The DAP has blamed the Penang government's incompetency and lack of aggressive promotion as the major reasons behind the rapid drop in foreign direct investment (FDI) to the state.

Despite organising many trade missions to Europe and the United States over the years, the Dr Koh Tsu Koon-led state government has not been able to attract new foreign investments, the opposition party's state organising secretary Danny Law Heng Kiang said.

For the number of trade missions it organised, Law said the state government should have attracted 10 times more investments than the present figures.

This clearly shows that the state government is not competent even in competing with other Malaysian states, let alone other countries, to woo foreign multi-national companies (MNC), the DAP leader said.

"It reflects the poor leadership of Koh and lack of aggressive campaign to promote Penang as an ideal place for investments," he charged.

According to the Malaysian Industrial Development Authority (Mida) FDI statistics, Penang has fallen from its pole position in attracting foreign investment back in 1999 to number four in 2004, behind Sarawak, Malacca and Selangor. Penang is expected to drop behind neighbours Kedah this year.

During its heady days, Penang recorded RM4.6 billion FDI in 1999, mainly from new investors.

The amount, however, dropped sharply by at least 70 per cent to RM1.4 billion in 2003 and RM406.37 million during the first half of 2004.

Although Kedah is considered to be a less developed state than Penang, Law said that statistics revealed that Kedah has been more aggressive and successful in securing new investments.

Shortage of manpower

According to Mida, Kedah will attract RM20 billion in FDI, mainly new investments, within the next two years, including a RM5 billion single investment by a semi-conductor producing German company.

The company, Infineon Technology, has already started operations at the Kulim Hi-Tech Park

During the same period, Penang is expected to have only RM7.5 billion FDI, mostly re-investments by existing multi-national companies.

Penang has about 700 foreign factories, including 200 in Bayan Lepas Cyber City, employing more than 500,000 workers, Kedah has only about 100, including 20 in the Kulim Hi-Tech Park.

Law warned that Penang would likely face a brain drain and shortage of workers soon as Kedah continues to surge ahead.

"Many unskilled, semi-skilled, skilled and professional locals would move to Kedah for employment because job opportunities would reduce tremendously due to lack of FDI in Penang.

"Lack of FDI and shortage of manpower would also affect the gross domestic product, as the manufacturing sector is the state's number one revenue earner," he said.

Law suggested that Penang should offer more attractive incentives to woo foreign investors to compete with other states and countries.

"Otherwise, the state would be badly hit by an economic slump and high unemployment rate", he warned.

"The Penang government should review its strategies and be more aggressive to woo MNCs and revive the state economy," Law added.

ATHI VEERANGGAN is malaysiakini 's Penang-based stringer.