Opening Speech by Penang Chief Minister Lim Guan Eng In Wawasan Open University On The Nishimura Lecture Organised By The Penang Institute On 17 March 2014.
A very good afternoon I bid to all of you. It is my pleasure to welcome the esteemed Professor Kiyohiko Nishimura, former Deputy Governor of the Bank of Japan and Dean of the Faculty of Economics, University of Tokyo, to Penang. He will be delivering a very important lecture that touches on the lessons from the recent financial crises and its relevance to the future of our region.
Economic uncertainty
The significance of this lecture cannot be over-emphasised, given the looming clouds of economic uncertainties. These uncertainties come from different directions and I shall delve into three main themes.
Firstly, the tapering of quantitative easing by the Fed has commenced, though the pace of tapering may change subject to the robustness of US economic recovery. As we all know, quantitative easing has been an important factor in Asia in the last few years as it allowed extra liquidity to flow into this region. The question is, what will happen when capital leaves? Certainly, there is bound to be an impact on Malaysia.
We are already seeing some effects of the tapering, as our foreign reserves have begun to shrink, which basically means that we are experiencing capital outflow. Whilst the ringgit’s weakening value has seen a rise in exports, it also means that the price of imported goods will increase, thus causing inflation. In these trying times, such an effect will further aggravate cost of living problems for low and middle-income households. Another problem associated with higher inflation is also the risk of increasing interest rates, which may be an added burden to our already high personal household debt problem, which currently stands at 83% to GDP.
Secondly, the Chinese economy is undergoing a period of rebalancing. With slower economic growth expected, its implications are serious considering that China is one of Malaysia’s largest trading partner. Already, there is some re-evaluation of China’s demand potential, especially after China suffered its first onshore bond default following the failure of Shanghai Chaori Solar Energy Science & Technology Co to make an interest payment.
Thirdly, global debt has soared by RMUS$30 trillion or more than 40% from US$70 trillion in mid-2007 to USD100 trillion in mid-2013 according to the Bank for International Settlements. This is due to the fact that governments in crisis suppressing interest rates and borrowing heavily in an attempt to generate growth to pull their economies out of recession. Private companies have taken advantage of record low interest rates by borrowing predominantly to fund share buybacks. The sharp increase in debt puts these countries’ financial security at risk, especially when interest rates begin to increase.
The more relevant question for us, is how do these three uncertainties relate to Penang?
Preparing Penang For The Future.
As I said earlier, external shocks will bear significant impact on Malaysia and Penang, being that our economy is still largely dependent on export-oriented manufacturing. Whilst it is impossible for anyone to predict the financial markets, it is important to remember two things:
1. A rising tide lifts all boats; and
2. Only when the tide recedes do you discover who is swimming naked.
As a responsible government in Penang, we believe in being prepared. For when the day comes that the tide turns, we do not want to be caught naked but instead be the best equipped amongst our peers. In other words, I am talking about strengthening our financial position.
Since taking over in 2008, the Penang state government established a budget-based administration and governance based on the principles of CAT (Competency, Accountability and Transparency). Through the implementation of open competitive tenders for all public procurements and tenders, requiring all state elected representatives to make public declaration of assets and full disclosure of government contracts signed with the private sector, making CAT governance of competency accountability and transparency our core values.
Thus Penang have been able to record budget surpluses every year without increasing any rates, increase our state assets by 50% from RM800 million to RM1.2 billion, rescue a local government(Seberang Perai Municipal Council) from bankruptcy within only one year and more importantly reduce our state debts by 95%. These achievements have been corroborated by Transparency International as well as the annual Auditor-General’s reports.
More importantly, the practice of good and clean governance in Penang has helped us become the top foreign direct investment (FDI) state in Malaysia for the period of 2010 to August 2013, with investments amounting to RM19.7 billion or nearly 20% of Malaysia’s total FDI of RM103 billion. Thus, we have demonstrated that good and clean governance can not only help us save money, but also secure the confidence of investors.
As we move forward, the government is upgrading from a budget-based administration that plugs leakages and cuts waste or inefficiencies to an outcome-based administration which stresses on positive impact and difference to the stakeholders that generates economic growth (pro-growth), creates employment opportunities (pro-jobs) and foster equitable justice (pro-poor).
Penang believes that economic growth alone is not enough if income inequality is not reduced through equitable distribution of wealth. 40 years after Arthur Okun’s book of “Equality and Efficiency:The Big Tradeoff”,International Monetary Fund’s economists have concluded that reducing inequality accelerates not reduces economic growth not in occasional spurts but sustained growth.
