SUMMARY TRANSCRIPT OF THE PENANG CHIEF MINISTER LUNCH SESSION WITH THE FOREIGN CORRESPONDENTS ASSOCIATION (FCA) OF SINGAPORE, 12 AUGUST 2011
Speech by Penang Chief Minister
• In spite of its size, Penang punches above its weight and contributes 35% to Malaysia’s total exports both in term of value and volume. Economically, it is the second most important state in Malaysia after Selangor.
• The main reason underpinning Penang’s economic success is basically its human talent. Since it does not have any natural resources, it survives and lives merely by its wits or die empty-handed. In that respect, human talent has been Penang’s main resource and over the past years, Penang has transformed itself into E&E hub and industrial cluster by building and attracting human talent.
• Penang was in a state of graceful decline over the last 18 years. That PKR has brought in new breath of change and reforms to Penang. Last three years, PKR has slowly stirred Penang up and shaken off the rust.
• In 2010, Penang was number one in terms of investments despite having six per cent of the country’s population. It has attracted 36% of Malaysia’s FDI further accelerating Penang’s contribution towards exports. The downside to this is that Penang is exposed to the vagaries of the world’s trading condition. So far, Penang has managed to weather the downturns well.
• Has full employment though facing severe shortage of skilled and ordinary workers. Like Singapore, Penang welcomes any workers.
• Feels that the reason why Penang is so “exciting” among all the other states in Malaysia is because Penang is not so focused on the traditional numbers, but also focused on the quality of life. Wants to build an international and intelligent city in Penang, with sustainable and good quality of life. Has good green policies with the first and so far the only state to adopt a no-plastic bag campaign.
• Penang is giving the platform and opportunity for everyone to “change the world”. Best place to visit and invest as it is the “freest” state, allowing people to express themselves and believing freedom of speech, freedom of expression and rule of law. “If you want to do any business in Penang, no need to say that you know the Chief Minister, only need to know the law and get the transaction done”.
• There may be some who will say that Iskandar may be the main growth area, for the moment but in the long run, Penang will beat Iskandar hands down. The reason because Penang has rule of law.
• Claims to run the cleanest state in Malaysia and being praised by Transparency International for being the “only corruption-free state” in Malaysia.
Question and Answer (Verbatim)
1. On the level of investments in Penang vis-à-vis Iskandar Malaysia
Answer: Admits that in terms of infrastructure work, Iskandar Malaysia is a very, very strong competitor now and probably in the future. But if you look at in terms of investments by foreign companies especially in high tech and knowledge intensive sectors, Penang is number one, based on figures from MIDA. In 2010, FDI into Penang was RM10.5 billion whilst Johor is half of that. The main critical area of investments in Penang is still E&E, followed by medical devices, aerospace and renewable energy (Robert Bosch). Also trying to focus on services sector, whereby by 2020 sees Penang’s GDP driven not only by manufacturing but also services. Wants to follow the California model with services accounting for more than 50 per cent of GDP (especially tourism). Manufacturing now accounts for 57% of Penang’s GDP.
On the infrastructure in place, expanding double track system which will be ready in two years. There are also 11 flights from Singapore to Penang daily which are usually full.
2. On the investments incentives provided for Penang vis-à-vis Iskandar Malaysia
Answer: Federal Govt incentives are the same for all states whether in Penang or Johor. Penang does not offer free land. What probably Iskandar can offer is cheaper land prices while Penang offers the “Eldorado of 21st century” ie human talent. So while investors can get some fiscal assets cheaper in Iskandar but in the long run, they will not get the logistics capability, human talent, supply chain management or “residual intelligence” available in Penang. Thus, in the long run, their costs will be higher.
On “residual intelligence”, Penang has 40 years of experience dealing with high tech E&E industry. This is a strong advantage because the quality of products manufactured in Penang is as good if not better than those produced in the MNCs home offices. Companies do not need to spend so much to train workers in Penang who have reasonably good command of English, technical knowhow, logistics support, supply chain management support and a “good and honest” State Government.
3. On whether corruption is an issue in Malaysia in general and how does Penang balance its reputation versus history of corruption in Malaysia when bargaining with potential investor
Answer: Foreign companies are already aware of Penang’s reputation. When investors come to Penang, their first visit would invariably excludes Government leaders. They want on-the ground assessment and feedback from the people that matters including competitors. Only once the country has passed the first test, do they want to meet the leaders to size them up, to see whether this is an intelligent person to work with, and honest enough to trust. It is a given that investors know that Penang is clean. Suggests that you refer to the latest issue of the Economist that has an article on Penang.
