In the midst of the momentous change that occurred in Malaysia on May 9, 2018, there has been one constant: the Pakatan Harapan government of Penang was retained for the third term in a row, having been at the forefront of the movement for change since winning power 10 years ago in 2008.
Back then, Penang was in a state of decline, struggling to recover from the Asian Financial Crisis of 1998. Even local government services deteriorated to the point that the moniker “Darul Sampah”, which roughly translates to “rubbish state”, was bestowed upon Penang. George Town was hollowed out, the economy was stagnant and the many talented sons and daughters of Penang left by the droves for greener pastures elsewhere. It was not a condition befitting a state that had been a historical leader in many fields.
George Town was the first town to be granted city status before Malaya even achieved independence. Founded in 1786, Penang began as a port economy, leveraging on its geographical advantage by becoming a transhipment hub for the many valuable commodities in the region. Later in the twentieth century, Penang became the first state to venture into large-scale export-oriented manufacturing based on foreign direct investment, attracting some of the biggest names in the tech sector.
Today, we are seeking to lead once again. Penang’s revival began in 2008 on the back of reform initiatives such as the introduction of CAT, or competent, accountable and transparent, policies to root out corruption. By implementing open competitive tenders, requiring senior government officials to make public declaration of assets, reducing elements of conflicts of interest and removing unnecessary opportunities for bureaucratic “toll booths”, the Pakatan Harapan government was able to reduce state debt by 90%, double state assets and record a surplus budget for 10 years in a row.
At the same time, new socio-economic reforms were implemented, such as targeted aid to vulnerable groups including senior citizens, single mothers, the disabled, taxi drivers, fishermen and even trishaw peddlers. A minimum household income threshold was also set, with the state providing a monthly top-up for hardcore poor families to help them make ends meet. New programmes are now being introduced, such as subsidised healthcare and cash incentives for working mothers.
In addition to these welfare initiatives, the state also embarked on a reform of housing policies in order to address the imbalance in the property sector, which was beginning to veer towards high-end developments in response to increasing land value. Using a mixture of carrots and sticks – incentives and disincentives – the state was able to nudge the private sector towards building more affordable homes rather than luxury units.
At the same time, there was also a need to address the industrial economy which had plateaued as other regional cities became more cost-effective. It was time to abandon the old labour-dependent models of assembly plants and start moving up the value chain into advanced manufacturing and advanced services such as business process outsourcing and shared services.
A key component in ensuring the success of the move towards more value-added jobs was the need for a skilled talent pool. Hence, the state began to focus on science, technology, engineering and mathematics (STEM) education, investing millions into initiatives such as the Penang Tech Dome, Penang International Science Fair, Penang Science Cafe and even coding classes for schoolchildren, as a foundation for preparing the local workforce to meet the needs and demands of the future economy.
Much work remains to be done, but Penang has managed to turn a corner and is now restored as the leading secondary city in Malaysia with the highest GDP per capita after KL. With an above average GDP growth of 5.3% and total manufacturing investments adding up to RM10.8bil in 2017, Penang is well on track. Since 2008, more than 152,686 potential employment in the manufacturing sector has been created.
In terms of trade, total trade increased by 19.5% to RM430bil in 2017, with RM233.5bil worth of exports. By trade volume, Penang’s North Butterworth Cargo Terminal is the third-busiest seaport in Malaysia, while the Penang International Airport is the busiest airport in Malaysia in terms of cargo handling, with air cargo now surpassing ship cargo.
After 10 years of building a solid foundation, the question to ask now is – what next? How can Penang get to the next level? And what is the next level for Penang?
Recently, our chief minister answered these questions by introducing a new development vision for the next 12 years entitled “Penang 2030: A Family-focused Green and Smart State to Inspire the Nation”. It sounds like a mouthful, but each phrase in there carries a significant policy imperative.
The phrase “family-focused” denotes the state’s recognition of the family as a central tenet and core value for Malaysians, with the individual seen as being part of a family and the family forming the basic unit of society. In terms of policy, this means that support systems and caring networks would be designed for such structures. At the same time, family also means being inclusive and sensitive to issues relating to gender, youth and senior citizens.
The second key phrase is “green”, which is something Penang is quite proud of. In the last 10 years, Penang has gone from being the “rubbish state” of Malaysia to one of the cleanest and greenest. We were the first state to institute no free plastic bags every day, ban polystyrene containers and implement waste segregation at source. Today, Penang has the highest recycling rate in the country at 38%, which is around double the national average. These may be small steps, but they symbolise an awareness about the need for sustainability and environmental protection in light of climate change.
The third phrase is “smart”, which signifies the state’s efforts to embrace the digital revolution. Technology is developing at such a revolutionary pace that almost every aspect of our daily activities cannot escape its influence. From the way we communicate to the way we travel, our lives have completely changed in ways that we could not have imagined just five to 10 years ago.
More importantly, a report commissioned by Dell last year revealed that 85% of jobs that will exist in 2030 have not been invented yet.1 This is a critical statement, because recognition of this proposition means we have to rethink our positioning with regards to industrial policies and human capital development. It is for this reason that Penang began to invest heavily in STEM education and science-based learning, particularly in the last five years.
Finally, Penang aims to “inspire the nation”. Throughout the years, Penang has always had a motto: “Penang leads”, which reflects not only the fact that Penang has been paving the way in many fields, be it in democratisation, development or social inclusion and welfare, but also in producing our greatest assets – our sons and daughters, many of whom have achieved greatness around the world. We aspire to forge ahead in the same spirit, through the Penang 2030 vision.
It is important to note that Penang 2030 is in itself nothing revolutionary, nor is it meant to be. Its agenda is really to expand and improve upon the successes of the last 10 years, and more critically to set the right path for growth and development moving forward to ensure Penang becomes not only a prosperous and robust economy but also a sustainable, liveable and inclusive one.
NB: This article was originally published in the Nov 2018 issue of the Penang Monthly.