Penang Recorded RM4.33 Billion In Investments For The First Half Of 2015, A 7.4% Economic Growth Rate For 2014 And Expected 6.2% In 2015(e/c)

SPEECH BY CHIEF MINISTER OF PENANG AT THE MICCI ANNUAL LUNCHEON DIALOGUE 3 September 2015 G Hotel:

Penang Recorded RM4.33 Billion In Investments For The First Half Of 2015, A 7.4% Economic Growth Rate For 2014 And Expected 6.2% In 2015

I am delighted to be delivering this luncheon address at the annual dialogue with MICCI, the oldest chamber of commerce established in Malaysia. Today, I would like to share with you some of the challenges that all of us face and how Penang is standing out amongst the crowd and achieving its aspirations.

Economic headwinds facing us are numerous. Firstly, the implementation of GST on 1 April 2015 has adversely affected our retail economy business is down 20-25% in Penang and 50% in places outside Penang.

The federal government’s promises of minimal impact on the economy has shown to be untrue. So bad is the situation until the federal government has failed to fulfill its promise to refund GST payments made within 2 weeks. If the federal goverment cannot even make refunds within 2 weeks, public confidence is affected as if they cannot even pay up.

Secondly, the RM42 billion on 1MDB scandal has caused a loss of confidence amongst fund managers impacting negatively on our economy. Our ringgit has depreciated significantly against all currencies and is about 30% down against the US dollar.

RM has become the worst performing currency in Asia this year. This effectively means that Malaysians are poorer by 30% in US dollar terms. Overall, investors in Bursa Malaysia were poorer by more than RM159 billion between July 15 and August 25 based on the drop in the market capitalisation of 909 counters traded on Bursa when the Bursa dropped from 1,727 points in July 15 to 1,532 on 24 August 2015.

This 30% ringgit depreciation has significant impact on Penang, as we are supposed to graduate to a high-income economy this year. According to the World Economic Forum Human Capital Report, a high-income economy is one with a GDP per capita of USD12,467 or RM40,481 based on the then-exchange rate of RM3.27 to USD1.

However, the ringgit’s 30% depreciation means that the benchmark of USD12,467 or RM40,841 has been raised to RM52,000. Penang was expected to achieve a GDP per capita of RM42,251 based on a population of 1,681,922 people and a GDP of RM71.063 billion by this year. This would have exceeded the benchmark of RM40,841 required to become a high-income economy. Unfortunately, with the current value of our ringgit, this is far off from the RM52,000 (USD12,467) now needed. So now only are we suffering from imported inflation due to the ringgit’s weakening value vis-à-vis the US dollar, we will also miss out on becoming a high-income economy.

At least Penang is able to lessen the negative impact through our manufacturing and services sectors which is externally-related. Indeed, many of the companies that are favoured by investors in the midst of the upheaval are Penang based, such as Inari, Globetronics and Vitrox. These companies, together with their local suppliers, will be able to mitigate Penang’s economy from the negative effect from the ringgit’s fall.

Our tourism sector is also expected to get an additional boost from overseas visitors and domestic tourists. Although we are already Malaysia’s top tourist destination, I urge the operators to take this opportunity to invest further in their products and make Penang even more attractive, competitive and premium rated.

Besides, Penang’s talents who are working overseas will find Penang’s properties even more attractively priced. All these will help mitigate the negative impact from the ringgit’s fallout. Of course, there will be businesses who are not exposed to these dynamics and will find that the ringgit’s fall compresses business profit margins. I encourage these businesses to invest in productivity enhancing processes or reinvent the business to cope better with the current testing times.

Malaysia is also highly vulnerable due to foreigners owning close to 40% of the Malaysia Government Securities, amounting to RM165 billion. The widely expected US interest rates hike later this month will put the spotlight on the investment decisions of these investors. Therefore, getting our domestic finances in order is of high priority.

The Federal Budget next month should focus on cutting waste and eliminating corruption rather than increasing taxes, levies and bureaucratic red tape. In Penang, we have shown how good clean governance and prudent financial management can go hand in hand. From 2008 to 2013, we recorded budget surpluses of RM453 million. This 6 years surplus is more than the RM373 million in budget surpluses BN recorded in the 50 years it ruled Penang from 1957-2007. This clearly shows what competency, accountability and transparency can do.

