Tuesday, July 19, 2016

MCA's Tan Chuan Hong’s Unfounded Accusation Against Penang State Government

(Photo taken from Tan Chuan Hong's Facebook)
Penang Malaysian Chinese Association's (MCA) secretary Tan Chuan Hong has recently alleged that Penang Institute received scolding from the chief Minister Lim Guan Eng due to their honest presentation of Penang’s declining economy.

According to Tan, Penang Institute’s latest report shows that “during DAP’s rule of Penang, the state’s GDP growth from 2009 to 2015 was lower (than the percentage) nationally.” 

On his Facebook, Tan wrote, “[A]fter DAP leading Penang government, Penang's GDP growth of year 2009, 2011, 2012, 2013, 2014, 2015 were lower national.”  He specifically highlighted the year 2009 when Penang’s GDP decreased by 10.5% as compared to the national rate of 1.5%. Tan concluded that this data is the reason for the chief minister’s warning to Penang Institute.

These allegations are not only unfounded but on their own expose much misinformation and the unfortunate ignorance on Tan’s part.

Tan’s Outdated Data
The so-called “latest report” that Tan showed to the media and posted on his Facebook is actually dated. It was taken from Penang Institute’s magazine Penang Monthly, issue January 2015, page 61. In that issue, Penang’s GDP increase of 5.7% compared to the country’s 5.8% in 2014 was calculated projection.

After federal government has announced the 11th Malaysia Plan, Penang Monthly has published the official figure in the July 2015 issue, page 37. The official figure stated that Penang had 7.4% increase in GDP compared to the country’s 6% in 2014.

Penang’s GDP vis-à-vis Malaysia 2008-2015, from Penang Monthly, July 2015 issue:


As shown, Penang’s GDP is higher than the country’s in 2008, 2010, 2014, and expected to perform similarly in 2015. The economy fluctuated in the past 8 years, not consecutively declined as alleged by Tan.

Instead of the most updated data, the Penang MCA secretary has exploited outdated figures as misrepresentation to make false allegation against the chief minister.

Penang’s economy in 2009
Tan questioned DAP’s ability to govern in view of the state’s -10.5% GDP decrease in 2009, attributing the fall to the party: “It even fell more than 10.5% in 2009, compared to the national drop of 1.5% in the same year. This has caused people to worry about the ability of Penang’s state government to govern.”

This exposes Tan’s ignorance over two very important factors that caused Penang’s GDP steep decline in 2009.

The first factor was the global financial meltdown in 2008 that caused economic recession in the country. This has significantly affected the manufacturing sector in Penang, which was 47.7% of the state’s overall economy.

As acknowledged in the Department of Statistics’ reportGross Domestic Product (GDP) by State 2009’, Penang’s GDP contraction in that year was “resulted from a sharp decline in the Manufacturing sector” due to the “global financial crisis.” 

The second factor was the failure of the previous state government under Barisan Nasional to diversify and upgrade Penang’s economy. This has thrown the state into the “middle-income trap”.

This is noted in the research jointly-published in 2010 by Khazanah Nasional and the World Bank. The recession in 2008-2009 has shown that Penang is, “A victim of its own success, its competitiveness in traditional areas is falling as wages rise. At the same time, it has not developed an environment where innovation can flourish to yield higher profits and wages.” 
(Homi Kharas, Albert Zeufack and Hamdan Majeed, Cities, People and the Economy: A Study on Positioning Penang (Malaysia: Khazanah Nasional Berhad, 2010), 10. Emphasis added.)

These two factors are evidence that the GDP plunge in 2009 was not due to the DAP and the present chief minister.

Tan’s false accusation exposes his own ignorance of the complexity surrounding the economic state of Penang at that time.

It is deeply deplorable that the MCA secretary has produced such nonsensical accusation by misrepresenting data and making severely ignorant allegation against the state government.

(An extract of this statement appears in Free Malaysia Today: http://www.freemalaysiatoday.com/category/nation/2016/07/18/seagates-closure-zairil-says-penang-will-bounce-back/)