Penang’s Economic Gains

There is an interesting article in Bloomberg on the Penang’s recent economic success:

Penang’s progress highlights the challenges facing the rest of Malaysia and the National Front government as China, Indonesia and Vietnam offer investors bigger workforces while Singapore lures talent with lower taxes and easier immigration. Lim, 50, the country’s only ethnic-Chinese state leader, embodies the contrast between Penang’s business transparency and the four-decade old policies of the ruling party that favor Malays, which the World Bank says undermine competitiveness.

I am sure that is a politically contentious issue. The very good sign, I think, is the ability of Penang to experiment. For countries to succeed in this very competitive environment they need to experiment and can’t be afraid to disappoint some people. I see Malaysia doing many good things, including recognizing the brain drain and the need to build a partnership with Singapore.

In the first seven months of 2011, Penang won 3.6 billion ringgit ($1.2 billion) of approved foreign manufacturing investment, ahead of the 3.4 billion ringgit that went to Selangor, the state that surrounds the capital Kuala Lumpur, a government report showed last month.

Under Najib’s Economic Transformation Program, his government is promoting about 65.8 billion ringgit of private- sector-led projects for southern Johor state, compared with at least 375 million ringgit for Penang, according to data compiled by Bloomberg. The comparison excludes projects covering multiple states or those without a clear single location, which amounted to 34.3 billion ringgit nationwide.

With my admittedly limited knowledge of Malaysia investing in Johor, to build a dynamic relationship with Singapore, is very wise. It seems to me investing in creating strong economic center’s in KL, Penang, Johor and Sarawak makes a great deal of sense. It is always wise to spread development around – at the same time concentrating it (somewhat contradictory, I know).

And the long term economic plans seem very wise: investing in building a high tech workforce, building around natural resources, targeting some key industries (health care, manufacturing…). I would also strongly push to maintain and upgrade the use of the English language. Granted, that is useful for me personally, but economically it is a powerful tool to grow Malaysia over the long term.

Building economies into mid-wage and mid-to-high-wage economies is very difficult. You need to constantly be looking out decades while still making people’s lives better today. And moving the society along with the economic development. Economies are made up of people, forgetting that is dangerous. But they also are in competition with many other countries that are doing what they can to grow and compete with your country. The balance is not easy, but it is much easier when the economy is growing and the gains cResidence Pass for Talented Expatsan be distributed to show people what has already been gained and dream about the potential.

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