Datuk Lee Kah Choon's comments

Reinvest in Penang, federal government told
By Sheridan Mahavera

PENANG, March 24 — “Penang is being pulled down by Malaysia,” claims investPenang executive committee chairman Datuk Lee Kah Choon.

By that he means the Putrajaya-centric Federal government who, he reveals in an interview with The Malaysian Insider, crafts policy that woefully ignores the state’s potential to be a money-spinner for the country.

He makes the case for how Penang should get as much attention as other states because the money that is made here can be used to fund roads and bridges elsewhere.

Lee lays out how more than any other state, Penang has become a primary component in the engine of Malaysia’s economy.

Its sprawling industrial zones house the regional centres for international giants such as Intel, AMD and Motorola.

Two-thirds of medical tourism revenue goes to Penang and it contributes 10 per cent of the nation’s GDP.

Penang’s industrial base is expected to expand further when the 26-km second Penang bridge links Batu Kawan south of Butterworth to Batu Maung on the island. This will encourage heavy industries to set up shop in those areas, says Lee.

But in its drive to quickly move up the value chain by concentrating more on high tech industries and research, Lee says Penang is constrained by the Federal government.

And this leads him to propose a controversial idea that has been raised in the debate of how to fairly distribute funds and manage development between the Federal government and other revenue-rich but remote states such as Terengganu and Sabah.


InvestPenang executive committee chairman Lee Kah Choon believes the Federal government should reinvest in Penang. — Pictures by Choo Choy May

Q: Could you briefly introduce us to investPenang?

A: InvestPenang is a company to facilitate investment in Penang. We started only in manufacturing but when I took over we expanded to include all businesses — education, services, (the) medical industry, tourism and property development.

We are currently attracting multinational companies to set up their regional offices here as we want to develop Penang into an international city. We want to attract the best foreign talent and get them to bring their families so we have to look at all aspects such as the best schools and best health care.

Q: How is Penang doing economically?

A: Penang is a place where you should put your money in. A business-minded person would put his money in Penang so that he can get a better return. That’s why the Federal government should put more attention in Penang. The one ringgit that you put here... the returns are higher than if you have put that money in Iskandar (Iskandar Development Region, Johor) or Pahang.

I’m not saying that other states should not get development. All I’m saying is that Penang should not be neglected but this does not mean it needs all the money. It’s more fine tuning and to provide an environment for investment so that you can get money to develop other areas.

Q: But if Penang, as you have pointed out, is so developed why does it need Federal government help?

A: If you have several engines of growth in Malaysia then you need to take care of them. Let’s say you have four engines and Penang is one of them. You should pay attention to all four. I’m not saying pay attention to one and ignore the others. Don’t neglect any of the four and don’t put the money in the fuselage or somewhere else that doesn’t provide movement.

Q: But does this engine need more funds because it seems to be roaring on its own?

A: Of course when it comes to money there’s never too much of it. What I’m saying is that the money should be put in the right place.

We might not need roads but maybe an LRT line from the airport to the tourist belt. I need money to lift the infrastructure to the next level, in order for us to compete with other cities to attract investment to Penang which goes to Malaysia. Which can then be used to fund roads in Kuantan.

I might not necessarily need that much money. But if you give me a good transport system where if I stand at a bus stop, the bus arrives in five minutes then it’s good enough.

So I’m not just talking about money. I’m talking about attention and the willingness to do things honestly and sincerely.

Because at the end of the day, if Penang succeeds all the income, corporate tax and income goes to the Federal government. If you have a gem but you don’t use it, its a waste.

Q: Is this lack of attention an obstacle to going up that high value chain?

A: There is still a lot of room for improvement and sometimes due to political considerations things are not done the way that they should be done.

A simple example is the heritage city. When I was in Parliament (he was a former parliamentary secretary for the Health ministry), Pak Lah (former Prime Minister Tun Abdullah Ahmad Badawi) said the government would give RM50 million for Penang and Malacca but when we checked with the Federal government there was no money. Then they said that the money is there, RM20 million to Penang and RM30 million to Malacca. Then they said it was through Khazanah (Federal government investment arm Khazanah Nasional Berhad). Two questions come to mind.

What criteria are they using to determine these amounts? Is it size? Penang is bigger, so why 20/30? Next question, why are you not giving the money to the state or an organisation under it? We have a World Heritage Office that oversees the heritage site.


Penang has the potential to be a money spinner for the rest of the country. — Pictures by Choo Choy May

Q: So you have not seen one sen of this RM20 million?

A: No. The Federal government says “we are not going to give to you.” It’s going to be parked at Khazanah.

