The Proofiness of Lim Guan Beng

I came across the term Proofiness while surfing the Time magazine...

Q: What is "proofiness"? 

A: It's the art of using math to tell untruths, the art of using bogus numbers or numbers that are semi-right to mislead. One example I like is when Quaker Oats had a huge ad campaign to try to convince people that eating oatmeal could lower cholesterol dramatically. It put a graph on the back [of the package] that showed a dramatic decline in cholesterol levels. And there was a drop, according to a study. But if you look carefully, the Y-axis was manipulated so that a really very tiny drop looked huge, when in fact, there was only a few points [decline] out of 200 Source here

I asked a buddy of mine whether I should respond in my typical way of addressing this Johor Born AhBeng kaki kencing or whether I should write in my brokeng engrish....he said....proper engrish bro...

I knew the cyber vultures are homing in each time my Guan Beng pieces comes out to try and attack this so called "character of mine"....macam lu kenal gua sape

They can't deal with facts......that we know from previous engagements. Terbukti bahlul tahap gaban with 99% Confidence Interval..

Well nak pendekan cerita...

Another advertorial came out last week in Bloomberg, I was rather surprised with the tajuk....

Bole Cita ka

Malaysia Losses From Racial Law Exposed

Mental beb...

EXPOSED?

What exactly have you exposed Chong Pooi Koon?

That you're a fucking idiot?No

Want me to go on?

You might feel really bangang after this....

You sure?

Ok .....let's roll baby...

Lets start with your first paragraph of the totally incoherent article shall we, for those who wants to waste your time go here

Lim Guan Eng turned Malaysia’s second-smallest state into the nation’s biggest economic success after he bumped into two National Instruments Corp. (NATI) executives at the local airport in 2008.

Economic Success should be measured by how the economy have performed under the rule of Lim Guan Beng

Refer below the latest State GDP data from Department of Statistics Malaysia

Source here

We all know about how Penang's GDP contracted by -10.8% a year after Guan Beng took over from my previous post .......... but folks look at the average (simple calculation sum pastu bahagi 3) over the 3 years (Table is sorted by the Average Growth Numbers)

1.71% Average Growth over 3 Years of Guan Beng managing Penang.

Even Perlis did better.

Somehow they all seems to be preoccupied with the FDI Numbers. Goreng Baik macam goreng pisang panas dowhs.....

UPDATE 24Oct

"Although there is a widespread belief among policymakers that FDI generates positive productivity externalities for host countries, the empirical evidence fails to confirm this belief. In the particular case of developing countries, both the micro and macro empirical literatures consistently finds either no effect of FDI on host countries firms productivity and/or aggregate growth or negative effects" Source : FDI Impact to Economic Growth Harvard University Research paper here

Let us go deeper into what constitute FDI for Malaysia and what drives these investments.


first look at the Bloomberg Article

Elected in March that year as Penang’s first chief minister from an opposition party in 36 years, Lim was struggling with the prospect of federal funding cuts. He convinced the managers to set up a research and production center in the state, and within two years the former British trading post was Malaysia’s top destination for foreign manufacturing investment. “The deal was struck very quickly,” said Eugene Cheong, a director at the local unit of the Austin, Texas-based maker of industrial testing and automation equipment.

Lim’s speed in closing deals with companies from National Instruments to Robert Bosch GmbH is helping Penang achieve what every Malaysian prime minister sought since Mahathir Mohamad started his Multimedia Super Corridor technology zone in the 1990s near Kuala Lumpur: a transition from low-cost assembly to a research and development base for industries such as solar cells and life sciences. 

With a general election due by early 2013, Penang’s progress highlights the challenges facing the rest of Malaysia and the National Front government as China, Indonesia and Vietnam offer investors bigger workforces while Singapore lures talent with lower taxes and easier immigration. Lim, 50, the country’s only ethnic-Chinese state leader, embodies the contrast between Penang’s business transparency and the four- decade old policies of the ruling party that favor Malays, which the World Bank says undermine competitiveness

Oh really? What you smoking Pooi Koon?

It was Guan Beng business transparency that has liberalised the Manufacturing Sector from the "Clutches of the much dreaded" NEP and Bumi Ownership Requirements?

Really?

The Malaysian FDI regime is tightly regulated in that all foreign manufacturing activity must be licensed regardless of the nature of the business in which it is engaged. The most interesting feature is that, Malaysia does not have laws governing FDI that lay down the general principles and rules for foreign participation in local businesses as is the case of Thailand and its Foreign Business Act. This has allowed the government maximum policy and regulatory space to screen and control FDI to suit the economic and industrial needs of the particular time. For example, unlike in Thailand, the foreign equity restrictions in Malaysia are not determined by a law.

