PENANG - MINISTER Mentor Lee Kuan Yew on Saturday packed into his one-day visit to Penang a noon meeting with Chief Minister Lim Guan Eng and other state government leaders, plus talks with two former chief ministers of the north-western state.

Penang is the only non-Malay-majority state in peninsular Malaysia. Since last year's general election, it has been governed by the Pakatan Rakyat opposition alliance, with the Chinese-based Democratic Action Party (DAP) in the driver's seat.

The Penang state government is keen to attract Singapore investments but Mr Lee offered his view that the state first needed better roads, bridges, airports and other communication links. He urged the state government to work with the federal government to secure the revenue needed to build such infrastructure, his press secretary Yeong Yoon Ying said.

MM Lee met Mr Lim for close to an hour. He also had a 15-minute discussion with members of Mr Lim's state executive committee.

Mr Lim told reporters he proposed certain broad areas of economic cooperation with Singapore, including tourism, health tourism, education, manufacturing and air services. The number of flights between Singapore and Penang has been climbing and will reach 84 a week by next year.

He also proposed that as Singapore pushed on with upgrading its economy, it could consider relocating the industries it had outgrown to Penang. The island is Malaysia's second most industrialised state, after Selangor. Several multinational electronics companies have manufacturing facilities here.

Mr Lim, who is also the DAP secretary-general, said he sensed Mr Lee was here for a feel of the new political situation.

Mr Lee last visited Penang in 1989, when the state government was controlled by Gerakan, a Chinese-based component party of the ruling Barisan Nasional (BN) front.

Mr Lim said that during their meeting, Mr Lee mentioned Tun Daim Zainuddin's prediction that it would be difficult for BN to regain Penang for at least 10 years.

Tun Daim is a former Malaysian finance minister and a keen observer of the political scene.

Read the full story in today's edition of The Sunday Times.