DAP Penang

Penang willing to be test-bed for World Bank recommendations

By admin on December 13th, 2009

GEORGE TOWN: Penang is willing to be a test-bed in adopting the World Bank’s latest recommendations outlining four key thrusts that could transform Malaysia into a high-income economy.

Chief Minister Lim Guan Eng said the 2009 World Bank report had suggested an integrated strategy that requires sustained efforts in promoting further specialisation of the economy, improving the skills base of the labour force, making growth more inclusive and bolstering public finances for Malaysia to become a high-income economy.

He said this in his speech during a dialogue with students,including some from Penang, at the University Of California at Berkeley, in San Francisco, yesterday during a visit there.

“One, to specialise the economy further, given limited resources within both the public and private sectors, and the need to achieve economies of agglomeration, it is important to focus on a few high-value-added, innovation-based sectors with strong potential.

“Economies of agglomeration describe the benefits to urban economies, such as towns and cities, flowing from economies of scale and the close proximity that allows easy access or networking with each other,” Lim said.

He added that improvements to an enabling environment could facilitate this through the building of an internally competitive and business-friendly economy and the provision of appropriate soft and hard infrastructure to support a knowledge economy.

Focused technology, innovation and urbanisation policies could nurture niches of growth by building on existing strengths in sectors such as electronics, resource-based industries, and Islamic finance.

“Two, is to improve the skills of the workforce. Greater specialisation will assist in accelerating growth and create demand for skilled labour and increase social and private returns to education and skills upgrading.

“To ensure this demand can be satisfied, with skilled labour currently at only 25% of the labour force, simultaneous efforts are required to improve the quantity and quality of skilled labour. This requires attention to incentives, competition, and merit-based recruitment in education, as well as curriculum development, better teacher training, and leveraging efforts with the help of the private sector,” he said.

Lim said, thirdly, growth must be more inclusive.

“Inclusiveness policies are yet another building block of a competitive, dynamic and flexible economy. They not only help households cope with poverty, but are also essential in promoting entrepreneurship and risk-taking.

“Effective social insurance programmes could help mitigate unemployment risks and ensure adequate pension coverage. Well-targeted social safety nets would protect the needy in times of adversity and reduce fiscal costs,” he stated.

Lim added that the fourth thrust would be to bolster public finances with fiscal consolidation and reform, which would help address investor concerns about the rise in the fiscal deficit, broaden the narrow revenue base, lessen the significant role of subsidies in expenditures, and reduce the crowding-out of private initiative.

On specialising, Lim said Penang had built its name as the Silicon Valley of Malaysia.

“The challenge is to also be the Software Valley of Malaysia, in essence be both the workshop and smartshop of the manufacturing and services sector.

“Penang should leverage its built-in advantages by expanding the range of goods and services that can be produced and supplied in the the existing specialised fields of high-tech, electronics, avionics automation, medical devices, green technology and professional services,” he said.

The Edge – 11 December 2009 – Written by Regina William
http://www.theedgemalaysia.com/political-news/155512-penang-willing-to-be-test-bed-for-world-bank-recommendations.html