GEORGE
TOWN, May 14 — Lim Guan Eng is a man on a mission. In five years, the Penang
Chief Minister wants to make the northern Malaysian state a world-class
international city. To get there, he has plans for a new multi-billion-dollar
transport system, new hubs for growing service sectors and new skills training
programmes, especially for island’s young.
“We want
to become an international, intelligent city that is clean, green, safe and
healthy, brimming with energy, expertise and entrepreneurship. An intelligent
city where we not only do the right things, but doing things right.
Where we
embrace the future, not only by preparing our young for the future, but also
preparing our future for the young,” he told TODAY in a brief interview in his
office in George Town last week.
“If we
have that, we will be the model state for the rest of Malaysia.”
Lim is
not shy about taking a leaf — or more — from best practices around the world,
including Singapore’s development playbook, since both share many similarities,
including an economy in which electronics manufacturing and services play a big
part.
He is
emulating Singapore’s public housing planning and has teamed up with
Singapore’s Temasek Holdings to develop a RM1.3 billion mixed-development
project near its industrial zone.
He is
also an admirer of Singapore’s efforts in building up its capital of human
talent and is currently doing the same with Penang’s workers.
Besides
eyeing Singapore, Penang is also reported to be learning from Hong Kong in
embracing change and being a regional hub. The state also wants to look at the
Dubai model for attracting tourism and trade.
Since
helming the state — a 293 sq km island connected by two bridges to a narrow
hinterland of 653 sq km — in 2008, Lim’s aim has been to transform Penang into
a showcase of modern Malaysia. As it is, the state is already one of the most
developed and is an electronics manufacturing hub.
He has
initiated an open tender process for state projects and has installed 318
closed-circuit television cameras to monitor crime, traffic and road
conditions, with another 216 units to be put up by the end of this year. The
streets of Penang are now cleaner too, after Lim introduced performance-based
pay for state employees, including street sweepers.
Tourism
numbers have also spiked. The total number of international arrivals at Penang
International Airport has grown at an annual rate of 7 per cent between 2007
and 2014.
In recent
years, Lim has turned his attention to developing the mainland, especially the
parliamentary constituency of Batu Kawan, which is earmarked to be Penang’s
next growth centre, to ease overcrowding on the land-scarce island. Batu Kawan
is connected to the island by the state’s second bridge, the Sultan Abdul Halim
Muadzam Shah bridge. At 24km, the bridge is also South-east Asia’s longest.
At times,
Lim has turned to Singapore for inspiration, a point he candidly made in his
interview with TODAY. “What Singapore has done is to follow international best
practices, and the fact that it works in Singapore and makes the city-state
prosperous, we feel we can achieve the same result for Penang,” he said.
“To do
that, (we) must get the basics right, namely good governance, clean leadership,
investment infrastructure, building up human talent, and sustainable
development.”
Penang
shares many similarities with Singapore. Manufacturing is an important sector
for both Singapore’s and Penang’s economy. Manufacturing constitutes about 20
per cent of Singapore’s gross domestic product (GDP), while the sector
contributes nearly 55 per cent to Penang’s GDP.
The stakes
are high. Penang, famed for its Assam laksa, street art and balmy beaches, is
the only state governed by Lim’s Democratic Action Party (DAP). It wrested
Penang from Prime Minister Datuk Seri Najib Razak’s ruling Barisan Nasional
(BN) coalition in the 2008 general election and retained it in the 2013 polls.
It is one of the three states controlled by the federal opposition, the others
being Selangor, Malaysia’s richest state, controlled by jailed former Deputy
Prime Minister Datuk Seri Anwar Ibrahim’s Parti Keadilan Rakyat, and largely
rural Kelantan, which has long been under Parti Islam Se-Malaysia.
With
Malaysia’s opposition coalition in tatters due to infighting — most evident in
the recent Sarawak state elections — Penang’s performance has become an even
more important barometer of the opposition’s ability to govern.
