Speech by Chief Minister of Penang, Malaysia, Lim Guan Eng At Oxford University, England.
Title: "Penang: A High-Income Model For Malaysia Through Inclusive Growth"
Venue: T.S. Eliot Lecture Theatre, Merton College, University of Oxford, United Kingdom
Date: 14th October 2015
PENANG AS AN ENTREPRENEURIAL STATE
1. It gives me great pleasure to once again to be at the TS Eliot Lecture Theatre at Merton College in Oxford University. The last time I was here was on the 29th of May, 2013, a few weeks after the 2013 general elections when I was hosted by the Oxford University Malaysia Club. This time, I have the honour of being hosted by the Blavatnik School of Government, Oxford University thanks to Datuk Seri Nazir Tun Razak.
2. Reading through the profile of this very new school in the hallowed halls of Oxford University, I cannot help but be amazed by its many accomplishments since its establishment in 2010. In the 3 years since the first class of Masters in Public Policy (MPP) students were admitted in 2012, you have now grown to a cohort of 119 students from 55 countries for the class of 2015, including two Malaysians (Mark Hew and Yew Ren Chung).
3. During this short period, you have also attracted a diverse group of world class researchers and scholars including Professor Sir Paul Collier, the author of the Bottom Billion; Professor Winnie Yip, director of the Global Health Policy Program here at Oxford and last but certainly not least, Professor and Dean Ngaire (“nyree) Woods, Dean of the school as well as an expert in the areas of global economic governance and global development.
4. MPP students are no doubt interested in not just learning about public policy but also discerning for themselves the types of public policies which are effective in different contexts. I want to share with you some of my experiences as Chief Minister of Penang in the past 7 years and in particular, some thoughts on how we put in place an “Entrepreneurial State” in order to achieve the status of a High Income economy through inclusive growth. And I shall approach this from the angle of good governance; dynamic smart economy that is sustainable and collaborative; social inclusion; talent building; liveability and the environment.
Penang Attaining High-Income Economy Status In 2015 Hobbled By The 30% Depreciation In The Ringgit.
5. A short introduction of Penang, the second smallest state in Malaysia with a land size of only 1,048 square kilometres and a population of 1.7 million people, with no natural resources but has progressed to achieve high-income economy status through good governance, rule of law, integrity in leadership and sheer human talent.
6. The World Economic Forum Human Capital Report defined a high-income economy as one whose Gross Domestic Product or GDP per capita reaches USD$12,467 or RM 40,841 based on the then exchange rate of RM3.27 for USD$1 in 2014. Penang was expected to achieve a GDP per capita of RM42,251 based on a population of 1,681,922 people and a GDP of RM71,063 million by this year 2015. Penang’s GDP per capita of RM42,251 would have exceeded the benchmark of RM40,841 to become a high-income economy.
7. However I wish to lay an important caveat that the precipitous drop in the value of the ringgit due to extraneous factors such as the 1MDB RM42 billion financial scandals on world currency markets, makes Penang technically not a high-income economy this year. Instead of RM40,841 as the benchmark to achieve high-income status, the drop in the ringgit means that the benchmark has been increased to RM50,000. Of course should the value of the ringgit recover, hopefully by next year when all the political and financial scandals are resolved, then Penang can be restored to our rightful status as a high-income economy.
Business of Government Is Not To Get Into Business
8. The term “entrepreneurial state” is associated with Ms Mariana Mazzucato, and she is now one of the key economic advisers to the newly elected leader of the Labour Party, Jeremy Corbyn together with other economic heavyweights including Nobel Prize Winner, Joe Stiglitz; Thomas Piketty; and your very own Professor Simon Wren-Lewis, a faculty member at the Blavatnik School of Government.
9. Her primary argument is for a wealth-creating agenda based on collaboration amongst “wealth-creators” involving not just business but also workers, public institutions, and civil-society organizations. Ms Mazzucato makes a strong proposition that the state can lead the way in investing in risky areas especially in research and development, innovation as well as retraining and upskilling, which the private sector would not touch. This is a strong counterpoint to the current mainstream thinking that those who govern best govern least and let the private sector do its job.
10. In Penang, we are shaping a progressive economic policy that is investment-led, inclusive, and sustainable to create wealth through a public-private partnership that drives long-term growth and productivity. In many respects Penang is an entrepreneurial state except that we do not believe in becoming involved in market outcomes, especially competing with business in accordance with our mantra of “the business of government is not to get into business”.
11. In Penang as an entrepreneurial state, we see ourselves providing a catalytic role in providing public goods and services, basic communications infrastructure and spurring the development of key risky industries. But in other areas, especially where the private sector has a proven track record, the role of the government is to reinvent government and leave business to the private sector.
RM1.2 Billion Fish Farm Industry From The Benefits Of Reinventing Government
12. Let me illustrate this with an example which may surprise some of you.
13. Many of you who have visited Penang or are familiar with Penang would associate Penang with a number of things – a rich, diverse culture and peoples; a thriving electronics and electrical (E&E) industry; and of course, our wonderful food. But very few of you would think of fish farming when you think of Penang. It would surprise you to learn that this industry grew from basically nothing in 2008 to a RM1.2 billion ringgit (180 million pounds) industry 7 years later!
14. Much as I would love to claim credit, this amazing transformation was done without spending a single penny but merely dependent on reinventing government. The previous government benefitted its cronies with one or two chosen individuals being given thousands of hectares of sea, which they then sub-let to genuine operators under the classic rentier system. This is described by some as predatory capitalism.
41. Further the low unemployment rate is translated to households in Penang enjoying household income growth of 7.6% annually between 2012 and 2014. As a result of these progressive policies, our Gini Coefficient has been reduced from 0.42 in 2009 to 0.37 in 2012, an improvement of 11% over 3 years. While Penang’s Gini coefficient is better than Malaysia’s rate of 0.42, we still have some ways to go before we reach the Scandinavian levels of income inequality.
Enabling, Empowering And Enriching the People
42. Penang has consistently been rated one of the most liveable cities in Asia – the 8th in Asia according to ECA International and of course the most liveable in Malaysia. We have the best street food in the world. We have a UNESCO World Heritage site in George Town. We are committed to making Penang the first bicycle and green state in Malaysia en route to being the premier destination to invest, learn, work, play and eat.
43. The present debt crisis have shown that income inequality can not be solved by free markets. Free markets are said to be better than the state in provision of goods and services except a pro-market “rule of law”. However, investment public goods such as infrastructure, basic social services, research and development, innovative technologies can only be done by the “entrepreneurial” state, provided that the state exit at the earliest opportune moment to prevent undue interference. We are still learning to grapple about when to exit so as not to throw good money after bad or divert resources for other worthwhile ventures.
44. In the short time which I have been given, I have tried to paint vignettes of how Penang’s development is based on certain principles that are based on good governance and transparent decision making which enables them with skills and education, empowers with rights and responsibilities and enriches the people by sharing in economic wealth.
45. Whilst we are focused on providing a better life for our voters, we realise that we can only win the future by investing in education. Whilst embracing the challenges of globalisation, we will not shy away from preparing the young for the future as well as prepare the future for young.
46. I hope that in the course of your MPP program, you will get a taste of what it’s like to be involved in public policy, perhaps via your summer internship programs, in a tangible manner. I would like to invite to see for yourself what we have done in Penang.
47. Thank you and good luck!
LIM GUAN ENG
-- CN --
槟州首席部长林冠英于2015年10月14日在英国牛津大学(T.S. Eliot Lecture Theatre, Merton College) 主讲“槟城：通过包容性增长(Inclusive Growth)为马来西亚打造一个高收入典范”，摘译如下：