I am very pleased to be here today to officiate the Kuala Lumpur launch of the “Penang Paradigm”, which is a 10 year development framework(2013-2023) put together by the Penang Institute, the Penang state government think tank under the leadership of its Executive Director, Professor Datuk Woo Wing Thye, to develop Penang as an international and intelligent state. Or to put it simply to make Penang No.1 in Malaysia.

Let me first confess that the Penang state government humbly seek your help, the experts and general public out there outside from Penang – to get your inputs on how we can make the Penang Paradigm better so we can make Penang No. 1 faster. 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 in and outside Penang is unlike previous development plans which are implemented without genuine public engagement and consultation.

Allow me to start by putting on record my appreciation for the contributions of Professor Woo, who is a world-renowned economist and a former special advisor to the United States Treasury, the United Nations and the Government of China. Though Professor Woo is unique in his talents, he is at the same time merely one among hundreds of thousands of talented Penangites who were lost to our country through “brain drain” in previous decades, and who are starting to return to serve Penang since 2008, in a transformation of “brain drain” into “brain gain”.

It is my long-held belief that Penang’s, and indeed Malaysia’s, most valuable export over the past 50 years has not been manufactured goods or services, but human capital – our talented sons and daughters. And what a tragic export business this has been.

Since Merdeka, 2 million Malaysians and Penangites, especially talented young people, have left because of lack of educational opportunities, lack of economic opportunities, discrimination, corruption and lack of social justice. Our loss has been other countries’ gain. Penang, especially, has given other countries their professors, doctors, engineers, chief justices and cabinet ministers. This state of affairs cannot be allowed to continue.

Hence, we have come up with this roadmap to address these and other problems affecting our development. Although it is a roadmap for Penang, 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.

Penang to be a regional hub

Ladies and gentlemen,

Our vision is for Penang once again to be a regional hub that will build, upgrade, attract and retain international talent. Penang can only do this by becoming an international and intelligent state – one that educates and nurtures talent; one that promotes and rewards diligence, expertise and entrepreneurship; one that is liveable by being clean, green, safe and healthy; and one that practices integrity, justice and people-centric governance.

Since 2008, we have worked with this vision in mind, despite the numerous constraints that we have faced. We have introduced open competitive tenders and compulsory asset declarations for EXCO members to weed out corruption and cronyism. We have made State Government contracts available for the first time for public scrutiny. We have legislated and pushed for freedom of information and local government elections despite Federal obstruction and opposition.

A clean and competent government

By operating a clean and competent government, we have reversed a string of deficits by recording consecutive budget surpluses year after year since 2008, and have reduced the State debt by 95%. And these surpluses are put to good use with innovations such as:-

• giving cash aid to the poor, senior citizens, the disabled, single mothers, trishaw riders, university, secondary and primary school students;
• yearly allocations for Chinese, Tamil, missionary and Islamic religious schools;
• providing fee wifi in public places throughout Penang;
• free bus services in the city of George Town as well as park and ride services across the Penang Bridge to ferry workers to and from the mainland to the island;
• carrying out infrastructure projects worth billions of ringgit to reduce traffic congestion and flash floods throughout the state;
• becoming the first state to allocate a RM500 million Affordable Housing Fund to build 19,172 units of the best quality that is managed by HDB Singapore; and
• becoming the first state to wipe out poverty in  Malaysia in 2013 by ensuring a minimum household income of RM770 a month for every family in Penang, above the national Poverty Line Indicator (PLI) of RM763 a month.

Build Penang’s human capital and liveability

In order to build on Penang’s human capital, we have set up learning and training centres as well as an educational hub in Balik Pulau. In the past five years, the arts and cultural scene in Penang has flourished with events such as the George Town Festival, and Penang has gained international renown for the revitalisation of our world heritage city.

In order to improve Penang’s liveability, we have thought outside the box by using new incentives to make Penang cleaner and safer, adopted green measures by banning free plastic bags, phasing out polystyrene bags  to maintain the highest recycling rate in the country at 26% and by introducing a conservation surcharge to limit water wastage. We are also seeking to take this thinking outside the box forward by offering Rapid Penang RM10 million every year to provide free bus services throughout Penang during peak hours which has not been taken up by the federal government.

Neglected by the Federal Government

Ladies and gentlemen,

All that we have done in the last five years we have achieved in spite of the constraints of our country’s over-centralised Federal system, where the Federal Government gets 94% of Government revenues and the States get only 6%, and where crucial local matters such as public transport – buses, ferries – and the airport and the Penang Port are all under Federal Government control.