Hence, Penang is not only the first state in Malaysian history to wipe out corruption but also the first state to wipe out poverty. Adopting the unconditional cash transfer or UCT model of topping up all families whose monthly household incomes are below the poverty line of RM790 per month, Penang has managed to free itself from absolute poverty. Now, we are focusing on reducing relative poverty through cash aid and providing affordable home ownership by building 20,000 affordable housing units throughout the state in addition to another 20,000 units more from the private sector supply.
Penang has relied on the twin economic engines tourism whether medical, education or recreation in nature and manufacturing in electrical and electronic sectors, automation, medical devices and aerospace. However, the key to future economic success is not an over-reliance on one sector but to seek convergence of not only the manufacturing sector but also both the services and government sector.
Penang is investing in the shared services sector through a RM 3.3 billion Business Process Outsourcing and Information Technology Outsourcing(BPO-ITO) hub that will see the creation of tens of thousands of high-paying and knowledge-intensive jobs. Already, global financial services firm Citibank has opened their Global Citigroup Transaction Services centre here, employing more than 1,000 local employees with an annual volume of 20 million transactions worth USD5.8 trillion.
In addition to Citigroup, other companies that have set up their shared services here include Wilmar, Air Asia, HIS, Atmel, Toll Forwarding and Jurong Shipyard. In total, the IT-BPO Hub will comprise of 74 acres of IT-BPO Park in Bayan Lepas, a planned development of 7 acres BPO Prime in Bayan Baru for ICT companies and a 100,000 sqft Creation Animation Triggers (CAT) in the George Town heritage enclave.
Conclusion
In pursuit of our goal to become an international and intelligent city, we have taken the important steps of institutionalising the fundamentals of rule of law, good and clean governance, as well as integrity in leadership. Following on from that, we have established outcome-based administration that focuses on creating a rising tide that lifts all boats.
While these initiatives have strengthened our financial position and built resilience, we have also taken steps to ensure we stay ahead of the game in manufacturing and services, in order to ensure Penang is best prepared in the eventuality of an economic tidal change.
Education is our lifeboat to the future. Not only can it reduce inequality, it can provide mobility and opportunity to all. Only a sound education foundation can provide ladders of opportunity and escalators to mobility. Penang state government is adopting a 3-prong approach towards strengthening our education system:-
• Giving annual funding to existing half-funded vernacular and religious schools;
• Building Learning centers that focus of STEM teaching of science, technology, English and Mathematics; and