4. The Economist article is entirely a positive one on Penang. Is there is any negative report on Penang. Referred to NST claim that Penang Govt should come clean on the state’s industrial development blueprint and not give all sorts of excuses why it was shelved. Critical reports in the Business Times that basic services like the train does not work etc. Is this because some of the Malaysia media is considered highly political or some of the critics have a point.
All newspapers in Malaysia are controlled by the Government. Does not mean that we dismiss criticism made against the States Government. But if that is the best they can do, then it says a lot about the State Government running the Government efficiently.
On the industrial blueprint, Penang has already announced it but the Federal Government insisted that we should collaborate on a Greater Penang Masterplan. So we have agreed to work with the Federal Government on the collaborative effort which will continue after the “Muslim Holidays”. Now we are blamed by the Government controlled press for doing the things that the Federal Government requested us to do.
In terms of basic services conditions in Penang, would like to invite you to come to Penang. Penang is visibly cleaner not only in terms of running an honest Government but also cleaner physically. Also safer and not to worry about safety in Penang. Penang was number one last year in terms of cutting crime by 27 per cent. For the first six months also cut crime by another 25 per cent. Wherelse in Johor, a Singaporean is likely to get kidnapped. Won’t have that problem when you come to Penang.
5. It was widely reported in May 2011 that DAP has opened up and would like more votes from the Malay community. Do not want to be seen as a Chinese party. Is there a shift going on within the Party?
Answer: DAP has always been multi-racial and never discriminated or mistreated any segment of the population unfairly, as portrayed by Govt-controlled media. Wants to run a CAT Government-competency, accountability and transparency.
6. Read somewhere that Penang now has more Chinese ethnic than Malays
Answer: Penang has always been a Chinese majority state. In future that is going to change.
7. How confident is DAP retaining power with the demographic shift
Answer: That is why the State Government is not race-oriented but performance-oriented. Up to the people to decide whether they have a good Government that delivers or not.
8. How confident is DAP retaining power in the next Election. What is the sense on the ground.
Answer: Can never take things for granted and not too cock-sure. Will keep on working hard.
9. How do you personally survive all the personal political turbulence. Also the ETP funds have been withheld from Penang.
Answer: Question of faith that Malaysians want something better for themselves (freedom, justice, fair play). For Penang, why it survived and prospered is because the current Penang Administration allows the people to express themselves, to fulfill their potential and put their talents to use. One of the greatest tragedies is when a person is not allowed to maximize its talents or to use it optimally. We have the only Speakers Corner in Malaysia (where you don’t need to register with the Police like in Singapore). In Malaysia, you can get arrested for assembly or speaking up. But only in Penang, can you enjoy freedom of speech but enjoy freedom after speech.
10. What is you assessment of Bersih and similar movements in Malaysia.
Answer: In Malaysia, there is no free and fair elections. That is why Bersih took out a campaign to seek a clean election, and when their request was rebuffed, they decided to hold a peaceful rally to petition the King to hold free, fair and clean elections. It was a peaceful assembly that was unfortunately brutally broken up by the Federal Govt. In Penang, we never asked the Police to act against demonstrators. You would probably find that the state with the highest number of demonstrators is Penang, all organized by the Opposition (BN). Malaysia may have freedom of speech but not freedom after speech (likely to be detained after speaking). No one has been arrested so far in Penang even though we already have the Speakers Corner for more than a year.
11. Apparently the mainstream press is so discredited that Malaysia has one of the highest readership of online alternative press.
Answer: Not surprising that they have lost all credibility. Look at some of the stuff they print which are outright lies. I have been accused of anti-Malay and anti-Islam. But at the same time, I have also been accused of anti-Chinese. Cannot be accused of both at the same time. I am not anti-Malay nor anti-Chinese but only anti-corruption.
When they make claims that Penang Govt victimized certain groups (banned the Maulud procession). Not true. Never banned any religious procession. In fact, every year, they are held on a bigger and bigger scale. But yet this lies are printed every year in the Government controlled media.
Can lie to some of the people some of the time, can’t lie to all people all of the time. People see through it. That is why they look for alternatives sources and of course, the internet is a very important alternative media.
12. How do you see the social media impacting the next election? What do you see changing? Has it had a big impact in the last election but is continuing to prevail?