As a result, over the past 50 years, Penang has been badly neglected by the Federal Government, which has underinvested in Penang’s public transport infrastructure and in her seaport and airport. Our airport runway is still smaller than Langkawi’s, and too short to allow for the Airbus A380 to take off fully loaded. The iconic Penang ferry has simply been left to decline.

The Penang Port, which was the largest port in Malaysia in the 1950s and 60s, has been reduced to being a mere feeder port for Port Klang and TanjungPelepas in Johor. The Penang Channel has still not been dredged to allow larger ships to call at Penang, despite the RM353 million dredging project promised in the 9th Malaysia Plan, and the Penang Port Free Commercial Zone in Butterworth is too small to allow Penang to develop into a regional logistics hub.

All this needs to change if Penang is to reach its full potential as one of the principal powerhouses of the Malaysian economy. Despite being one of the smallest States in Malaysia, with only 6% of the national population, Penang held the top spot for foreign direct investment in Malaysia in 2010, repeating this feat in 2011, with foreign direct investment over the two years amounting to 28% of the national total. Penang contributed 25% of Malaysia’s exports, and nearly two thirds of its medical tourism receipts.

The twin pillars of the Penang economy – tourism and manufacturing, both require adequate investment in Penang’s hard and soft infrastructure if Penang and Malaysia are to flourish. For this reason, we have recently announced a RM6.3 billion project to construct 3 major highways to decongest roads in the island plans and South-East Asia first underwater sea tunnel as our third link to improve the connectivity between the Island and the Mainland. But more is needed to improve the airport, port, housing and public transportation infrastructure in Penang.

The people are our greatest asset

Ladies and gentlemen

The Penang Paradigm’s strategic vision is based on our greatest asset: our people. We believe that we can provide the best environment for people to live in if we have a people-centric government that invests in people, that educates and trains the people, that frees the people to innovate and engage in enterprise, and that liberates the people from ignorance, poverty and disability so that that they can be full participants in our economy and in our democracy.

We do not seek to manufacture economic growth through Government expenditure and spending by GLCs because we believe that the business of Government is to stay out of business. Instead we seek to turn Penang into a knowledge economy that emphasises science and technology and that relies on life-long learning and upskilling to generate human-capital-led growth.

Our belief that success and prosperity depends primarily on the people rather than on Government means recognising that in an increasingly globalised world, Penang must be able to fulfil a 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.

Quality of life in Penang should not be just for the rich, but for all who live and stay in Penang. This requires quality affordable housing, efficient and effective public transport, green open spaces accessible to all, a clean and healthy natural environment and a vibrant arts, culture and heritage landscape.

Thirdly, our emphasis on people means that we believe that we cannot prosper and develop as a State and as a nation if women, ethnic minorities, the poor and the disabled are shut off from full participation in our economy and our democracy. People-centric government requires eradicating poverty, eradicating unfair discrimination and eradicating corruption and cronyism, which elevates private interests and private profits above the public good.

In other words, empowering  human talent, good and clean governance, sustainable development, liveable city and a shared society are critical success factors for economic prosperity that will make Penang No.1 in Malaysia. A shared society is crucial to ensure that prosperity is inclusive. A ‘shared society’ is a socially cohesive society. It is stable, safe based on four key characteristics:-

1.     democratic participation in decision-making,

2.     respect for diversity and the dignity of an individual,

3.     equal opportunity; and

4.     prohibition of all forms of discrimination.

I believe that the Penang Paradigm is the insightful and path-breaking model by Professor Datuk Woo and his team in Penang Institute with Zairil Khir Johari as his CEO, to let Penang lead again.

Making Penang No. 1

Making Penang No. 1 in Malaysia is possible. After all, Penang achieved international recognition in 2011 when it was selected by Yahoo Travel as No. 8 top island in the world you must see before you die. This year George Town became the No. 4 top place for retirement in the world, becoming the only Asian city in the top 8 list. And in 2011 and 2012, George Town became the most liveable city for the first time in Malaysian history, surpassing Kuala Lumpur for the first time ever.

But as I said earlier, while the Penang Paradigm is a roadmap to make Penang No. 1 in Malaysia as a balanced society and an international and intelligent State, the same lessons can be applied nationally. Lest we forget, 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 and 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.

Income as % of US income (in GDP per capita)

Lastly, I would like to end by saying that the time has come when the people should no longer fear the government, but that the government should fear the people. And it is because we, the Penang state government, fear the people that we have adopted this crowd-sourcing approach in order to seek inputs from the people at large. And so, I hope you will all participate by giving your feedback in order to help us refine the Penang Paradigm.

Thank you.

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* This speech was given by Penang Chief Minister Lim Guan Eng during the Kuala Lumpur Launch f the “Penang Paradigm”(2013-2023) on 5 March 2013.