Speech by the Chief Minister of Penang Lim Guan Eng at the Economist Corporate Network talk on 28th April 2014

Good afternoon ladies and gentlemen. It is my pleasure to address this luncheon in the presence of such highly influential business leaders. I would like to extend my appreciation to Mr Justin Wood and the Economist Corporate Network for putting this together.

Businesses these days grapple with different challenges emanating from fierce competition, technological advances, socio-political changes, the degradation of the environment and unpredictable climate. Whilst these are challenging issues on their own, they are compounded by financial markets volatility induced by the monetary policies in the developed world and the slowdown in the Chinese economy.

So, let me share with you some ideas that Penang is implementing in helping businesses cope.

Firstly, my government believes that the role of the government is to stay out of business. This is because over a long period of time, we can see that the track record of government backed businesses has been dismal if not scandalous, for example Perwaja Steel.

Besides, businesses that enjoy implicit or explicit government backing usually enjoy preferential access to markets and cheaper financing. This does not create a level playing field between the private and the government-backed businesses. Such unfair advantage will stifle the development of the private sector, thus preventing these businesses from realising their full potential. Ultimately, government backed businesses will crowd out of the private sector.

Secondly, it is not enough for the government to only stay out of business. The government needs to create a conducive environment. Needless to say, my government is committed to making the bureaucracy more efficient, policies clearer and the infrastructure better. These are the crucial ingredients for businesses to invest and be competitive. The Penang government has made improvements in all these and will continue to pursue these relentlessly.

Ladies and gentlemen, to move on to the next level of development, Penang recognises that high margin, high profitability and highly innovative businesses thrive in a balanced society. This is an environment where the society is intellectually creative, socially progressive, politically empowered, environmentally sustainable, materially prosperous and culturally vibrant.

This is because in a balanced society, brilliant ideas, resourceful private capital and smart human talent can co-exist, reinforce each other and thrive. The closer we are to attaining a balanced society, the more we are going to attract talent, ideas and capital. With critical mass in all these, we can then be more innovative.

The application of these ideas should not be limited to just Penang, because the challenges that businesses face are equally valid in other parts of Malaysia. As we know, Malaysia is stuck in the middle income trap. Malaysia cannot compete on technology with the likes of Koreas; and cannot compete with the likes of Vietnams on labour costs. Hence, Malaysia, like Penang, needs a conducive environment where talents, ideas, capital and businesses congregate and innovate to escape the middle income trap. This means that for a start, Malaysia needs to emphasise merit above other factors.

In Penang, we have explicitly put this concept into action in the Penang Paradigm, the 10 years development plan for Penang. Apart from implementing business friendly policies, Penang is the first State to introduce the no free plastic bags policy and has implemented this policy throughout the year.

Penang has also been consistently rated one of the top 10 most liveable city in Asia. And Penang generates the lion share of medical tourism receipts in Malaysia. George Town, being a UNESCO World Heritage Site, certainly has added an impetus to the historical and cultural vibrancy.

All these are aimed at creating a balanced society so that more talents and businesses will come to Penang; and elevate the degree and intensity of innovation and creativity.

Thirdly, the State government is determined to root out “public enemy number one”. In December 2013, the World Bank President Jim Yong Kim declared corruption as the “public enemy number one”. I cannot agree more. My government recognises the scourge of corruption and immediately upon taking office in 2008, we decided to award all State government procurement by open tenders to eliminate corruption.

This policy is not only an anti-corruption drive but also we want to increase business confidence in Penang. We want businesses to know that in Penang, they operate in an environment where putting across the best idea and the most competitive bid will secure the project. Deals are transparent and are struck by merit; and not through corrupt practices.

I am pleased to share with you that the increased business confidence is reflected in higher Foreign Direct Investment numbers. Penang has enjoyed an economic resurgence that has seen investments increase.

Besides, my government is embracing transparency whole heartedly. All State exco members and State assemblymen must make public declarations of their assets.

Lastly, as touched on at the start of my address, the financial markets are likely to get more volatile in the coming months due to tapering of quantitative easing in the US and the slowdown in the Chinese economy.

Such external shocks cannot be brushed aside naively as Malaysia is an open economy. Whilst it is impossible for anyone to predict the financial markets at any point, it is important to remember that:
1) a rising tide lifts all boats; and
2) only when the tide goes out, do you discover who is swimming naked.

So as the government in Penang, we believe in preparing ourselves for the future, for one day when the tide turns, we want to be the best clothed swimmer amongst our peers.

Therefore, the Penang government has strengthened its financial position by establishing budget-based administration and governing based on the competency, accountability and transparent principles.

As a result, we have recorded yearly budget surpluses and have reduced the state government debt by 95%. Indeed, we are praised by the Auditor General and singled out by Transparency International for our transparent open tender government procurement system.