Answer: Definitely, it will have a huge impact. Look at what happened in Singapore. Am sure it will be equally big in Malaysia, but probably a little bit more dispersed because the rural population will need a bit of time to handle and master the new medium. So when we talk of winning power in the next election, it may not happen but certainly happen in elections after that. Looking at timeframe, maximum lifespan of five years for the ruling coalition in Putrajaya. The voters will be younger and more informed. The ruling party has command over traditional media but not over the social media.
13. What medium is working the best right now in Malaysia; Facebook or others.
Answer: Everything related to social media. At the moment, the one that stands out would seem to be Facebook. Malaysia has one of the highest users of Facebook but am sure Twitter will catch up.
14. Is Pakatan Rakyat strong enough to survive the next election and the one after that.
Answer: Definitely, so long as we are still the Government in several states, will definitely go on. How long can the Federal Government continues to feed on the gravy train. There is only so much you can steal. The extent of corruption is incredible. How much more can you steal. So when the chicken comes home to roost, there will be a full accounting. There is a lot of suffering among the lower income group because of rising prices. Seventy per cent of the population has household income of less than RM3,000. Rising prices are cutting their savings and living standards.
The Government cannot sustain the subsidies indefinitely because the budget deficit is blown apart. Even this year, we are wondering how they are going to deliver this election budget.
15. Are there lessons to be learnt from the Singapore election namely the use of social media and the way opposition parties harness that.
Answer: Think the experience from the Singapore election is that the PAP did rather well. Thought they would lose more seats (12-15 seats), based on the turnout of the crowds. But they managed to lose only six seats which was a remarkable performance. But if you look at the victory margins (seats with less than 1,000 votes), they almost lost more than that. Fortunate for PAP, that all the close seats went their way. But if they had not, then they would have lost 10-12 seats. Under the circumstances, the PAP performed very well. One of the reasons they performed well despite the overwhelming demand for change was principally because they ran a clean and competent Government. Change is a most powerful word in the world.
So despite allegations of arrogance which is grating, it does not cause the people money. This is why the people were still willing to give PAP a shot. If the Government had been corrupt, that would have been the end. Why they could still win 60% of the vote.
In the last election, the ruling Malaysian Government scrapped through with 51% of the popular vote. But the way they gerrymanded the constituencies, they won 62% of the seats.
16. For the next General Election, what will DAP be campaigning on?
Answer: Need for change so that we can claim our country, reclaim democracy, stop them stealing the future of our children. Look at all the transactions that have been done, how much we lost over the MAS scandal. No full accounting over the various scandals.
17. Geographically throughout Malaysia, where do you see the biggest pocket of strength for the Opposition?
Answer: Basically in Peninsular Malaysia on the western coast and the northern states. The ruling Party’s strength is concentrated in the south near Singapore, probably influenced by the more conservative strand. But when they see Singapore changing, it has also an impact on the southern part of Peninsular Malaysia.
18. How many of the states can the Opposition win this time around? Can you retain the five states won in the last election?
Answer: Can retain the five states and hope to win three more (Terengganu, Perlis and Negeri Sembilan).
19. Would that give you majority in the Parliament?
Answer: It would come close but not necessary give majority.
20. What’s changed that would allow you to win those states between now and the last election?
Answer: Cost of living, economy that is still very, very bleak. Apart from that, calls for change.
21. So basically, you are able to spread your message more in these states than able to in the last election?
Answer: When we talk about changing the government, they don’t laugh at us. In the past, we will be laughed off.
22. How will you be able to win Sarawak because Sarawak and Sabah are really the stumbling block for the Opposition Alliance to take control? In the last state election, Sarawak was still overwhelmingly pro-Umno, pro-BN. So what’s going to change between now that would enable you to win power? Without Sarawak, it’s difficult for the Opposition to gain power at the Federal level.
Answer: Sabah and Sarawak has always been seen as the fixed deposit for BN. It no longer is. That by itself is a big improvement for us. They can no longer bank on winning all the seats.
The last round in Sarawak, BN’s popular vote went down by more than 8 per cent which is a big thing by any standards. Expect the sink to be greater in the Parliamentary elections because the Chief Minister will still be around, there is a sense that BN will have a wake-up call. Of course we have to wait for the results.
One factor, we are concerned about is mass cheating. There have been some reports of some import of foreign workers given citizenship and registered as voters. That is of great concern.
23. One of the interesting things about the Sarawak factor in Malaysian politics is that it is also determining infrastructural investment. Sarawak, now with the chief power coming out of Bakun, is attracting all of the heavy industrial investment. And this is really the place where industrial growth in Malaysia will happen at a large scale. What are the critical issues in terms of how politics are affecting economic development in terms of infrastructure in Malaysia?
