From foreign investment to infrastructure and raw water supply, the Penang government says it is at the mercy of federal authorities, which it has accused of causing deliberate delays on these projects. But Putrajaya will only hurt the country with such moves, Penang Chief Minister Lim Guan Eng said, as foreign investors, frustrated with delays, eventually look elsewhere. Freeze by federal agency to draw investors.  Lim alleged that Putrajaya has frozen the efforts of the Malaysian Investment Development Authority (Mida) to draw and facilitate foreign investments to the state. He said the agency had stopped introducing and recommending companies and has not responded to the state’s letters for support or follow up on potential investments.

The situation has become so severe that a large international firm was giving up interest in Penang and Malaysia because of the delays, he said. “We have got queries from a major multinational corporation. Because of the slow response from Mida, they are thinking of going to another country,” he said, adding that he could not reveal the company’s identity because of confidentiality. Lim asked why Putrajaya was treating the state like a step-child. “After all, if they (potential investors) don’t choose Penang, they are not going to another state. They are going to another country,” he told The Malaysian Insider. Mida’s functions include evaluating applications for manufacturing licences, tax incentives, expatriate posts and duty exemptions. It is the federal government’s principal agency to promote the manufacturing and service sectors.

With more than 300 multinational companies, Penang drew the highest foreign direct investments (FDI) in Malaysia from 2010 to August 2013, with RM19.7 billion or nearly 20% of the country’s total FDI of RM103 billion. However, MIDA has stopped introducing investors over the past year, Lim said.Penang Chief Minister Lim Guan Eng says Putrajaya cannot afford to play partisan politics when it comes to investors who are frustrated over delays in approving their investments in Penang. – The Malaysian Insider pic by Hasnoor Hussain, October 10, 2014. “There is no communication. And then when we write to them, we don’t get any response,” he added.

According to the latest Mida statistics, Penang received RM2.34 billion in foreign investments from January to May this year, behind Sarawak (RM7.45 billion), Pahang (RM4.2 billion), Kedah (RM4.1 billion) and Johor (RM4.08 billion). Lim said he does not blame Mida officers, adding that he knew they worked “under directive”. He also questioned if Mida has even set a quota for Penang investments. He said the agency has always had a quota for every state to benchmark itself against. “They must reach certain targets. What’s the target for Penang? I don’t think there is any target for Penang. “We hope they can shed some light on this matter,” he said, adding that investments in the country were too important to be politicised.

In the dark about key infrastructure

Lim also expressed concern about the lack of clarity in federal plans for the airport and port, which the state has no control over, as well as raw water supply. The Penang International Airport is nearing capacity, and Lim said the state wants to know what plans the federal government has to deal with this. He said the Kedah government’s plan to build an international airport in nearby Kulim did not make any sense as the area had little demand. “It’s not rocket science that you have to expand in areas where there is over-capacity or where there is excess demand,” he said. “Why is the federal government behaving in such a partisan way?

This is clearly politics to punish. Government should provide, not punish.” Lim added that Putrajaya has still not informed officially the state about the privatisation and change of management at Penang Port since Seaport Terminal (Johore) Sdn Bhd took over operations in January. Similarly, there has been no communication over plans to build a reported RM10 billion mixed property project on the site of the Royal Malaysian Air Force (RMAF) base in Butterworth, he said. He said it was the federal government’s prerogative to plan and implement projects under its ambit, but it should at least inform and confer with the state authority.

Raw water supply in limbo

Lim said the federal government also needed to fulfil its part of the water assets migration agreement with the state, signed in June 2011, to ensure adequate raw water supply to Penang. He said the RM2 billion Perak-Penang Water Basin Transfer project, to pump raw water from Sungai Perak in Perak was approved under the Energy, Green Technology and Water Ministry in June last year, but put on hold early this year. The Perak government has since demanded that Penang buy treated water from Perak instead.

The federal government is supposed to intervene since they have these powers to let us buy raw water from Perak, but they refuse to do so.“No state sells treated water to another state… Why is it that Pahang can sell (raw water) to Selangor, and Johor can sell to Malacca? Why can’t we buy raw water?” Lim said the Penang government felt cut off and adrift, but was determined to work harder to bring about improvement and change for the people. “Is Penang an orphan without any siblings?” he asked, stressing that the state got back in allocations only 3% of the Customs duties and taxes that Penangites had paid

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