Lim’s
government will also need to win over sceptical political rivals in Putrajaya,
whose blessing it needs for transport improvements, as well as Penangites worn
out by the traffic jams and overcrowding that come with rapid development,
while keeping the island’s soul.
If Lim’s
plans for the state are realised, Penang could well be on its way to becoming a
global city that could rival Singapore.
Manufacturing
hub
Penang’s
metamorphosis into a manufacturing hub began with the establishment of a Free
Trade Zone near the international airport in the early 1970s, offering tax
breaks and speedy investment approvals to foreign investors.
This
attracted tech giants such as Intel and Bosch, as well as other electrical and
electronics (E&E) factories to set up shop in the state, eventually earning
it the nickname Silicon Valley of the East. Since then, about 3,000
manufacturing companies have set up operations in Penang.
Today,
Penang is the E&E hub of Malaysia and accounts for 8 per cent of the
back-end support for the global semiconductor industry.
Ooi Eng
Hock, chairman of the Penang branch of the Federation of Malaysian
Manufacturers (FMM), said Penang’s competitiveness is one of the reasons
Malaysia continues to rank well in various global and commercial economic
rankings, including the World Bank’s Ease of Doing Business listing.
The
country was ranked 18th on the 2015 list while Singapore has retained the top
spot for the past 10 years.
“We also
have a pro-business government, liberal investment policies, efficient delivery
system, well-developed infrastructure, educated work force and good quality of
life,” he told TODAY, citing the advantages of setting up businesses in Penang.
Between
2000 and 2007, companies ploughed RM29.4 billion into the state’s manufacturing
sector. The bulk of this, RM22.7 billion, was foreign direct investment (FDI).
According
to a 2015 report by the Malaysia Industry Development Authority, Singapore
ranks fifth in terms of Penang’s FDI sources, with 87 approved projects
totalling RM1.3 billion.
“Penang
continues to offer great value for investors from Singapore, both in the
manufacturing as well as services sectors. This is more so with the current
depreciated ringgit,” state investment promotion agency InvestPenang director
Lee Kah Choon told TODAY in an email.
Growing
services and skills
Aware
that Penang cannot depend solely on its manufacturing strength, the state has
cast its sights on expanding its services sector. Already, services account for
47 per cent of Penang’s GDP, just one percentage point less than the
manufacturing sector.
In
particular, the state government wants to turn Penang into a hub for the
fast-growing sector known as shared services and outsourcing (SSO), which
includes technology, accounting and other support services for companies that
do not have these in-house. The SSO sector has doubled from RM6.39 billion in
annual revenue in 2009 to RM12.79 billion in 2013.
Penang’s
SSO sector provides more than 8,000 high-income jobs to locals and serves both
regional and global markets.
In July
last year, the state government entered into a joint venture with Temasek
Holdings to develop a mixed-use project near Penang’s Bayan Lepas Free
Industrial Zone. The RM1.3 billion project, called BPO Prime, will cover 1.6
million sqf of commercial and residential space. Businesses that set up there
will take on work such as data processing, back-office administration,
accounting, technical support, transcription, software development, IT
consultancy and disaster recovery for client companies.
The
project, scheduled to start construction next year, will be planned and managed
by Economic Development Innovations Singapore (EDIS), a privately-owned
international economic development company chaired by veteran civil servant Philip
Yeo.
“EDIS
shares Penang’s vision for the future and fully supports the forward-looking
and business-friendly approach that Penang has adopted,” its senior development
director Eng Gim Hwee told TODAY in an email. “There is potential for even more
overseas companies to set up their operations in Penang, especially in the area
of the business process outsourcing industry. EDIS’ projects will serve as key
enablers in support of these efforts.”
To get
its workforce ready for these new businesses, Penang has set up the Penang
Skills Development Centre, where school leavers and existing workers take
classes ranging from accountancy to technical courses.