Answer: In terms of economic development, the people’s perception has changed. In the past, we welcome development for development sake. Now, the big question is how does this benefit us? For example, Lynas the rare earth factory in Pahang which is the home state of the Prime Minister. Why has there been strenuous opposition? Because people see this huge facility instead of benefiting the people, in fact they see it pose a serious threat to their health and safety. So when you talk about development, must get translated across that it benefits them. Similarly for Sarawak, can talk about having cheap power etc, but if it results in displacement of the natives, do you think they will be grateful being robbed of their land? Think there will be an accounting.
Just like in Libya, Gaddaffi ruled by fear. Once the fear dissipates, the rule ends.
24. Talked to some Sarawakians and they said we know the Chief Minister is a devil, but he’s our devil against the Federal Government. So how would a Pakatan-led Government address this concern of the East Malaysians.
Answer: Main concern for PM Najib is that the Sarawakians would back out and there is pressure against the Chief Minister. And also unhappiness with BN Government more readily in Federal elections.
25. How exactly is Penang going to move from manufacturing-based economy to service-based economy? You gave a timeframe of 10 years but what type of investments do you need for this? How are you going to boost.. are you building a theme park or investments in hotel or what’s going to generate ?
Answer: Look at the masterplan. When you talk about tourism, you are talking about health tourism, education tourism, heritage tourism. Penang is a UNESCO World Heritage City, that by itself attracts its own clientele, a rich and valued market. Existing infrastructure in Penang is already there. The hotels, logistics, as well as the service mentality. We need to upgrade and improve on it. Need huge investment in infrastructure and training workers in hospitality sector. The Hard Rock Hotel chain has only one hotel in Malaysia ie. in Penang. Why? Because we are seen as the place where you are free to be yourself, where you don’t have to fear from the moral police.
26. From the Singapore perspective, keeping or maintaining the share of manufacturing above 20% is a huge challenge, leading us down the path of bigger capital investment but less employment. What are the issues that Penang faces? It’s very hard in a globalised, connected Asia to keep moving up the value chain in manufacturing.
Answer: It’s very difficult to escape the middle income trap. We are in the middle income trap. The only way to escape that is:
a) Attain international benchmarks
b) To be a haven for human talent
c) Investment for infrastructure
Like to believe that we have a good government in Penang.
27. The Iskandar project is talking about giving 15% personal income tax rate to attract human capital to Iskandar. Are there any specific incentives that the Penang Government is issuing to human capital?
Answer: No. Taxation powers are the sole prerogative of the Federal Government. Penang does not have tax powers. Can recommend but Federal Government won’t listen. All tax receipts go to the Federal Government. So we have nothing.
On the 15% flat rate that was implemented last year, its only specific for Iskandar.
28. How is Penang addressing those human capital challenges in terms of having a small population base? Talking about investments over RM10 billion, the skills required for those specific industries for E&E and higher manufacturing. The challenges specifically the medium of instruction in Malaysia is now Malay. Does Penang has prerogative to state how you wish the curriculum to be configured?
Answer: No, it’s a national jurisdiction, so it’s a national power but fortunate that Penang has a very strong education base. Generally, the population has a good command of English.
29. You are saying there is no shift in strategy in the way that DAP wants to reach out more to the Malays or the Indians Malaysians. Nothing that changed in strategy.
Answer: Always been appealing to all Malaysians, including Malays. Not been highlighted because they want to paint us as anti-Malay, just as they want to paint PAS as anti-non Malay. Just part of their humanization of opponents of the Federal Government. Can’t overturn 50 years of propaganda. Takes a lot more of effort and got to show results.
30. A lot of factories moving out of China now because of cost. Is Penang benefiting from this relocation from China? What sort of investments?
Answer: Yes. Do not want to mention names since they still have substantial investments in China. Some of those investments that were announced in Penang worth RM10.5 billion in FDI were actually slated for China.
31. Wages in Penang also higher than average in Malaysia
Answer: One of the reason why Penang is an attractive place for investment is because emphasis on 3Ps, proficiency, productivity and performance. If you are able to deliver, the companies don’t mind paying a bit more because you get value for money.
32. Read that the tourism sector faces problems because of pollution with number of tourists going down. Is there any way to solve this?
Answer: Penang is visibly cleaner than before. Problems have been dealt with and we can always be better.
33. How did you manage to bring the crime rate down?
Answer: Installing CCTVs in the street (over 100 and want to put in more), community effort and engaging the Police and letting them do their work.
