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Penang’s FDI free fall: Lim should resign

Penang’s FDI free fall: Lim should resign

From Calvin Sankaran, via e-mail

Chief Minister of Penang Lim Guan Eng, in true Malaysia Boleh spirit, has develop his own unique version of brainwashing technique that is as ugly as it is effective. This Brylcreemed boy from Batu Pahat has a simple repertoire in making speeches and giving interviews. First he accuses his political enemy BN as racist, evil, corrupt and inept. Then he shifts gears and proudly recites a long list of feats that he had performed in Penang since he became the Chief Minister, a boast he repeats ad nauseam.CAT 2

One of the his favourite claims is Penang was ranked No 1 in Malaysia for investment in 2010 and 2011 due to his much-hyped CAT (Competency Accountability and Transparency) policy, open tender, anti corruption and a host of other initiatives. He will go on boasting that his administration’s policies had impressed the investors so much that they decided to head to Penang in droves and pour in mountains of money.

However, as I had shown in the past, Penang ’s outstanding performance in 2010 and 2011 has nothing to do with the CM or his administration’s policies. The mechanism of FDI (Foreign Direct Investment) doesn’t work like pick up your lunch pack from the local McDonald’s. It takes several years to realise a single FDI project as it requires extensive feasibility studies and long protracted negotiations.

As such Lim has been the lucky benefactor and recipient of the efforts of his predecessor and the Federal government. Lim and his administration have not brought in a single significant FDI project. As such I had predicted long ago that soon Lim’s luck will run out soon.

In 2012 due to aggressive efforts of MIDA and the economic transformation initiatives of Prime Minister Najib, the national FDI has reached a historic record high of RM162.4 billion. But on the other hand Penang bucked the trend and plunged to a record low of US$808 million – a shocking 72% drop.

To put this news into perspective, Penang now ranks No 6 in the country and lags behind the likes of Negeri Sembilan and finished barely ahead of minnow Perak and Terengganu. If we consider FDI, Penang ’s ranking drops further to No 7.

In fact if not for the massive inflow of domestic investment into the state’s over-inflated housing sector, Penang would have dropped to the 2nd last position in the country just ahead of fellow Pakatan-run Kelantan and Kedah.

In 2005, concerned about a 16% drop in FDI into Malaysia for the year 2004, Lim had observed, “fall in FDI for Malaysia in 2004 reflects the lack of confidence of foreign investors in the Malaysian economy”.  Lim said that “good governance as well as a corporate culture of excellence and accountability is important requirements sought by foreign investors.”

In 2010, Tony Pua, the self-proclaimed economic expert of DAP, commented on Malaysia’s drop in FDI as, “Not only are foreign investors unwilling to invest in Malaysia, our own local investors as well as foreign investors who are already in the country have a total lack of confidence in the ability of our economy to generate an attractive return to their investments”.

Guided by the same logic and thought process used by Lim and Pua, we also can conclude that the massive 72% decline in investment for Penang in 2012 is a reflection and an indictment of the investor community’s view on Lim’s performance as the Chief Minister of Penang.

This drastic drop seems to indicate that the investors view unfavorably the ability and the track record of Lim and his exco members in managing the state. It is not difficult to imagine the investors being decidedly unimpressed and underwhelmed by Lim’s penchant for rhetoric and populist slogans over well thought out and carefully crafted strategy and action plans

There have been numerous complaints from the investing and expat community about the rampant over-development of the island, drastic drop in quality of living, worsening traffic jams and the policy paralysis that brought about by the present state government.

Instead of improving the wellbeing of people and infrastructure of the state, the CM spends most of his time engaging in endless politics and on the ceramah circuit gloating about his achievements as the Chief Minister shouting ”UBAH” and lambasting BN.

Despite his self-proclaimed democratic and human rights credentials, Lim rules the state with an iron fist and runs a command economic system where the CM makes every decision by himself.

Penang has a proud history as one of the most important hubs for global electronic supply chain which was built painstakingly over the decades by the previous CMs. But thanks to the disastrous policies and incompetence of the current administration, the state’s competiveness and position has eroded significantly. At this rate, Penang is facing the real danger of de-industrialisation, massive plunge in the quality of living and a complete economic ruin.

Now the million ringgit question is this: As Guan Eng took sole credit for Penang’s success will he accepts the responsibility for the state’s abysmal ranking and resigns gracefully? Will he admit to his abject failings and apologise to Penangites for misleading them and mismanaging the state and bringing to the edge of economic disaster.

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