Malaysia only has "Foreign Equity Guidelines" that can be easily changed by the Government. Until 1998, foreign equity share limits were made conditional on performance and conditions set forth by the industrial policy of the time. For example, in the past, the size of foreign equity share allowed for investment in the manufacturing sector hinges on the share of the products exported in order to support the country's export-oriented industrial policy. FDI projects that export at least 80% of production or production involve advanced technology promoted by the state, no equity conditions are imposed (EIU 2001). However, the restriction was suddenly abolished through the decision of the Ministry of Trade and Industry (MITI) when the country is in dire need of FDI after the economic crisis in 1998 as mentioned earlier.

This sudden policy-shift in opening up the investment regime undoubtedly affects the country's long-standing social policy of redistributing wealth in favor of ethnic Malays and other indigenous people known as the bumiputras. This particular goal is provided for by the Federal Constitution and operationalized by the National Development Policy. The goal is to have 30 % of the corporate wealth held by the bumiputras. In the area of foreign investment, this translates into the requirement that a portion of the residual of the corporate equity not held by foreign investor is to be reserved for bumiputras. Only when the residual equity is not taken up by bumiputras can it be allocated to non-bumiputras. Similar restrictions apply to employment. Indeed, this policy runs against the principle of non-discrimination advocated by the WTO and most bilateral and regional trade and investment treaties.

However, Malaysia managed to ensure that this particular restriction does not hinder potential FDI flow into the "targeted industries" by ensuring that attractive incentive packages and world-class infrastructure and facilities can more than offset its negative impacts. This sudden policy-shift towards opening up the entire manufacturing industries to foreign investors, bar 7 minor ones, in June 1998 showed that, when economic necessity dictates, Malaysia is able to forego this socio-political goal that has been in place for the past three decades. Besides abandoning the export requirement in 1998, Malaysia has, for a long time, taken steps to minimize other negative incentives, such as nationalization and appropriation, double taxation, joint venture requirements, domestic employment restrictions and restrictions on remittance of profits. Again, as there are no domestic laws that set the general rules or standards on these issues, much has to be achieved through bilateral agreements.

In terms of protection of foreign investment, foreign investors are theoretically guaranteed against expropriation of property without compensation by virtue of Article 13 of the Federal Constitution. In the absence of a comprehensive investment law that can provide a blanket protection against expropriation for all foreign investments, Malaysia has relied extensively on bilateral investment guarantee agreements , or IGAs, to:

• Protect against nationalisation and expropriation
• Ensure prompt and adequate compensation in the event of nationalisation or expropriation
• Provide free transfer of profits, capital and other fees
• Ensure settlement of investment disputes between private parties and Government under the Convention on the Settlement of Investment Disputes (ICSID) of which Malaysia has been a member since 19662 . 

Source : Investment Regime Malaysia refer here  

Let us now look at the current incentives by the Federal Government

Equity Policy for New, Expansion or Diversification Projects
The level of exports had been used to determine foreign equity participation in manufacturing projects. However, since 31 July 1998, the Malaysian government had relaxed the equity policy guidelines for all applications for investments in new as well as expansion/diversification projects in the manufacturing sector. Under this relaxation, foreign investors could hold 100% of the equity irrespective of the level of exports.

However, this relaxation did not apply to specific activities and products where Malaysian companies had the capabilities and expertise. These activities and products include paper packaging, plastic packaging (bottles, films, sheets and bags), plastic injection moulded components, metal stamping and metal fabrication, wire harness, printing and steel service centres. In these cases, specific equity guidelines prevailed.

To further enhance Malaysia's investment climate, equity holdings in all manufacturing projects were fully liberalised effective from 17 June 2003. Foreign investors can now hold 100% of the equity in all investments in new projects, as well as investments in expansion/diversification projects by existing companies, irrespective of the level of exports and without any product/activity being excluded

Folks don't take my word for it read the whole document to understand what kind of FEDERAL INCENTIVES ARE PROVIDED TO THE INDUSTRY

Go here for the full document......Bengs do read mah.....jangan malas loh

Well I wonder what was Guan Beng doing prior to 17 June 2003 and the few years after?

Was he actively engaging the Federal Government to fully liberalise the Investment Guidelines?

Let me think....

He was released from Prison on 25th August 1999......could not stand in National Election in 2004 and even  lost the Melaka DAP committee election in 2005.....nasib baik Bapak ada

 If I fail and have to go to jail, I have no regrets. I have no regrets of going down fighting for the principles of truth and justice. And pursuit of human rights, especially women's rights. There can be no women's rights if women rape victims are considered equally responsible, and even detained, whilst the accused remain free. Lim Guan Beng Source here

So semangat .....can you help us find the Owner of the Tetek and the Perpetrator please

But Beng gua kesian sama lu punya anak kena itu macam sama itu MalaysiaKini.......i feel u belader.......