34. What are the plans to handle traffic?
Answer: Building better accesses and better roads. (Talks about short term, medium term and long term plans including plans for the third bridge). Public transport is a Federal jurisdiction. All we have is the roads. I can sit around and twiddle my thunbs but we thought we will do something.
35. What about the airport?
Answer: Airport is being expanded but is taking a long time. Hope to see it done by middle of next year.
36. Immigration has been fabulous. Rivals Singapore in terms of processing
Answer: Yes, come to Penang. No need to line up at the Johore Causeway.
37. Do you feel that the Federal Government is not allocating funds to Penang because it is run by the Opposition? Any big projects that have been refused that should take place but has not taken place because of that? How does that play out on the ground?
Answer: Yes definitely. Quite a few. One example is heritage. They promised us RM25 million. They gave us zero. So we have to rely on ourselves. Have to save and to scrape together. Its only when they (the people) suffer and you have a jolly good time, then people get angry.
38. State budget is from taxes?
Answer: From quit rent, tax on land, land tax and property assessment. Signs of support for the State Govt is the quit rent and property assessment has increased tremendously. Looking at around 30% increase. Last year, the state budget was around RM907 million. Recorded surpluses every year and we are the best financially managed state in the country, so says the Auditor-General. The surpluses go to social programmes and increased money to schools including religious schools. Believe that education should be depoliticized. So schools in Penang have improved immeasurably in terms of facilities and services. Increased allocation for all sectors including Muslim affairs, as compared to previous BN Government.
39. On the federal level, the Opposition parties look quite independent. How is there coordination of policies?
Answer: It may appear to be independent because we are among equals and of course, Anwar is pares inter pares, first among equals. Indisputable.
40. This can be a risk because he definitely has to serve 10 years in prison again. Can Pakatan survive without Anwar?
Answer: The bonds formed are much stronger now between parties. In the past, would need Anwar as a breach. We have built bridges among ourselves.
41. His daughter is impressive, isn’t she?
Answer: Very impressive. She strikes a chord amongst the younger generation.
42. Already the Opposition first made such inroads in the last election, we have seen more demonstration, more voices speaking out and more lash back as well? How do you see that moving forward as you make further inroads in terms of the stability of the country?
Answer: The states ruled by Pakatan have been very stable. Peaceful and orderly. Of course, there are demonstrations but this is part of democracy. You have demonstrations every day in the States. People accept that. So long as they are peaceful demonstrations, it’s not a problem. Only when the demonstrations turn violent and becomes a looting exercise, rather than expressions of certain views and positions, that is a problem. Greater inroads by the Opposition means that we are heading to a two-party system which is good for a functioning and healthy democracy.
What Penang wants to offer is not the old development model, the command economy system is not the only way forward. Wants to offer an alternative, people-centric government. Instead of corruption, offer integrity, instead of cronyism, offer transparency, instead of mediocrity, offer competence. Believes that Malaysians deserves better. There are so many bright Malaysians in Singapore, many from Penang. Appears to be one of our greatest exports. Not something we are proud of. If our best and brightest have to go overseas to showcase their talents, this is very wrong.
43. Do you believe affirmative action can lead to corruption and cronyism?
Answer: There is nothing wrong with affirmative action for the poor. It’s when it is misused to enrich the few, that is where our future is stolen. It shouldn’t be race-based but needs-based. And when it’s needs-based, the main beneficiary will still be the Malays, because they are the poorest. There is no dispute as far as that is concerned. But what is happening now, look at the shares tender. In the last 30 years, the Govt implemented the distribution of shares of the Corporate Equity Restructuring Scheme so there will be more Malay representation. But who do they give these shares to? To all the UMNO, BN cronies. They ripped off RM54 billion of shares. They have discovered that of the RM54 billion of shares, only RM2 billion is now held by the Malays. What happened to the RM52 billion. That is why during the Bersih rally, so many Malaysians come up and come out. Multiracial gathering.
44. So fundamentally, you are saying the NEP was a failure?
Answer: It did not achieve the objective of eradicating poverty and ensuring distributive justice. That is why it is a failure. Those crooks who ripped off the NEP were never brought to book. There were various estimates of how much money was stolen. Morgan Stanley estimated US$100 million. The Global Financial Integrity Report in Washington early this year by World Bank economists tabulated the amount of illicit money secretly taken out of the country, RM300 billion estimated over the last nine years.
There are definitely some very serious allegations he uttered when he was in Singapore. Can YAB Lim Guan Eng please come forward and explain all what he had said?