By Hazlin Hassan, Malaysia Correspondent

KUALA LUMPUR, MALAYSIA - Penang lost out on a multibillion-dollar foreign investment because it does not have enough experienced electrical and electronic engineers, state officials said.

The assertion could point to a worrying drop in Malaysia's international competitiveness. After all, Penang is dubbed the country's Silicon Valley.

Penang Chief Minister Lim Guan Eng told Parliament recently that the state lost US$3 billion (S$4.1 billion) worth of foreign investment because it could not 'commit to having 1,000 engineers'.

'I didn't turn down their investment but they did not want to come because I could not give them a guarantee,' he was quoted as saying by The Star daily.

Parti Gerakan delegates at its annual assembly on Oct 31 staged a protest to demand that Mr Lim explain why he had lost a big investment. The party has an axe to grind because it lost Penang to Mr Lim's Pakatan Rakyat alliance in last year's general election.

According to Mr Lim's chief of staff Jeff Ooi, the specifications laid down by the potential investor were such that Penang could not fulfil them. He and other state officials declined to identify the Western European company involved.

'We have a shortage of engineers in Penang, and the investor specified that it needed senior electrical and electronic engineers, which we do not have in big supply,' Mr Ooi told The Straits Times.

It spelt bad news for Malaysia, coming amid a sharp drop in foreign direct investments (FDI) into the country.

Prime Minister Najib Razak recently revealed that the country's net FDI plunged to RM3.6 billion (S$1.5 billion in the first six months of the year, compared with RM19.7 billion in the same period last year.

Gerakan economic bureau head Wan Sun Keong said Mr Lim gave a 'flimsy excuse' for losing the investment.

'Each year, our public and private universities produce no fewer than 6,000 engineering graduates, based on my own unofficial estimates,' he said.

Penang is home to major manufacturing plants, including top chipmakers Intel and Advanced Micro Devices, lighting manufacturer Osram Opto Semiconductors and automotive equipment maker Bosch. Intel alone employs about 5,000 engineers in Penang, said Mr Wan.

The state reeled in RM10.2 billion worth of FDI last year, compared with the national total of RM46 billion.

The Penang Skills Development Centre, which trains students for employment with Penang-based companies, said it produces about 100 electrical and electronic engineers a year.

But Mr Ooi attributed the brain drain to Malaysia's lack of competitiveness. He said the state government had obtained supporting data from the state Human Resource Department and the Federation of Malaysian Manufacturers.

The opposition has long complained about the brain drain, as Malaysian professionals get lured away by higher pay elsewhere and are turned off by the shrill debates on race and religion. There are also concerns that the country's education system does not produce quality graduates.

'It all boils down to salaries,' said Mr Shamsuddin Bardan, executive director of the Malaysian Employers Federation. A senior engineer working in the US could make about RM30,000 a month, compared to about RM20,000 in Malaysia.

Ms Fui K. Soong, executive director of the American Malaysian Chamber of Commerce, suggested that a review of the country's tax structure could help attract talent. 'Professionals make much more overseas where the tax structure is much lower than in Malaysia...We have to move up the value chain and create a high-income economy,' she said.

Critics say the tax system burdens the middle class - professionals, entrepreneurs and civil servants - the most.

Malaysia's pool of engineers

THE following figures were given by various institutions when asked about the number of engineers in Malaysia:

• Institution of Engineers Malaysia: 20,000 active members.
• Board of Engineers Malaysia: 13,000 registered members. About 3,250, or 25 per cent, are from the electrical and electronic disciplines.
• Malaysian American Electronics Industry, a committee under the American Chamber of Commerce Malaysia: 7,000 engineers employed by its members.
• Malaysian Employers Federation: 60,000 engineers nationwide of all disciplines. It says the number is not enough.

This article was first published in The Straits Times.