Anyway  any more crap in the incoherent petik sana sini article should I bother looking into? The worldbank report gua sudah kautim when it came out...read here

Gua sebenornye tak puas hati.....this article would not be complete to me unless I have the historical data on FDI by State in Malaysia

MIDA's website does not provide historical data (If you are reading this....dude kasi upgrade ur fucking website brader)

We need to know on whether Guan Beng's Deal Making Abilities actually made Penang the Top Target FDI for Manufacturing?

What was it again.......Mojo? 

PETALING JAYA: Penang Chief Minister Lim Guan Eng has been chided for claiming credit for two high-profile foreign direct investments (FDI) into Penang. Mark Ooi Swee Hing, the former political secretary of Lim's predecessor Tan Sri Koh Tsu Koon, said Lim gave the impression that the investments were due to the new government's efforts within a short span of two months.

“To set the record straight, the effort of the new government in the last two months merely represented the final short phase of a long process of promotion and negotiations stretching back one to two years. “His announcements did not at all acknowledge the crucial roles Koh played in convincing the investors to locate here, together with the Malaysian Industrial Development Authority (MIDA),” he said at a press statement yesterday.

 The two FDIs are from Japan’s Ibiden Co Ltd (RM1.2bil) and United State’s Honeywell (RM115mil). Ooi said in each of the cases, Lim had “hurriedly called a press conference to claim credit the day after MIDA made the announcement”. “Such publicity was obviously aimed at giving the impression that these investments are solely the result of the new state government’s efforts in investment promotion,” he said.

 He added that multi-national companies usually took time to assess economic feasibility, logistics, local supply chain and human resources, fiscal and tax incentives before deciding.

“In the case of Ibiden, the entire process took two years and Dr Koh himself personally visited Ibiden’s headquarters near Nagoya, Japan, on July 19, 2007 and met with their top management to present a strong case for Penang,” said Ooi. He also explained that in Honeywell’s case, the process also took considerable time and effort, with the decision to invest only made and reported in the US press on Feb 28 this year. “It is only fair and proper that the new state government honestly gives due credit to the previous state administration as well as to MIDA and the Treasury for the work they have done.'' Source here

Mojo baik punye....

Now back to the numbers......remember my old post folks?

Those numbers were combined between Domestic and Foreign Investments.....and if you noticed...


The "corrupt" Serawak had more than Penang

We need deeper analysis....

So while we wait for MIDA's data.....why dont we look at the behavior of Malaysia's FDI and more specifically the Manufacturing Sector....

Come folks..... let's entertain ourselves with this paper:  Foreign Direct Investment in Malaysia – Findings of the Quarterly Survey of International Investment and Services by the Stats Department Source here

Guidelines provided by IMF (BPM5) describe FDI components as equity capital, reinvested earnings and other capital. The explanations are as follows:

• Equity Capital - comprises equity in branches, all shares in subsidiaries and associate companies (except non-participating preference shares),  

• Reinvested Earnings (RE) - consists of direct investors’ shares of earnings not distributed as dividends by subsidiaries or associates and earnings of branches not remitted to direct investors, and

• Other Capital - consists of debt securities, trade credits, loans, deposits and others.

And where does all this FDI goes to? (Trivia...which state has the highest contribution in manufacturing?)

And where does the Money comes from?

How profitable are these FDIs?

FDI Investment Income by Component Investment Income of FDI constitutes of three components namely dividends, reinvested earnings and interests. Dividends are distributed earnings allocated to shares and other forms of participation in the equity of incorporated private enterprises, cooperatives and public corporations. Interests comprise income on loans and debt securities. The value of income in 2001 amounting to RM22.5 billion surged to RM33.7 billion in 2007, an increase of RM11.2 billion or 49.8 per cent (See Chart 3). The chart also illustrates that the total investment income improved gradually over the years and peaked in 2007.

 And which sector contributes most out of all these FDI Investment Incomes?

Ah Chong ah...

The Veli The Hard to bilive that 3 Ahbengs or isit 1 AhBeng and 2 Gwailos bumping into each other in a Local Airport lead to the turning of Penang into the Nation Biggest Economic Success....

I'm really keen to look into the latest numbers......who knows maybe the Singapore Government is actively propping up Penang for their long term interest to alter the Political balance of Malaysia....

If you missed my recent post  in there I highlighted that the battle for PRU 13.....

The GAME is in the STATES .....

NOT FEDERAL......

If I may quote the incoherent Ah Chong from Bloomberg

Penang’s economic resurgence may bolster the opposition alliance’s claim it can be an alternative to the National Front

And let's not forget the Jilat baik E-CONomist piece

If its politicians can claim the credit for the recent success, that should greatly help the opposition in the next general election, expected within the year.....

Little wonder, then, that Penang has become a political weathervane as much as a lesson in economic development

So far it has been a very interesting lesson in Proofiness.....

This engrish is really crampin my style......

Next round I'll go back to AhBeng language....thiouuuuuuuuuuuuuu...