Key Points of 2 Speeches to Australian Investors and Professionals by Penang Chief Minister Lim Guan Eng at the Victoria Investment Centre and Asialink's Sidney Myer Asia Centre In Melbourne, Australia on Friday, 23^rd March 2012: 

Penang seeks convergence of the manufacturing, services and government sector to propel Penang's escape from the middle-income trap to high-income economy status of USD15,000 per capita by 2020 

Trade is very important to the Malaysia and Penang's economy. Malaysia is the 22^nd largest exporter in the world, behind Australia, which ranked 21^st, and the 26^th largest importer in the world behind Australia, at the 20^th position. Malaysia is the 37^th largest economy in the world behind Australia, which ranked 13th.

Malaysia has a relatively small domestic market and Penang especially, focuses on export-oriented economy, particularly in the electrical & electronics (E&E) sector. Despite being the second smallest state in Malaysia, Penang contributes towards 25% of Malaysia's imports and exports.

Penang also topped manufacturing investment in Malaysia in 2010 and repeated that historic feat in 2011. For two years in a row, Penang has led manufacturing investment in Malaysia. In 2010, we attracted RM12.2 billion worth of investments while we received RM 9.1 billion last year. In FDIs, Penang contributed to 28% or RM 17.7 billion of Malaysia's total FDI of RM63.2billion in 2010-2011.

Penang's recent successes is attributed to CAT governance on competency, accountability and transparency based on open competitive tenders and full disclosure that has resulted in surplus budgets every year since we took power in 2008. Penang has also managed to reduce our state government debts by 95% from RM 630 million in 8.3.2008 to RM 30 million at end 2011. This marks a reduction of 95% over a period of three years, the highest record ever amongst all states in Malaysia.

Australia is an important trading partner for Malaysia. Australia was our 11th largest trading partner while Malaysia was Australia's 10th largest trading partner with total two-way trade of goods and services of Aus$15.6 billion in 2010. Exports of air conditioner, machines and parts to Australia are one of the major contributors to Malaysia's manufacturing export growth. As for the services sector, Australia is one of the major export market for construction services, oil & gas, MRO (maintenance & repair and operations) services, and legal services.

The Malaysia-Australia FTA (MAFTA) could address barriers to Australian trade exports in agricultural products and processed food as well as in trade in services. Hopefully, Malaysia can enjoy greater access to the services in Australia including legal services, telecommunication, accounting services, architectural services, engineering services, education services, insurance services and banking.

Australia has been traditionally a destination for higher education for our Malaysian students. To date, about 300,000 Malaysians have been educated in Australia. I believe that it would be feasible for Australian universities to set up branch campuses in Penang. In Melbourne alone there are over 75,000 Malaysians residents and students.

Victoria and Penang shares many similarities in that we punch above our weight. Both are heavily industrialised states with Victoria’s GDP comprising almost 90% from the manufacturing and services sector as compared to Penang’s 97%. We hope for more investment from Australia in areas where Australia has a world-class track record in education, media, design and aerospace.

Apart from strengthening CAT governance, Penang seeks convergence of the manufacturing, services and government sector to propel Penang’s escape from the middle-income trap to high-income economy status of USD15,000 per capita by 2020. As companies seek convergence for products, technology and services to survive and stay in the market, governments seeking investments and FDIs must seek convergence of the government sector with the high-value manufacturing and services sectors.

To escape the middle income trap, Penang must not only be the 'sweat shop' of the manufacturing sector but also be the 'smart shop' of the services sector. KPMG listed Penang as one of the 31 emerging IT-business process outsourcing (BPO) cities of the world. Today, multi-national corporations have set up BPO operations in Penang in the areas of human resource, accounting and financial services, education and health as well as technical support and customer care.

Human talent is the primary condition required to make this convergence of manufacturing, services and government sector happen. To draw in human talent, Penang must be an attractive place to live. Making Penang cleaner, greener, safer and healthier is only the first step. Just as Melbourne is the cultural capital of Australia, Penang aspires to be the cultural capital of Malaysia.

Besides having a UNESCO World Heritage city, Penang is a great place to live, work, learn, play and dine. Indeed accolades for Penang include Penang's food being ranked as the 7^th most delicious food in the world by CNN and Yahoo Travel listing Penang as one of the 8 top islands in the world that "You must see before you die". So come to Penang whether as an investor or as a tourist, so that you can at least die happy!

*Lim Guan Eng, Penang Chief Minister