Chief Minister Lim Guan Eng declared Penang an entrepreneurial state except that the government does not believe in becoming involved in market outcomes or competing with businesses.
He said this is in accordance with the state’s mantra of “the business of government is not to get into business”.
In Penang, the state government sees itself as providing a catalytic role in providing public goods and services, basic communications infrastructure and spurring the development of key risky industries, he added.
“But in other areas, especially where the private sector has a proven track record, the role of the government is to reinvent government and leave business to the private sector,” he said during a talk in the United Kingdom.
Lim is on a working trip at the TS Eliot Lecture Theatre at Merton College in Oxford University, where he was hosted by the Blavatnik School of Government, Oxford University, thanks to well-known banker and businessman Nazir Abdul Razak.
During his speech, Lim shared his thoughts on how his team put in place an “entrepreneurial state” in order to achieve the status of a high income economy through inclusive growth.
He cited an example where Penang has managed to develop a RM1.2 billion fish farm industry from the benefits of reinventing government.
“Very few of you would think of fish farming when you think of Penang.
“It would surprise you to learn that this industry grew from basically nothing in 2008 to a RM1.2 billion (£180 million) industry seven years later.
“Much as I would love to claim credit, this amazing transformation was done without spending a single penny but merely dependent on reinventing government,” he added.
Previous government benefited cronies
Lim said the previous government benefited its cronies with one or two chosen individuals being given thousands of hectares of sea, which they then sub-let to genuine operators under the classic rentier system.
“This is described by some as predatory capitalism.”
He said such “crony capitalistic practice” was stopped by giving permits only to owner-operated fish farms up to a maximum of 8,000 square meters each.
Lim added that rental was fixed at RM3,600 (£550) annually.
He stressed that the state instituted a check-list system where approval must be given if all the boxes were ticked, and the outcome of approval must be given within three months.
“This is how a billion-ringgit fish farm industry was born out of nothing at all. This wasn’t rocket science at work,” Lim said.
He added that the state was merely putting into practice its principle of “CAT governance” combining “Competency, Accountability and Transparency”, which was introduced immediately upon taking office in 2008.
“We merely enabled the fish farming industry by giving the licences to genuine owner operators.
“We empowered them by making the permit approval process much more transparent and the result was the enrichment of these firm farm operators and their employees as well as the state government,” he said.
But Penang is much more than just fish farms, Lim added.
He said Penang is Malaysia’s most industrialised state with more than 95 percent of its GDP derived from manufacturing and services.
He added that even though Penang is a small state making up only 5.5 percent of Malaysia’s population and less than 0.5 percent of its land mass, the state contributes 7.4 percent to the nation’s GDP, seven percent of the total port container traffic and 12.3 percent of foreign tourist arrivals.
He stressed that Penang also contributes about 22 percent of Malaysia’s balance of trade surplus in 2014.
“Our economic growth rate is expected to be 6.2 percent this year despite the travails of the present economic climate,” Lim said.
