By Julie GohPENANG, Malaysia, Nov 24 (Reuters)
Malaysia's manufacturing state of Penang believes it can introduce controversial economic reforms and wininvestment despite a global economic slowdown and the challenge of being anopposition-run state.The opposition alliance's triumph in Penang, the third largest statein terms of economic output in Malaysia, was one of the biggest shocks inMarch's historic elections that brought the opposition to power in five ofthe country's 13 states.How well it can now govern those states could determine whether thealliance can sustain an unprecedented challenge to the Barisan Nasionalgovernment, which has ruled this southeast Asian country of 27 million peoplefor 51 years.
"Yes, the economic slowdown has affected Penang. I'm not going to runaway from admitting it," Penang Chief Minister Lim Guan Eng told Reuters inan interview last week."That's why, we are adopting an expansionary budget next year, onethat is pro-growth, pro-jobs and pro-poor," he said.
Despite the prospect of Malaysia's economic growth slowing to just 1.5percent in 2009, according to leading local investment bank RHB, from anexpected 5.4 percent this year, Penang has seen a rise in foreign investment.The state has received $1.69 billion worth of investment in the firstseven months of 2008 against $1.30 billion for the whole of last year, Limsaid.U.S. firm National Instruments said this month it would spend $80million to set up a plant, while Honeywell said it would shift someoperations to the island.
FROM INMATE TO CHIEF
The island, lying strategically at the head of the Malacca Strait anda free port until 1969, built up one the largest electronics manufacturingbases in Asia from the 1970s offering good infrastructure and a bilingualworkforce."Investors feel that because there is a new government, and they feelthat because this new leadership is in tune to their concerns, this is one ofthe added advantages that they want to invest in Penang," the 48-year-old Limsaid.Even so, he is looking to the federal government to provide 500million ringgit ($138.1 million) to retrain workers who lose their jobs inthe current downturn.Heading such a powerful state is a big change for Lim.He was detained under a harsh security law from 1987-1989 along withhis father, Lim Kit Siang, who leads the Democratic Action Party, part offormer deputy prime minister Anwar Ibrahim's opposition alliance.
The younger Lim is one of the most vocal and powerful critics of thegovernment and has been accused of stoking racial tensions over a range ofissues, from dual language road signs to demands that a system of affirmativeaction for ethnic Malays be ended.Any mention of race in this country where nearly 60 percent of thepopulation is ethnic Malay and where there are large ethnic Chinese andethnic Indian minorities is met with a forceful response by theMalay-dominated government.Lim, an ethnic Chinese, says the 37-year old programme designed tolift Malays out of poverty has enriched only those with political connectionsand has also entrenched corruption.Malaysia's ranking in Transparency International's corruptionperception index has fallen to 43rd from 37th since 2003.The government insists it is doing all it can to stamp out what itcoyly labels "money politics" but Lim and the opposition say no real actionhas been taken.
Since winning power, Lim has initiated a system of governance he calls CAT -- competency, accountability and transparency -- a move he said hasendeared him to foreign investors and now he plans to replace closed tenderswith open tenders."It has been challenging in the sense that there are so many things todismantle, all the past excesses," he said.
So far, Penang voters appear to be willing to give Lim the benefit ofthe doubt."We voted the opposition into power. We should give them some time toimplement changes," said Ong Swee Aik, who sells shoes in the 65-storeyKomtar building, which also houses the state government office. :If they do agood job, we will vote for them again in the next election."
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