Think globally, act locally A blueprint for Penang's transformation

At the 5th Asia Economic Summit held on Dec 7 in Singapore on Strengthening Economic, Trade & Investment Ties After the Crisis - Reconnecting Asia with Europe and us, Penang Chief Minister Lim Guan outlined his vision for Penang to transform itself into an international city, with a knowledge-intensive and high-income economy.

Kwang Hua Yit Poh

WHAT IS HEARTBREAKING about the current economic crisis, caused by the collapse of key financial institutions in the West, is that the culprits are seldom the victims. This is one of the negative effects of globalisation: abuses by those involved in the collapse of the western financial system can have dire consequences like financial distress, loss and suffering for innocent people half a world away in Asia. Worse still, those involved often escape unpunished and can return to their hefty bonuses.

There are five lessons to be learnt. One Without transparency and account-ability, arrogance takes over which invariably ends in disaster, for everyone.

The second lesson is that it was we — the small developing nations — who made ourselves vulnerable. We have failed to move out of the middle-income trap, and forgotten that we have to continue climbing the value-added ladder, aiming for a high-technology and knowledge-intensive high-income economy in order to develop the skills level of our people.

Thirdly, what we have to learn is that out of every crisis, a new balance of power emerges. It is of course claiming too much, as many eager economists are doing, to say that the centre of economic power is moving to East Asia away from the United States and Europe.

The 2009 World Bank figures show that developing East Asia had growth rates far surpassing that of Organisation for Economic Co-operation and Development (OBCD) countries at 11.4% as compared to 2.5% in 2007, 8% in 2008 as compared to 0.4%, projected 6.7% as compared to -3.2% in 2009 and projected 7.8% compared to 17% in 2010. (See table opposite.)

Whether during an economic crisis or in boom times, the gap between the OECD and East Asia developing countries tends to hover around an average of 8.1% per year, as happened over the last four years. This yawning gap in growth rates is the reason behind China's astonishing leap within a generation beyond not only Germany but also japan to emerge as the second largest economy in the world after the United States with the largest foreign reserves of US$2.3 trillion.

However, to say that the economic centre of power now lies in Asia is untrue. In GNP per capita terms, Asia's large population still puts Europe and the United States ahead. Despite having the second largest economy, China's zoo8 per capita income using purchasing power parity was ranked 133th at a paltry us$6,000, behind Turkmenistan, El Salvador and Namibia. In other words, what we are going to see is not a uni-polar world, whether centred in the West or East but a multi-polar world that leads to a more balanced economic order.

The fourth lesson is the necessity to build for the future, not the present. We need each other: the West needs us as much as Asia needs them so that together we do not let our children down.

The fifth lesson we have had to learn is to concentrate on basics at the local level. Economics, like politics, begins at home. Local economic innovations must take place. That is why we must invest in education, tourism, lifestyle enhancement and regional ties rather than in international ties.

In other words, we must think globally but act locally. There are six aspects of "Think Globally, Act Locally" for Penang to succeed in transforming itself into an international city with a knowledge-intensive and high-income economy.

• Openness not in economic terms but in pursuit of knowledge. This is characterised by a purposeful and determined willingness not to be bound by dogma but to learn from successful models, combined with a willingness to explore, experiment and progress through change.

• A people-centric approach through continuous emphasis and engagement with the people by emphasising education over propaganda, competency over political background and excellence over indoctrination. There is no dispute that the energy, expertise and entrepreneurship of its people are the critical factors behind economic success. That is why Penang aspires to be the first wifi state in Malaysia, where wifi is provided free of charge.

• Seeking social cohesion and inclusion to achieve a harmonious society.

• Unbalanced growth must be compensated through the provision of development and social services that are inclusive, accessible, available and affordable to everyone. Efforts must be made to provide development services to those not touched by rapid economic growth.

• Seeking new sources of growth such as a green economy. A green economy refers to a sustained growth model which features environment-friendly technologies, renewable energy resources and low carbon emissions. In Penang we aspire to be the first green state in Malaysia by reducing plastic bag use, implementing green buildings and finding alternatives such as manufacturing bio-degradable food containers made from padi or sugar cane husks, which can be eaten.

• A determined effort to brand the state as synonymous with quality, safety, sustainability reliability and integrity. Standards of service in all industry sectors, including good governance, must be at the highest level if we are to beat the competition. Penang's CAT governance of Competency, Accountability and Transparency has achieved recognition from Transparency International in reducing corruption and inefficiency.

Lim Guan Eng is Chief Minister of Penang, Member of Parliament for Bagan and state assemblyman for Ayer Putih.



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