We haven’t seen one sen of the RM20 million. Right now, it’s parked at Khazanah. Since when did Khazanah go into heritage? (It was reported in December 2009 that Khazanah is launching a small grants scheme for stakeholders in the Georgetown heritage site. The scheme will be managed by subsidiary Think City Sdn Bhd.)

Why is Iskandar given special treatment as far as tax is concerned?

So what iI’m trying to say is that when you plan you must get the biggest bang for your buck.

You can put one million in Penang and you can get one million to use for development somewhere else. That should be the logic. We should capitalise on Penang and look at it as part of national development.

A lot of people say if you develop Penang, only the people of Penang will benefit, which is not true. If Penang prospers, it prospers the surrounding areas, like Kedah, Perlis, Northern Perak. As Penang develops, it supplies logistics to other areas such as Kulim Industrial Park (in Kedah). It would not be able to take off or maintain without Penang.

So when you do planning at the central government you have to look at all these considerations in order to develop Malaysia.

In the heat of political differences these things have been overlooked.

Q: Having been in the Federal government and now on the opposite side, does it give you insight into how to overcome these obstacles?

A: The obstacles are the same, whether you are on this side or that side. Even under the same governments, historically, we would get small development grants, just about three per cent (of the national total).

They say we are already developed so you don’t need it. It sounds logical but it’s not. Since you have a big house, your maintenance is also high.

When you are in the same government also it doesn’t mean you do something, it moves. Even if you go up to prime minister level, do you think everything moves? It won’t. I’ve seen it myself.

Q: Talking about moving up the value chain, is Penang moving towards that?

A: We try but we are being pulled down by Malaysia. Penang has the brand but we are being pulled down by Malaysia.

Q: So you’re saying that Penang could attract the best brains just like Singapore, just like Hong Kong, but it can’t because of Malaysia?

A: Because of central policy. It’s very simple. As far as Penang is concerned we are a centre of excellence. Intel, for instance, came here four years after they were founded and they are here until today. Over a period of time we have built up a talent pool of managers and technicians. When they want to open a plant in China they bring people from Penang. Penang is different from KL and even the rest of Malaysia.

Penang is also very international whether you are talking about trading, manufacturing.

But all these talented people are leaving Malaysia. It is not because of Penang, but because of Malaysia. It is a multi-prong brain drain.

Malaysians are being sucked out by Singapore, Australia, United Kingdom and the United States. In the future, may be China and India. So that’s one side, people here are leaving.

Then we are unable to attract people to return unlike Taiwan, China and India. And I think it’s because we don’t have the heart and passion to bring them back.


More than any other state, Penang has become the primary component in the engine of Malaysia’s economy. — Pictures by Choo Choy May

Q: Even with all these (government) programmes to recruit the best brains and invite overseas Malaysians back?

A: That’s just talk only. When they come back, there are 1,001 things to frustrate them. There’s so much bureaucracy. A simple example, your SPM (Sijil Pelajaran Malaysia) must have Bahasa Malaysia. They also find it hard to carry out their trade.

You have to keep in mind that these people are already making tons of money overseas and they are already established. To decide to come back is already an issue and when you come back, there are so many fences for you to clear, so what is the attraction?

Then there are the scholarships; you give 2,000 out but there are no follow-ups. When these graduates come back, do they have proper jobs? They are being given out without human resource projections. For example, you send 500 people out because in five years you want to develop bio-technology, so that when they come back they will have these jobs. Does the government do that?

Penang has the place but there are no people to stay and staff these positions.

So the system is Federal. So how can Penang move up the value chain? How can the country move up the value chain?

Penang has the foundation. We are short-handed when it comes to the high-end technical posts. But because of the policy we can’t retain them we can’t attract them. We have the positions but the people for them are working overseas.

So is Malaysia not pulling Penang down?

Q: Because these policies are not decided with Penang in mind.

A: So that’s why I say that de-centralisation is the way forward.

The more you make, the more you must reinvest. But if you have a Federal government that does not make policies with this in mind, then Penang suffers and central government suffers long term. Worse still, they take the money from you and snub you. Like Terengganu and Sabah at one time.

When we joined the federation we joined to prosper together. When you take all our money you must plan to use the money wisely and give back to the people.

That’s why I feel that de-centralisation in the sense of more say and a fairer distribution of income is the way forward. The money should come back to the state because the state knows what it needs.

Penang is pulling more than its weight when it comes to contributing towards Malaysia. But you have to reinvest, you can’t expect the goose that lays the golden egg to lay eggs without feeding it.

I agree with the Federalism philosophy where you use the rich to help the poor. But in order to create the wealth to help the poor, you have to reinvest into your profit centre.

We have to have more say in how funds are used, in terms of development how they carry projects in these states.

We have been chasing something else and something we don’t know and neglecting what we already have.