The
private sector has also pitched in, with FMM setting up its FMM Institute to
upgrade workers’ soft skills, such as through management courses. It also
provides six- to nine-month internships to school leavers to expose them to the
working world.
Chief
Minister Lim, noting that Singapore’s success stems from its talent pool and
its ability to adapt to changes, said Penang is taking the same path.
Besides
arming working adults with the necessary tools that will make them more
relevant in a highly globalised world, the state is also targeting the young
through Tech Dome Penang, which is scheduled to be operational by middle of
this year. The tech dome is a hub for technology learning and the exchange of
ideas, as well as a vehicle for improving scientific literacy and technological
capability in Malaysia.
It is
well known that Singapore’s model of governance has for many years been a
source of inspiration not only for Penang, but for many developing countries,
such as China, India and Hong Kong, according to analysts.
“The
Singapore story is imbued with a strong narrative of building up this
successful global city-state from ‘nothing’,” said Assistant Professor Woo Jun
Jie from Nanyang Technological University’s School of Humanities and Social
Sciences. “For this reason, we are particularly attractive to other city-states
or small states that face similar physical-geographical limitations, as well as
newly-reformed nation states such as Myanmar.”
He said
many policy innovations that have marked Singapore’s development, such as the
HDB housing model or high-grade reclaimed water NEWater, are of deep interest
to countries experiencing social and environmental changes associated with
urbanisation.
“Perhaps
most important of all, Singapore’s record of clean government and low
corruption is an inspiration to many developing states that are considering
political reform,” Asst Prof Woo said.
The lure
of property
Singaporeans
are not just investing in Penang; many are also buying homes.
Up to 20
per cent of buyers in the state are foreigners, said Jerry Chan Fook Sing,
chairman of the Penang branch of the Real Estate and Housing Developers’
Association Malaysia. Mr Chan reckons Singaporeans form the bulk of purchasers.
“People
look at Penang as an investable location,” he told TODAY in an interview. “A
lot of the Penang diaspora are in Singapore and they still have family ties
here so they invest in property. Besides the slower pace of life in Penang, the
Singapore dollar goes a long way, especially here.”
As prices
rise, the state government, as Singapore has done, has introduced several
cooling measures.
These
include price caps for purchases by foreigners at RM2 million for landed
property and RM1 million for stratified property, as well as moratoriums on the
sale of affordable housing of five to 10 years from the date of purchase.
Penang
has also adopted a programme similar to Singapore’s BCA (Building and
Construction Authority) Green Mark scheme, with monetary incentives aimed at
encouraging developers to build more environmentally friendly buildings.
Urban-planning
solutions from Singapore
For
Penangites, though, the issue is housing affordability. Under Lim’s leadership,
Penang has engaged Singapore’s urban solutions firm Surbana International
Consultants (SIC), formerly known as HDB Corporation. SIC (now part of Surbana
Jurong) has been providing consultancy services for a massive public housing
development in the state’s mainland strip of Batu Kawan, near the second
bridge.
The move
is part of the state’s plan to spur development in the mainland, said Chief
Minister Lim, who pointed out that it was a “natural progression” due to land
scarcity on the island.
The
Penang branch of Malaysia’s predominant political party, the United Malays
National Organisation (Umno), has criticised the hiring of a Singaporean firm,
saying it was an insult to local developers who could do the job just as well.
At the time, Lim replied that “the poor deserve a home and not a box for their
children to grow up healthy and safe”.
The
result is an affordable housing scheme built by the state’s development arm,
Penang Development Corporation (PDC), in the township of Bandar Cassia, which,
for the first time, uses Singapore’s public housing as a benchmark.
The
project comprises 11,800 affordable apartment units costing between RM42,000
and RM400,000 per unit. The apartments are housed in nine- and 20-storey blocks
on an 80ha site that has a carpark, shops, a football field and a recreational
lake surrounded by lots of greenery.
Construction
of phase one, comprising three apartment blocks, are currently at 60 per cent.