Thanks to these surpluses, we have been able to carry out many social welfare programmes and distribute cash aid to the needy. As a result, we were able to reduce our income gap. This is proven by our Gini Coefficient, which is the measure of income inequality where a higher number signifies greater income inequality, reducing from 0.42 before to 0.37 in 2012. This 0.37 by Penang is much superior to our national gini coefficient of 0.42.

Thanks to our CAT model of governance, international investment increased. From 2008 to 2014, we managed to attract RM48.2 billion worth of investments, which is 93% higher than the RM24.9 billion invested from 2001 to 2007.

Ladies and gentlemen,

This brings me to what Penang is doing to achieve our aspirations and ride through the storm. As highlighted in my speech last year, Penang wants to be an international intelligent city by leveraging on the available talent, liveability, heritage, good governance and Penang’s strategic location. We seek convergence of our manufacturing, services and public sector to create synergies in both new and existing industries that can create positive economic spillovers. I am glad to be able to share with you some of the initiatives that the State has done in the past twelve months to accelerate the convergence.

An empowered organisation is one in which individuals have the knowledge, skill, desire and opportunity to personly succeed in a way that leads to collective organisational success. During the 10th Malaysia Plan, our economy grew 5.3 percent with 1.8 million new jobs created – 1.3 million jobs in services, manufacturing (431,000 jobs), construction (78,000 jobs) and agriculture (11,000 jobs). The skilled workers in the country make up a dismal 28 per cent of the total workforce, far off from the targeted 35 per cent to be achieved in 2020.

In the area of talent, the state government has introduced German Dual Vocational Training in Penang. We want to bring in the foundation that underpins Germany’s manufacturing prowess into Penang. The first batch of the students will start on Mechatronics next week and will be employed in companies such as B Braun, Southern Steel, Robert Bosch and Osram. In addition, to bringing in German Dual Vocational Training, the state government is also supporting it financially. The programme is open to all companies in Penang and I encourage your participation to upgrade your employee’s skills.

No doubt because of the depth of our talent pool which we are continuously cultivating, foreign investors have continued to prefer Penang as an investment destination. According to MIDA, in the first six months of this year, Penang attracted RM4.33 billion worth of investment, compared to RM3.13 billion last year.

This is set against excellent GDP growth of 7.4% in 2014 in Penang; and the 11th Malaysia Plan estimates Penang’s GDP growth this year to be equally robust at 6.2%. We also have full employment with Penang recording the historic low 1.2% unemployment rate last year. Such good employment market is translated to households in Penang enjoying household income growth of 7.6% annually between 2012 and 2014.

These are all excellent footing as we embark on an ambitious RM27 billion Penang Transport Master plan to develop comprehensive public transport infrastructure in Penang. This will be a “big bang” approach that will involve land, sea, air and rail solutions for the people of Penang.

As you are aware, we have recently selected the Project Delivery Partner who is going to seek the required approvals from the relevant authorities together with a detailed proposal on the layout for the RM27 billion project. The implementation of this 5 in 1 approach combining buses, taxis, LRT, ferries and cable car is timely as the global economy is softening.

The injection of construction activities will help cushion any of the negative impact externally. Therefore, by investing in public infrastructure, Penang will be able to ride out the current economic situation and emerge stronger at the end.

Ladies and gentlemen,

The economic clouds might be darkening with the ringgit’s depreciation and a global economic slowdown. However, Penang is well positioned to capitalise on any new opportunities.

We are continuing to make ourselves more attractive and robust. Coming into power in 2008 just before the financial crisis, this government has proven to be able to navigate economic storms.
Together with businesses like yours, we are investing to make Penang better.

Thank you.

—–Mandarin Version–

槟州首席部长林冠英于2015年9月3日在马来西亚国际工商总会(MICCI)的年度午宴上发表演讲,重点如下:

我们正面对经济不景气。首先,2015年4月1日推行的消费税严重影响零售业,槟城的业者生意下跌了20-25%,槟城以外地区的业者下跌了50%。

联邦政府原本承诺消费税对经济影响不大,已经证明不属实。情况糟糕到联邦政府没有办法依承诺在两个星期内退还已经上缴的消费税。 如果联邦政府不能在两个星期内退款,公众肯定会失去信心,彷佛他们没有办法退还消费税。