With all these, we hope that we will not only be in the best prepared position, but also being able to demonstrate that good governance is important to secure the confidence of others, especially the financial markets who might one day be wary of high public debts.

Ladies and gentlemen, in conclusion, Penang understands businesses and my government is committed to providing the best environment for businesses to thrive. We know what have been holding Penang and Malaysia back from realising their full potential. So, the policies in Penang are equally relevant to Malaysia and Penang is certainly a model for Malaysia to emulate.

The Penang government’s policies have liberated the business environment and have induced businesses to invest and thrive. So businesses should welcome the implementation of such policies on a national level for the benefits will be multiplied many folds over.

Thank you.

—–Mandarin Version—

槟州首席部长林冠英于2014年4月28日在经济学者机构网络会谈发表声明,重点如下:

让我与你们分享槟城如何创造利商环境:

首先,政府相信政府的角色就是不做生意。我们可以看到政府背后支持的生意都不受欢迎,要不就变成丑闻,例如:柏华惹钢铁。
此外,那些由政府背后支持的生意通常享有市场通路的优待或更低廉的资金,这让私人界及政府公司在不公平的环境下竞争。这会阻碍私人界的发展,也阻止他们发挥他们的潜能。最终政府支持的生意会把私人界排挤出去。

其次,仅仅让政府不做生意是不够的。政府需要创造一个利商环境。不用说,槟州政府立志让官僚体制更加有效、政策更加清晰及改善基建。这些都是商业投资及保持竞争的关键因素。槟州政府也尽量改善这些,并且会努力追求。

槟州认同在平衡的社会里高收入、收利润及高创新生意。这是一个有创新能力、进步社会、政治权力下放、永续环境、物资丰富及文化活力的社会。
因为在一个平衡的社会里,灿烂的想法、丰富的私人资本及精明的人才可以共存,互补及共荣。当我们离平衡社会越近,我们就越容易吸引人才、点子及资本。有了上述种种,我们可以更加有创意。

上述想法的应用不只限于槟城,因为全马的商业所面对的挑战是一样的。大马陷入中等收入陷阱。我们的科技不比韩国、劳动成本不比越南。因此,马来西亚,也像槟城一样,需要一个有利的环境,让人才、创意、资本及商业汇集及革新的地方,以逃脱中等收入陷阱。这意味着马来西亚需要强调绩效制。
在槟城,我们明确地把上述概念转成“槟城典范”的行动,为槟城规划出一个10年计划。除了推行新商的政策,槟州是第一个全年推动无免费塑料袋措施的州属。

槟城也一直被评为亚洲10大最宜居城市之一。槟城在医疗旅游方面为全国带来不少收入。乔治市做为联合国文化遗产城市,也为历史及文化注入了活力。
这些都是创造平衡社会的努力,好让更多专才及商业可以前来槟城,提高革新、创意的程度及深度。

第三,槟州政府决心铲除“头号公敌”。在2013年12月,世界银行行长金墉宣布,贪污腐败是发展中国家的“首号公敌”。我绝对同意这一点。 我的政府意识到贪污腐败的祸害,我们于2008年刚执政槟州之初即决定,所有政府部门的采购皆需公开招标,以杜绝腐败。

这政策不只是反腐败,我们也要在槟城建立经商者的信心。我们要让商家知道,在槟城做生意,只要有最好的概念,加上最具竞争的价格,就能够透过公开招标获得政府的计划。一切的交易都是透明并以绩效为先,而不是透过贪污腐败的方式取得工程。

商家对槟城的信心,可透过外国直接投资数目的增长看出。槟城已经透过投资的增长,看到经济的复苏。此外,槟州政府全体行政议员及州议员皆需公开财产,以示透明。

基于中国经济的放缓,以及美国量化松宽政策,金融市场在未来的数个月会有更大的波动。马来西亚是一个开放的经济体,面对这些外部冲击,我们并不能够置身事外。虽然没有人能够预测未来的金融市场走向,但需紧记:

1) 水一涨,众船皆高;
2) 只有在潮水退下后,你才会发现,到底有谁在裸泳。

作为槟州政府,我们需为未来作好准备。当潮水退下时,我们要成为同侪中,穿着最好的泳衣的人。

因此,槟州政府透过其预算为基础的管理,强化金融地位,并秉持能干、公信、透明的施政方针管理槟州。

也正因此,我们每年创下财政盈余的记录,并成功减债95%。我们的公开招标政策,甚至获得总稽查司及国际透明组织的点名赞扬。

有了这些装备,我们希望我们不只是能够为未来作最好的准备,并希望能够证明,良好施政在获取民众信心方面,扮演着非常重要的角色。

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