first time in Malaysia, contractors can participate in the open
tender process and also review the successful contractors and if they
are not satisfied, online objections can be registered via the Internet.
Unlike the past when political cables are need to secure government
projects, all we need now is not political cables but computer cables.
18. We have also issued a new directive whereby all administrators and
state excos of the government are not allowed to make any new land
applications. We have removed unnecessary ad-hoc committees to bring
about faster approvals of development and initiated much needed reforms
such as allowing for leasehold lands to be converted to freehold status.
19. The savings from replacing corruption with transparency can be
immense as exemplified by the famous remark by a United States financial
research house Morgan Stanley in Asiaweek in 2004 that Malaysia suffered
losses of as much as USD 100 billion over the last 2 decades.
20. Accountability in accordance with
democratic principles allows voters to maintain a strict check and
balance with the people they voted into power. Accountability will be
assured through a continuous consultation process amongst various
stakeholders in society, on relevant issues.
21. For example, Penang is again the first state to invite professionals
to participate in our decision-making process by appointing them to the
Penang State Appeals Board and establishing a Working Professional
Committee comprising of professionals from 5 different professional
bodies to improve land procedures. I would consider our initiative of
inviting social and civil participation in decision making a very
important plank of reinventing government.
22. Reinventing government therefore encompasses the establishment of a
civil society. Put in the point that in a civil society that we
envisaged we hope to allow both professionals and the citizenry to have
a say in decisions which affect their lives unlike the present system
now where someone make a decision completely divorced from the public.
23. Competency is the most
important aspect of good governance. There is no point being transparent
or being accountable if you are not competent and can not deliver. We
believe that in every servant, he wants to be the best achiever– no one
wants to be the worst. We intend to introduce a system of benchmarking
to allow him/her room to perform and measure delivery. We will even
consider of pursuit of businesslike practices in government without
sacrificing democratic accountability.
24. Reinventing government must be built on giving managers clear goals,
allow them wide discretion in achieving those goals, but hold them
strictly accountable through sound performance measures. The central
goal is efficiency; the central strategy is to stimulate competition
through market like processes, such as contracting out, and to measure
results through benchmarking and key performance indicators.
25. As such, one of the initiatives the Penang State Government is to be
the first fully wired island in two years’ time for both wifi and wimax.
We presently have 126 hotspots throughout the state, but the vision is
for WIFI broadband to be accessible anywhere in Penang, 24 hours, 7 days
26. I envision great things for the State: to make it the first wifi
state, the first Green State, the first state to wipe out hard-core
poverty. I envision Penang as an International City that is a location
of choice for investors, a destination of choice for tourists and a
habitat of choice for locals who desire sustainable living. To that
purpose we need to resolve the 3Cs problem of Cleanliness, Crime and
traffic congestion to improving the public transportation system, health
and public order.
27. We believe that having a CAT government not sufficient, the
government must also have a soul. As government are made up of men and
women who have souls, so must a people-oriented government. I would
characterise a government with a soul as one that adopts an ethical and
moral leadership that professes and gives faith, hope and love; where
the people must have faith that the government is there to help and not
harm them; the government must give hope to the young that there is a
bright future with equal opportunities, level playing field and social
justice; and that the government must show love for the people based on
human dignity, compassion and a caring society.
28. As a competent government, we must focus on Penang's inherent
economic strengths to ensure a dynamic and vibrant economy. We believe
that a CAT government can exceed last year’s FDI and may even match the
record RM 3.9 billion of FDIs in 2006. This vision can only be achieved
with a public-private sector partnership(PPP) where there is
co-operation between all parties as partners, co-ordination as allies
and even healthy competition amongst friends.
29. Reinventing government to ensure a government that works better and
cost less is necessary if Penang is to succeed in transforming itself
into an international city. This transformation of Penang requires a PPP
that includes an excellent civil service that reaches out to the private
sector as partners and treats the people as friends.
Lim Guan Eng, Penang Chief
Minister Penang & DAP