第二,420亿令吉的一马机构丑闻已经令许多投资经理会失去信心,导致经济负面影响。马币兑各种外币严重贬值,兑美元更是下跌30%。

马币已经成为今年表现最差的亚洲货币。这意味着马来西亚人民在兑美元的意义上比以前穷了30%。整体上来说,马来西亚股票交易所在7月15日至8月25日是之间穷了1590亿令吉,当股票从7月15日是的1727点下跌至8月24日的1532点,交易所内909个柜台的股票市场交易也下跌。

马币贬值30%对槟城也有显著影响,我们应该在今年晋身高收入经济体。根据世界经济论坛人力资本报告界定,当国内生产总值达人均收入为1万2467美元,或4万零841令吉(以1美元兑3令吉27仙为准),就能称为高收入经济体。

而槟州在马币大幅贬值上付出了代价,事缘我们理应在今年走向高收入经济体,但现在却被拖回中等收入的阶段。

原本我们以4万零841令吉就能晋身成为高收入经济体,但,现在马币贬值30%,意味着标准已提高到5万2000令吉。根据原先预测,槟州今年的国内生产总值将达人均收入4万2251令吉,这个预测建基于168万1922人口,以及2015年国内生产总值710亿6300万。按此推算,我们已达4万零841令吉高收入经济体标准。不幸地是,随着马币贬值,国内生产总值离5万2000令吉(1万2467美元)一大截。我们不只要承受进口货因马币兑美元贬值的通膨,我们也失去成为高收入经济体的机会。

至少槟城还可以依赖我们两大外在相连的制造业和服务业减轻经济不景的影响。很多位于槟城、备受投资者青睐的公司如Inari, Globetronics 及Vitrox也正处于逆境。这些公司与自己的本地供应商合作,将能够帮助我们减缓槟州经济因马币贬值所承受的负面影响。

马来西亚也是高度脆弱的,因为外国人拥有接近40%的政府国债,总值约1650亿令吉。预期中的美国利息在本月上调将令投资者的决定备受关注。因此,让我们的国内经济恢复正常秩序是非常重要的。

联邦政府下个月的预算案应该要注重开源节流及反贪,而不是提高课税、征税及繁文缛节,在槟城,我们展示了廉政及审慎财务管理可以并行。2008年至2013年之间,我们的预算盈余达4亿5300万令吉。这六年的盈余比国阵执政槟城50年期间(1957-2007年)所累积的3亿7300万令吉还多。

这些盈余促使我们得以做出更多的社会福利计划,对有需要的群体给予现金支援,以减少州内收入分配不均的问题。我们的基尼系数确认了这一成效,槟州的收入分配不均基尼系数从之前的0.42降至2012年的0.37。相对全国的0.42,槟州的0.37明显出色许多。

我们秉持“能力、问责及透明”的治理模式,使得国际投资增加。从2008年至2014年期间,我们获得了高达482亿令吉的投资,比起2001年至2007年的249亿令吉投资,足足高出93%。

在打造专才方面,槟州政府引进了德国技职训练系统——这套让德国制造业的表现如日中天的系统。我们的第一批学生将往机械电子工程领域发展,他们将被德国贝朗, 南方钢铁, 博世公司以及欧司朗所录用。政府除了引进有关系统外,也给予财政上的支持。这项计划公开予州内所有的公司,我希望您能参与,一起提升员工的技能。

毫无疑问的,因为我们长期耕耘于打造人才库,外资才会对槟城不离不弃,把这里作为他们投资的据点。根据马来西亚投资发展局资料显示,今年首六个月,槟州吸引了43亿3千万令吉的投资,而去年同期,槟州所获得的外资是31亿3千万令吉。

这一切使得槟州2014年的国内生产总值成长至7.4%;而第11大马计划亦预测槟州的国内生产总值持续强劲有力,达6.2%。在就业方面,我们创下失业率的新低,去年的失业率仅有1.2%。如此良好的就业市场反映在槟州的家庭收入上面,2012年至2014年期间,我们的家庭收入成长皆为7.6%。

当然我们不仅仅因此而满足,接下来,我们还会挹注270亿令吉,投资于槟州交通大蓝图之上,以便全面发展州内的公交系统。这项爆炸性的大型计划,将囊括海陆空及轨道方面的工程,全方位造福槟城人民。

若有留意,你会发现最近我们刚遴选出项目交付伙伴,后者将寻求相关部门的批准,以便执行一个涵盖巴士、计程车、轻快铁、渡轮及缆车五合一的大型计划。有关工程价值270亿令吉,它的出现宛如全球经济疲软下的及时雨。

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