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Penang PR twisted facts are exposed

Penang leads: CAT or just bull?

March 17, 2011

FMT LETTER: From Calvin Sankaran, via e-mail

For Penang, the future looks golden. Records are falling like ten-pins, accolades are pouring in. Investors are stampeding in at a record pace – with 2010 seeing a gargantuan 465% increase over the previous year. And for the first time ever, Penang proudly perched at the No 1 position in Malaysia for attracting investment, a huge leap from the 4th place in 2009.

The state’s financial health looks very robust and is at an unprecedented high too – reaching RM1.025 billion in accumulated funds in 2009.

Revenues are up in tandem, climbing to RM376 million. As the icing on the cake, the northern state also chalked up a budget surplus of RM77 million for the same period.

Much also has been reported about the stunning turnaround of the previously loss-making MPSP (Majlis Perbandaran Seberang Prai). After suffering from eight years of consecutive deficits, MPSP has managed reverse this trend in 2008, when Pakatan took over the state administration.

In 2009 MPSP had recorded a surplus of RM14.57 million and saw an increase of 50% in its reserves.

These achievements are extraordinary by any standards. And the man who engineered this brilliant transformation is none other than the Chief Minister Lim Guan Eng, a man many Penangites believe would guide their state to its rightful place beside economic powerhouses of Singapore and Hong Kong.

Pakatan supporters adore Lim and consider him as Penang’s own Lee Kuan Yew and attribute these successes to his seemingly superhuman leadership qualities and CAT (Competency, Accountability and Transparency) policy.

However such hero worship is not universal, for there are equally many Penangites who view Lim as a Machiavellian politician and incompetent leader.

This group derisively dismisses Lim’s claims of successes as mere propaganda and a financial sleight of hand. To ascertain the truth between these two opposing viewpoints, let’s examine each of these issues objectively and one by one.

Firstly, let’s pore over the investment data provided by MIDA. Interesting, we find that of the total of RM12.2 billion investment, a large amount (RM9.392 billion) is by existing investors with Western Digital and Jabil Circuits alone contributing RM6.5 billion.

Upon further investigation we also discover that not only for Western Digital and Jabil, but almost every other investment procured by Penang in 2010 was through the personal efforts of the Prime Minister himself or by the hard work of the MITI and MIDA teams. Worryingly it does appear that despite numerous overseas trips, incessant hard sell and marketing of CAT slogan, the Penang Chief Minister had failed to even to obtain a single, significant FDI project.

Let’s look now at the state’s much publicized and hyped financial acumen. CM Lim had declared that the increase in state’s revenues as “the dividends of anti-corruption measures”. However, a study of the Auditor General’s report for 2010 turns up no evidence to substantiate this assertion. In fact the AG’s report sheds light on some very disturbing developments that are happening under Lim’s watch that do not reflects positively on his CAT mantra.

The AG’s report highlights that the expenditure of the state government had risen from RM252.3 million in 2007 to RM299.2 million in 2009, that’s whopping 19% increase in just two years! This certainly does not seem to support the contention that Lim’s anti-corruption efforts or CAT policies are helping to save money or boost state’s coffers.

The big jump in the revenue trumpeted by the state government proves to be a mirage too even under a cursory examination. This increase actually was due to “non tax related revenue” such as land conversions (which alone netted RM35.2 million). This means, in order to jack up revenues the state government (among other things) had been selling public land at an unprecedented rate to property developers.

This is action which prioritises developers’ and political interests over rakyat’s, is rather an irresponsible move especially when the state is land scarce and desperately short of affordable housing. Such policies could prove ruinous and highly detrimental and very likely lead to environmental, economic and social disaster if allowed to continue unabated.

Interestingly and contrary to what we were led to believe by the current state government, we learn from AG’s report that from 2004 to 2008 the state (when it was under BN) had actually enjoyed an excellent financial health with huge surpluses In the case of MPSP, one might recall Lim ordering an investigation in 2008 on the excessive spending by the council. However, for some reason the result is yet to be made public up to now.

Lim’s deafening silence in this matter is very perplexing indeed and has given rise to various speculations, none flattering to his CAT administration.

Lim is also extremely fond of highlighting his budget surpluses.

However, this claim too falls apart like a house of cards upon analysis for it seems to owe more to creative accounting than to good governance.

This is because the DAP-led government had been using the devious accountants’ trick of over budgeting and later under-spending to declare a budget surplus later on.

The adoption of financial chicanery and creative accounting practices is the mark of a dishonest and incompetent organisation. As have seen in case of Enron, WorldCom and numerous others, such deceitful tactics can only go so far and ultimately these dirty deeds will be exposed and the shenanigans will be brought to face the full force of justice.

So Mr. Chief Minister, it might sound trite but honesty is always, always is the best policy.

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KChuah says:

13/01/2012 at 2:57 PM

In your featured post, 100 reasons say NO to PR, the Reason 2: Penang PR exaggerated FDI inflow was mainly due to their efforts is supported by a piece of bias opinion. That is not to say that the numbers reported are wrong, but their respective interpretations are clearly contrived. In that story, the fact that the state expenditure in 2009 increased by a “whopping 19%” in two years is interpreted as a failure to save money, when it clearly means strong economic developments. Note that the new 2010 state expenditure is RM377.2 million, a double whopping 26% increase in one year with budget surplus. Not surprisingly, the story attributes budget surplus to “creative accounting” of over budgeting, as if a state can budget beyond its revenues. The fact that the state sold public land for development is labeled as an unprecedented mean to increase revenues, when a better question is why these revenues are missing before. Were there no development for the last 18 years or somehow new houses can be build without land? The fact is Penang’s FDI tops the nation in 2010, 2 years after PR took control of the state. It is hard to imagine that Penang would be No. 1 anyway because the federal agencies did something.

nkkhoo says:

I have challenged LGE to list down which FDI is coached by him and his team.

So far, not a single FDI project in Penang is directly attributed to PR.