Penang Continues to be in the Limbo

I guess it is necessary to revisit one of my previous articles on Penang written in May 2005.

Penang - a fading pearl

Once touted as the ‘silicon island’ in Asia, Penang is a state in decline. As one of the three most important economic engines and a high-technology manufacturing powerhouse, the state recorded a GDP growth of 6.3 percent in 2004 which is lower than the country’s GDP growth of 7.2 percent.Its manufacturing sector is facing tremendous pressure and competition chiefly from the economic emergence of China and other regional players such as Vietnam, Cambodia and Thailand. Limited industrial land area and higher labour cost have put Penang in a disadvantage position when competing with other labour intensive economies capable of providing investors with the benefit of economy of scale and cheaper labour force.

Moreover, centralisation of control over the provision of public services in the hand of the federal government left the state government with little jurisdiction and control over many governance instruments and public facilities e.g. public transport system, local councils, public infrastructures et cetera.

Despite being an important economic centre, Penang receives the second lowest development allocation from the federal government after Perlis in the 8th Malaysia Plan. State generated revenue is less than RM200 million annually. Furthermore, the state government controls less than one percent of total land area on the island. This has contributed to its inability to bring overdue development and rejuvenation to Georgetown which is showing signs of worn and torn.

Thus far, three areas – Bayan Lepas, Bertam and Batu Kawan - have been earmarked for IT and high-technology development under the MSC Phase 2 initiative. To complement this effort, the state government has launched its ‘Invest Penang’ arm to lure more investments to the state. While it is necessary to bring development to the mainland, Penang can strive to become a total wireless enabled island to drive e-commerce and ICT adoption.

To make a successful transition from a production-based economy to a knowledge driven economy, Penang needs to invest in its people, IT infrastructure, R&D centres and to formulate proper policy responses. On the contrary, its premier university - Universiti Sains Malaysia - was not picked as a centre of excellence for biotechnology development despite its strong R&D track record in marine biology, biochemistry and pharmaceutical research. Instead of leveraging on the intellectual capital of an existing university, the federal government plans to build a new university in Dengkil to specialise in biotechnology.

Penang’s allure as a tourism destination is also fading. Public transport system is most fundamental to a vibrant tourism destination. It has inherited the minibuses (and all the bad habits) that once ply the roads of Klang Valley. There is a serious need of transformation here. The public transport system must offer quality, consistent and courteous service. By allowing residential development projects in Batu Feringghi, the icon of Penang’s tourism is set to lose its shine forever. Its once beautiful and famous beaches are showing signs of neglect and environmental pollution. Yet, over the last decade the tourism industry was not able to introduce new products and attractions.

Inner Georgetown is also facing a cultural death. The state government can beautify its surrounding amenities and environment but it cannot bring back the cultural dynamism of both Chinatown and Little India. Worse, some of these beautification projects are unnecessary, irrelevant and wasteful. The repeal of the Rent Control Act – coupled with higher rental - has alienated and pushed out its lower income dwellers, turning the inner city into a sleepy town. Penang is no longer the ‘little Hawaii’ which charms many tourists and visitors from East Asia and all over world. As it is, Penang is slowly but surely showing all the necessary symptoms of a third world country.

DAP’s Danny Law attributed the Penang dilemma to Umno’s domination. It should be the effect of Umno’s neglect. Consequently, Umno leaders and members in Penang are the most disgruntled lot. Over the years, many of its divisions have passed resolutions condemning the state government for neglecting their interest and welfare. To straighten the record, other communities do not gain much from the state government as well.

Chief ministership rotation was also proposed as a possible solution to their problem. Is this solution practical? If the Umno-led federal government can only respond to an Umno-led state government, then the whole power-sharing model in Barisan Nasional is nothing but a farce. I would like to reiterate that the Umno-dominated ruling regime could not afford to continue ignoring the plights of Penang people. To compete in a globalised world, we need fully working economic engines and to fully optimise their potentials. Due to constant overlook, the state has developed a new export sector – skilled workers. There is no reason to celebrate here.

As such, bigger development allocation should be given to Penang so that the state could deepen and widen its industrial base especially in the E&E, marine biology, biotechnology, IT and semiconductor industries. The natural experience, skills pool and industrial experience and networks in the state can be further enhanced to benefit national industrial development.

The federal government should:
1) Provide a special RM1 billion development allocation for the state to develop a Northern region hub in manufacturing and ICT (through MSC Phase 2). Funds are needed to solidify Penang’s position in the region as a high-technology manufacturing base, a knowledge economy and an important engine of growth. Penang should strive to achieve the status of a wireless and IT connected state to drive MSC Phase 2 development.

2) Establish a federal-funded Centre of Industrial Excellence to promote high-technology R&D in various areas (collaborating with other state agencies, institutes of higher learning and private sector): marine-biology, engineering design, advanced manufacturing, ICT and others. Results of the centre can be shared with or benefit other states.

3) Address traffic congestion problem in the state. The federal government should endorse the provision of a second-link bridge between the island and the mainland. The second-link bridge which reportedly cost more than RM2.6 billion ringgit could help to easy the over capacity of the current Penang bridge and bring significant benefit to the development of the mainland. It could also help to persuade high-tech SMEs to locate their operation or R&D facility in the newly earmarked MSC IT cyber cities at Batu Kawan and Bertam.

4) Consider giving more control to the state government over the provision of public transport. At present, the public transport system in the state does not meet the expectations of the people and visitors to the state. Penang which is also highly dependent on tourism, the second biggest sector, needs a highly dependable, efficient and courteous public transport service to support social, commercial and tourism activities in the state. A good public transport system is essential and consistent with the state government’s initiative to reduce inner city congestion and pollution.

Meanwhile, it is equally perilous for Gerakan to neglect its duty and responsibility to lead the state government effectively and efficiently. Penang, as its traditional power base, is key to its political relevance. The party leadership should understand that it is not Umno which determines its political fate and survival but the people of Penang.