Penang housing executive councillor Jagdeep Singh Deo told TODAY that 520 units
of the apartments will be completed by the end of this year.
Another 520 units
are expected to be completed by 2018, and the rest will be finished by 2019
onwards.
“We see
their (Surbana’s) achievements, especially where the HDB is concerned, and therefore
we invited them to come over, to gain exposure from their experience,” he said
in an interview.
Because
of the attractive price tags, the state received thousands of applications from
interested buyers. The units are at least 30 per cent cheaper than similar ones
sold by private developers or at the resale market.
Only
those with a household income of between RM3,500 and RM10,000 a month are
allowed to apply. Applicants also have to be registered Penang voters and
working in the state.
These
days, once-sleepy Batu Kawan is a hive of construction activity. Work has
started on the site where Swedish furnishing giant Ikea is set to open an
outlet in 2018 — the first outside Kuala Lumpur. Next to the Ikea site will be
the upcoming Aspen Vision City, a mixed development that will include
condominiums, office towers, an international school, a hospital, a 9.7ha park
and an integrated central transportation hub.
The two
projects are among several planned in Batu Kawan, including the RM1 billion
Design Village Penang project consisting of a premier outlet shopping mall and
a 300-room international class hotel.
For Hadi
Yusoff, a sales executive who commutes 20 minutes daily from Batu Kawan to work
on Penang island, the changes can’t come soon enough.
“Previously, when people
talk about Penang, they refer only to the island, as if the mainland is a
different state once you cross the Penang bridge,” he said.
“The big plans like
Ikea and the transport hub will finally put the mainland on a par with the
island.”
Development:
The price to pay
Back on
the island, though, Penang’s success has come at a price.
As
property prices soar, Penang’s green hillslopes are being illegally cleared for
more development — something recently highlighted by local newspapers. The price
of living is rising and islanders are finding themselves more often than not
sitting in traffic jams.
“It takes
me 15 minutes longer to get to work nowadays, compared with about a
year-and-a-half ago,” said human resources executive Susan Zachariah, who drives
the 9km route from her house in Taman Brown to her office near Queensbay Mall,
both on the east of the island. “Driving to town is also getting to be a
nightmare. It used to take about 20 minutes, but now it is at least twice as
long.”
To ease
congestion, the state government has drawn up a RM27 billion Penang Transport
Master Plan (PTMP), an integrated system that will feature light rail transit
(LRT) and monorail lines, cable cars, buses, water taxis and ferries, apart
from highways. It also includes a 2km undersea tunnel linking the island to the
mainland.
The state
government has been organising roundtables and town hall meetings on the plan
to keep people updated. And yesterday, the Penang government said that relevant
reports on the PTMP will be made public.
The PTMP
is expected to take off by the end of year, if the federal government gives the
green light.
That is a
big “if”.
“PTMP is
not just a game changer for Penang, it is a life changer for the people,
ensuring prosperity and personal mobility for the next 50 years until 2065. If
the federal government does not give approval, then it will have passed a death
sentence to Penang,” Lim told TODAY.
While Lim
is banking on the PTMP to give Penang a new lease of life, analysts contacted
by TODAY said the state’s greatest challenges lie in the economic and political
spheres.
“Penang’s
biggest challenges are in the socio-economic and political realm. The first is
how to stay ahead of the pack in attracting desirable and quality foreign
investment and human capital, whilst resolving the island’s problems of
overcrowding and traffic gridlock,” said Dr Lim Teck Ghee, director of the
Centre for Policy Initiatives in Kuala Lumpur.
“The
second is how to avoid being marginalised by an Umno-dominated BN (Barisan
Nasional) government that will continue to use its federal power and resources
clout to bring down the opposition,” he added.
University
of Tasmania’s Asia Institute director James Chin concurred, saying that Penang
is dependent on development funds dished out by the ruling federal government.
“There is
only so much the state government can do, as the federal government controls
the bulk of the funds. The important point is for Penang to show it can run the
state government efficiently,” he said.
