In 2005, concerned about a 16 percent drop in foreign direct investment into Malaysia for the year 2004, the current Penang Chief Minister Lim Guan Eng observed, ‘fall in FDI for Malaysia in 2004 reflects the lack of confidence of foreign investors in the Malaysian economy'.

Lim further opined that ‘good governance as well as a corporate culture of excellence and accountability is important requirements sought by foreign investors'.

Guided by the very same logic and thought processes employed by Lim, we also can conclude that the massive 80 percent decline in FDI for Penang in 2009 is a reflection and an indictment of the investor community's view on Lim's own performance as the chief minister of Penang.

This drastic drop seems to indicate that the investors view unfavorably the ability and the track record of Lim and his exco members in managing the state.

It is not difficult to imagine the investors being decidedly unimpressed and underwhelmed by Lim's penchant for political rhetoric and populist slogans over well thought out and carefully crafted strategy and action plans.

While the previous chief ministers are fondly remembered and celebrated for securing dozens of blue-chip MNCs as anchor investors, Lim has the dubious, unwanted distinction and legacy for losing these premium companies. Intel and Dell are just two examples of key investors who have left Penang during the reign of Lim.

No doubt, Lim's administration would take pains to point out at the global economic downturn which had caused the worldwide FDI to shrink significantly in 2009. However, the facts do not support but rather contradict with this argument since Penang's FDI decrease was not in tandem with the trend of the rest of the country or the world.

Based on the United Nations Conference on Trade and Development's (Unctad) data, the global FDI suffered a 41 percent contraction in 2009. For Malaysia, the reduction was 51 percent for all the states.

My friends in Economic Development Board (EDB), Singapore's main agency for investment promotion, tell me that the data is similar for the city state too although the official data has not been made public yet.

For Penang, the FDI plunge was an unprecedented 80 percent and the state also dropped to No 5 ranking nationally, far behind Sarawak, Selangor, Sabah and Johor. Even Kelantan has done better with an only 52 percent decline.

The result would have been far worse had the data not been propped up by local investments, most of it in property development projects that attracted much controversy due to the adverse impact to quality of life, heritage and environment. One can foresee that with the state governments of Perak and Kedah demonstrating far more aggression and innovation in attracting FDI, it would not be long before these states too would overtake Penang in the national ranking.

The reasons for such drastic decline are not hard to pinpoint. Lim's shocking decision to turn down a RM10.2 billion high-tech FDI because he could guarantee enough engineers has made Penang a laughing stock around the world. Lim's action has affected Penang's position as a key high-tech FDI destination, perhaps permanently.

I personally received many ‘thank you' calls and e-mails from my Singaporean friends who had no doubts that the investor in question would be warmly welcomed and grabbed up by their EDB.

This state of affair augurs poorly for Penang and if these danger signs are left unheeded, then the state faces a real prospect of de-industrialisation thus resulting in a drastic drop in the standard of living and income.