GEORGE TOWN (Malaysia): Penang has managed to reverse a declining flow of investments with an inflow of RM8 (S$3.3) billion in the first nine months of this year compared with only RM4.77 (S$1.98) billion last year.

Chief Minister Lim Guan Eng said this was due to an "experiment" with key measures to "reinvent Penang's economic setting".

He had noted that despite being the second smallest state in the country with a population of only 1.4 million, Penang's exports alone amounted to 27 per cent of the country's total.

"However, mismanagement and abuse of power had caused Penang to stagnate in the final years of the 20th century," he said in his speech at the 4th Asia Economic Summit in Hong Kong.

Lim noted that Penang was a middle-income state trapped in between low-cost competitors of poorer states, who were competitive in mature or sunset industries, and high-wage innovators in rich states, who were competitive in new or sunrise industries.

Lim said the most popular measures to counter the current recession included an expansionary budget and government guarantees for financial institutions.

"However, we need to look beyond the recession and be bold enough to undertake fundamental reforms and reinvent the economy to allow Asia to continue enjoying sustainable growth and prosperity."