IN December, the World Bank held a forum to deliberate on new initiatives and financing instruments to develop small countries, or small states, as they are referred to by the organisation.
According to the World Bank’s website, equitable growth, resilience, and finance and partnerships were among the key issues deliberated at the forum.
The World Bank defines small states as countries with a population of 1.5 million or less, with constraints in terms of limited human capital, which translates into inadequate production capacity for local production or export at scale, as well as a confined land area.
The other pertinent constraint for small states is the inability to access International Bank for Reconstruction and Development (IBRD) financing because of a lack of creditworthiness. The theory is simple: with a small population, tax revenues are, by nature, limited.
Above are few examples of the 12 key challenges faced by some 57 small states to achieve sustainable development goals.
Correspondingly, as the smallest state in Malaysia with a population of less than 300,000 people in 821 sq km, Perlis fits some of the World Bank’s criteria for small nations in the world.
Perlis is popular for its precious, exotic harumanis mangoes, and the state economy is highly dependent on the agriculture sector, backed by a small contribution from the manufacturing sector.
With a small population and not much manufacturing activity, the Perlis government not generating enough tax revenues to sustain the state, it explains its high dependency on federal funds. Its budget for 2017 is RM208 million, with a deficit of RM83.46 million.
The amount is just a fraction of the RM3.5 billion budget tabled by Selangor this year. Of course, it is unfair to compare Perlis with Selangor, or even other states in the country, due to its size and economic capacity.
Datuk Seri Azlan Man realised the constraints when he was sworn in as the seventh Perlis menteri besar after the 13th General Election in May 2013.
The international economics graduate of Denver University, who once served as Malaysia’s Permanent Mission counsellor to the United Nations in 1999 before being appointed deputy director of the Public Complaints Bureau, is aware of the daunting task in transforming the state.
Despite mounting pressure to prove his mettle in developing the state, Azlan seems to be cautious in making public announcement on potential investments unless they are officially signed and sealed.
Azlan had made it clear to newsmen about his principle of not making announcements for the sake of publicity. For a first-term menteri besar, it is evident that Azlan is trying to establish himself as a leader of substance rather than a populist politician.
In spite of still being far from achieving his vision of tabling a balanced budget, Azlan’s administration is making some progress in reducing the deficit, without compromising on much-needed development programmes for Perlis.
Unlike some states that are blessed with natural resources, Perlis has to leverage the booming southern Thailand export market since it is strategically located at the Malaysia-Thai border.
Besides tourism, Azlan had identified the services sector as one of the nodes for Perlis’s future development.
Last week, Azlan officiated the Logistics Integration Programme and Padang Besar KTMB Cargo Terminal Facility Upgrading Project, which is set to strengthen Padang Besar’s position as the main gateway for southern Thailand’s growing export market.
The RM23.5 million project funded by the Federal Government is spearheaded by the Northern Corridor Implementation Authority (NCIA).
Once completed by the end of next March, the initiative would see a significant jump in its cargo-handling capacity from 120,000 TEUs (twenty-foot equivalent unit) annually to more than 150,000 TEUs annually.
It is a crucial project for Perlis as the state is vying to further leverage Padang Besar’s position as a main gateway for southern Thai exports by tapping into the total 400,000 TEUs of cargo movement annually.
In appreciating the Federal Government and NCIA’s commitment to transform the state, Azlan said the terminal would complement his plan to build the first Perlis inland port to tap the future growth of cargo movement from southern Thailand.
Malaysian Investment Development Authority (Mida) chief executive officer Datuk Azman Mahmud remarked that the Padang Besar expansion programme was a significant milestone of the National Logistic and Trade Facilitation Masterplan, of which the agency was actively involved in.
He said the project would boost Perlis’s internal capabilities and improve competency and trade compliance, as the state has already attracted 48 manufacturing projects worth RM1.03 billion in investments.
According to Azman, the investments, mainly in electronics and electrical (E&E) products, food manufacturing, non-metallic mineral products and plastic products, had created 6,033 jobs in Perlis.
Azman urged investors to leverage all programmes and facilities provided by Mida, such as the Less Developed Area scheme, which offers companies 100 per cent income tax exemption for up to 15 years.
Perlis is set to receive another boost with the launch of Chuping Valley next week, which is set to transform the state’s manufacturing sector and create enormous spillover effects on the state economy.
It is understood that the project, to be spearheaded by NCIA, will focus on three main components, namely, renewable energy, green materials manufacturing and green E&E manufacturing, and the halal industry.
Besides NCIA, Universiti Malaysia Perlis, which produces highly sought-after talents among employers in the engineering sector, is also expected to play a critical role in the project, particularly concerning technical expertise.
The two projects will complement Kuala Perlis’s mixed development maritime city plans and the Kangar City Centre launched by Azlan last month as Perlis moves towards achieving city state status by 2030.
These projects, and more in the pipeline, will take several years to be completed, but Azlan seems to be on course in proving that he is, indeed, a menteri besar of substance instead of a mere populist politician.
ADIE SURI ZULKEFLI is Kedah/Perlis NST bureau chief