

Mr Mohr gives two main reasons for Penang's success with the coronary crowd. First, it is relatively cheap. Open-heart surgery that would set you back $100,000 in America costs only about $10,000 in Penang. Second, Penang's hospitals are as well-equipped as many in the West.

The combination of low cost and high technology is the main reason why industries across the state of Penang, made up of the original island and a larger bit of the mainland, are prospering again after more than a decade of decline. Their revival is important to Malaysia's economy—Penang and the surrounding region account for 21% of the country's GDP. But the renaissance could also have important political consequences for the country. Since 2008 Penang has been one of only four states (out of 13) run by an opposition party. 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.


The island's fortunes sank as it lost business to its arch-rival, Singapore. In the post-colonial period Penang fell victim to the rise of nationalism. The region's freshly minted republics chose to develop their own ports. Penang enjoyed a revival during the 1970s with the setting-up of Malaysia's first free-trade zone (a “free port” by another name); this attracted big names in electronics, like Intel and Bosch, which built some of the first offshore assembly lines. But this boom was founded on cheap labour, and as Malaysia became richer other emerging economies, such as China and Vietnam, drew the assembly work away.

To recover its prosperity, Penang has sought to reinvent itself. With the rise of India and China, Penang's location again looks very handy to foreign companies as a place to invest, as in the 18th century. It is relatively close to both big markets—yet offers advantages that trump Asia's giants'.



Whom to thank?

When the Democratic Action Party won the state's legislative assembly three years ago, it became the first opposition party to triumph in Penang in more than 40 years. The victory presented a direct challenge to the Barisan Nasional (BN) coalition that has ruled the country continuously since independence in 1957. Penang's new leader, Lim Guan Eng, says that the federal government has an “ambivalent” attitude towards him, cutting off some funding but not undermining his authority. “They don't want us to get any credit, but they can't afford to see us fail”.

The revival of Penang was already under way in 2008, but Mr Lim's new policies have helped it along. He has become the first governor in Malaysia to open up all state tenders to competition. This has entailed dismantling the special preferences for ethnic Malays that have underpinned the BN's rule since the early 1970s. That was when the Malay majority institutionalised affirmative action for themselves, to the disadvantage of ethnic Chinese (a majority in Penang), who were perceived to have got unduly rich. Mr Lim claims that by reforming the system he has ended the cronyism and corruption that wasted money under previous regimes.