• Attracting world class universities as well as adopting the German vocational school system within multi-national corporations.
These are huge challenges and success is yet uncertain. But we must be willing to try and invest in education. For only when we boldly invest in the future then can we win the future.
For this reason, it is important not to rest on our laurels. Therefore, lectures such as this one today are important as the insight from an insider such as Professor Nishimura will undoubtedly prove to be invaluable to all of us, whether as government, corporations or individuals in Penang and Malaysia.
Thank you.
—–Mandarin Version—
槟州首席部长林冠英于2014年3月17日在槟城研究院主办的开放大学主题演讲上发表演讲，重点如下：
一个注重科学、科技、英文和数学（STEM）的良好的教育制度是我们迈向未来的救生艇。
经济不确定
首先，联邦政府已经开始逐步削减量化宽松，虽然它的步伐可能随着美国经济复苏而有所改变。而我们也知道，量化宽松货币政策是亚洲过去几年的重要因素，它允许额外的流动资金进入这个区域，问题是：当这些资本离开时会发生什么事情？肯定的，它也必定影响马来西亚。
我们已经看到削减购债规模的影响，我们的外国储备金也在减少，基本上就是说我们经历着资本外流，而疲弱的马币虽可见到出口的上升，但这也意味着入口商品的价格将会上升，进而导致通货膨胀。这种时候，中低收入家庭的生活成本上涨问题将会扩大。另一个伴随通膨而来的风险是利息上调，对我们原有的高额家庭负债可能形成额外的负担，目前它占国内生产总值83%。
其二，中国经济在进行“再平衡”。随着经济成长放缓，它的影响力是很严重的，尤其当中国是马来西亚最大的贸易伙伴国。还有，业界也重估中国需求的潜能，特别中国上海超日太阳能科技股份有限公司债务违约，成为中国国内首宗债务违约。
其三，根据国际清算银行(BIS)，全球债务已经从2007年中的70兆美元，上升30兆美元或40%至2013年中的100兆美元。这是因为政府在危机中压低利息及大量借贷，以刺激成长脱离经济衰退。私人公司已经乘低利息时大量借贷用于股票回购。债务上升让这些国家的金融安全受威胁，特别当利息开始上升。
与我们有关的问题是，这三个不确定性如何影响槟城？
为槟城未来做准备
如较早前所说，外来的震荡将严重影响马来西亚及槟城，因为我们的经济仍然极大的依赖出口导向的制造业。然而，任何人要预测金融市场是不可能的，最重要的是记住这两点：
1.水涨船高，涨潮的时候船自高
2.但只有退潮时你才看得到是谁在裸泳。
作为负责任的槟州政府，我们相信要做好万全准备。一旦潮起潮落变换之际，我们不想被人看到在没有准备之下裸泳，相反是要让我们的同侪们穿着最好的装备迎战。我说着的就是强化我们的金融地位。
自2008年执政，槟城州政府开始预算型管理，以能干、公信、透明的方针施政。透过在各公共设施实行公开竞标、要求州内民选代表必须向公众公布财产、公开政府与私人界签署的合约，让能干、公信、透明成为我们的核心价值。
槟城有能力在不涨任何税务之下，每年为预算制造盈余，让我们州资产增加50%，从8亿令吉增至12亿令吉，而且，只用了1年时间成功营救威省市政局免于破产，最重要的是把州债务减少95%。这些成就都得到了国际透明组织及国家稽查报告的赞许。
更重要的是，槟城的良好及廉洁施政协助我们在2010年至2013年8月成为全国外资最高的州属，共获得197亿令吉，占了马来西亚1030亿令吉外资的20%。因此，我们所标榜的良好及廉洁政府不只为我们省钱，但是也为投资者带来信心。
在我们前进之际，州政府已经从修补疏漏、减少浪费的预算型管理，提升到成果型管理，为槟城各造带来不同于之前正面影响，那就是“三有政策”：制造经济成长（有成长）、制造就业机会（有工作）及提倡社会平等正义（有济贫）。
槟州相信，若财富无法获得公平的分配，即便经济成长再强劲也于事无补。在美国著名经济学家阿瑟·奥肯出版《平等与效率——重大抉择》的40年后，国际货币基金组织内的经济学家做出总结，即减少财富分配不均，将能让一国的经济永续成长。
职是之故，槟州不仅是全马第一个消除贪腐的州属，同时也是第一个消除贫穷的州属。在槟州，任何家庭收入低于贫穷线即每月790令吉以下者，将能自动获得补贴，以便可以脱离贫穷。现在，我们进一步把重点放在解决相对贫穷的群体上，方法包括提供援助金、提供2万间可负担房屋，外加私人界的2万间等。
槟州一向依赖双经济引擎，其一为旅游业，涵盖医疗、教育或自然休闲类旅游；其二是制造业，包括电子与电气、自动化、医疗器材以及航太领域。但，我们的未来不能过度侧重单一领域，反之，应寻求突破与整合，把触角伸到制造业上以外的服务及政府领域上。
槟州透过投资33亿令吉的“槟城资讯工艺商务流程外包中心”建设资源共享服务中心，将能创造出上万个高收入以及知识密集型的工作机会。目前，花旗银行也已经来到槟城开设他们全球性的交易服务中心，并聘请了超过1千名的在地员工。这平台每年处理2千万宗交易，相等于5.8兆美元。
除了花旗集团，其他来到槟城设立资源共享服务的公司，还包括了丰益国际、亚航、HIS, Atmel, Toll Forwarding 以及 Jurong Shipyard。槟城资讯工艺商务流程外包中心将分为三个部分，即于占地74英亩地 的峇六拜 IT-BPO、峇央峇鲁BPO Prime（占地7英亩）, 及乔治市古迹区10万平方尺的创意动画区（CAT）
结论
为实现成为一个国际智慧型城市的目标，我们采取了重要步骤，让我们的法治丶良好廉政，及廉洁领袖成为我们的基础制度。随后，我们制定成果型管理，专注于制造能撑起全部船只的涨潮。
虽然以上措施已加强了我们的财务状况并具有弹性，但为了确保槟州在应对经济潮汐变化上充分准备，我们也采取步骤确保制造业和服务业继续领先。
教育是我们未来救生艇。良好的教育基础不仅能够减少不平等，同时它可以提供社会流动及机会。槟州正采取3项步骤，三管齐下来加强我们的教育体系：-
. 制度化拨款予半津贴和宗教学校；
.建立学习中心，专注在科技和英数STEM教学上；
.吸引世界顶尖大学，其中通过跨国企业采纳德国职业学校系统。
这些都是巨大的挑战，成功与否尚不确定。在教育领域上，我们必须愿意尝试和敢于投资。因为，只有当我们大胆地勇于投资未来，我们才能赢得未来。
因此，我们不能再固步自封。无论对于槟州或联邦政府丶企业和个人领域，今日的演讲非常重要，就如Nishimura教授深入的专研，无疑地向我们证明这是无价的。
谢谢。