Posted by: Kaki Ayam | March 3, 2008

Penang "bribed" Motorola to stay? ….and for how long, until after elections?

Readers, answer these questions –

  • Would you want your local gov to waste 1billion of your taxpayers money so that the state would look ‘better’ before election time?
  • Do you think that Motorola will still be in Penang in 5 years time?
  • How many billion more would the government need to entice these larget coorperation from leaving? What about Intel, AMD, Hitachi, Fairchild, Agilent, Avago, Braun, Electrolux, Unico just to name a few?
  • What are the advantages that only Penang could offer as compared to Indonesia, Vietnam and China? Considering that Vietnam, China and Indonesia has improved tremendously over these few years in terms of gov efficiency, people skills and logistics, while at the same time, providing a much lower labour cost?
1 billion is not a small amount by any standard. While I hate to see Motorola or any of these companies go away, I would think twice before agreeing for a 1 billion contract as a enticement to stay put. Personally I would rather use the 1 billion to build up the human capital and find ways to improve on Penang competitiveness rather than to entice them with cash and contracts. I really hope the state government has something up his sleeves otherwise, the 1 billion contract to buy a time of less than 5 years would be a total waste. It is real sad that our government have to resort to these tricks to persuade foreign companies from leaving.
Letter: Penang “bribed” Motorola to stay??
Beh Lih Yi | Mar 2, 08 1:46pm
Highly-confidential correspondence confirms that the Penang state government had asked the federal government to offer a RM1 billion project to American telecommunications giant Motorola in a desperate attempt to retain the latter’s investment in the state.

If this wasn’t done, the Gerakan-led state government warned Prime Minister Abdullah Ahmad Badawi that its ‘catastrophic impact’ would be ‘politically very detrimental’ especially in the run-up to the general elections on March 8.

The three-page letter, signed by outgoing Penang chief minister Dr Koh Tsu Koon, was addressed to Abdullah and dated Dec 3 last year. Malaysiakini has seen a copy of the letter.

According to it, under the deal, the government will offer a RM1 billion project to Motorola involving the upgrading of the police force’s radio network. In exchange for this, Motorola agrees to stay put in Penang and pump-in an investment of RM350 million over the next five years.

Motorola, which has a manufacturing facility at Penang’s Bayan Lepas Industrial Zone, announced its latest investment of RM350 million for the state on Tuesday.

pak lah and koh tsu koon and motorola factoryThe stunning revelation comes as the opposition intensifies its attacks on the Gerakan state government over the sliding performance of the island’s economy. Koh has been on the defensive repeatedly denying such claims.

The state’s shaky economic performance has topped voters’ concern and is likely to be an influential factor when votes are cast on Saturday.

In the letter to Abdullah, Koh – who is also Gerakan acting president – began by stating that he was ‘very concerned’ over disclosures that Motorola was on the verge of announcing that they would be ‘pulling out their entire operations in Malaysia’.

Koh said that Motorola’s pending decision ‘was not a threat for a bigger and new contract’ but a ‘necessary business strategic response’ to the perceived lack of support from the Malaysian government.

The government had previously rejected Motorola’s request to continue to supply and expand the existing radio network of the police force due to the fact that the network project, dubbed the Government Integrated Radio Network, had been committed to another consortium.

Three ‘dire consequences’

The letter further stated that Abdullah had told Motorola executives during a meeting in February last year that the company should only work on expanding and upgrading the police’s radio network, which has been put in place by the American giant in 1992.

Koh, in the letter, went on at length to justify to Abdullah the importance of Motorola continuing to invest in the state. This included the company setting-up its worldwide headquarters in Penang for certain products.

The outgoing chief minister told Abdullah that Motorola ‘will have no choice’ but to move their product headquarters and related operations to another country, most probably China which Koh described as ‘wooing Motorola very aggressively’.

Motorola needed to make a decision whether to accept the offer to move by early this year, he added. Koh also listed out ‘three dire consequences’ should Motorola decides to pull out:

  • penang koh tsu koon komtar 290208It would cause a total of 10,000 jobs to be lost of which 4,000 are direct jobs in the Motorola facility in Penang and the remaining 6,000 jobs among Motorola suppliers and vendors in the country.
  • It would be a ‘bombshell’ on the electrical and electronics industry in the country and the decision will trigger a highly probable domino effect with other multinational companies pulling out.
  • It will be ‘politically very detrimental’ especially in the run-up to the general elections.

Koh, chief minister for 18 years, appealed to Abdullah and the federal government to reconsider its decision not to award Motorola a new project ‘in this special case’.

“From what I gather, the retention and expansion of the existing communication system for the Royal Malaysian Police radio network will cost less than RM1 billion for 10 years, and not more than RM4 billion as was erroneously conveyed,” Koh stated.

He added that the cost will cover an upgrading of ‘an existing communication system already in full operation’ over a 10-year period and he will try his best to convince Motorola to further reduce the offer price.

Koh ‘arm-twisting’

Koh also stressed that Motorola has invested an accumulated amount of RM5 billion in Malaysia over the past 35 years and that it has ‘contributed significantly’ to the nation’s economic development.

He cited Motorola’s move to make an additional investment of RM350 million in research and development and manufacturing over the next five years to back his argument.

“I sincerely trust YAB Dato Seri (Abdullah) will assist Penang, and Malaysia, to retain a major investor, avoiding the catastrophic impact of a pull-out and also to allow the police to continue with expanding a tested and trusted radio network,” said Koh.

The controversial deal was first hinted at by PKR leaders in Penang on Thursday, but without any proof to substantiate their claim or name of the corporation involved.

penang and election 200208PKR Penang chief Zahrain Mohamed Hashim – who is contesting the Bayan Baru parliamentary seat and who said he had read the letter – described it as Koh ‘arm-twisting’ Abdullah.

Koh, when quizzed on the matter by reporters on Friday refused to respond apart from saying the question was ‘vague’.

On Tuesday, Motorola had announced its latest deal to invest RM350 million in Penang over the next five years.

Coincidently, the announcement served as a lifeline to Koh who was cuaght in a whirlpool of opposition claims that Penang had lost its shine due the relocation of many multinational companies to other countries.

Launching the Penang Progress Report 2008 on Wednesday, a visibly relieved Koh had said: ‘The announcement by Motorola that it would be investing RM350 million more for its operations in Penang yesterday proves that the state is still competitive’.

‘The DAP is trying to run down everything but refuses to see the progress,’ Koh was reported to have said.



  1. That’s the way my friend when it comes to monopoly of power. It makes perfect sense. When we give them so much mandate, they have such high leverage of power that they are no longer beholden to us, their bosses!

    vote BN out!

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