Last year, 3.36 million visitors flew into Penang, resulting in RM7.4mil collected in tourism taxes.
PENANG’S so-called “twin-growth engine” – manufacturing (high-tech industries) and services (tourism and the digital economy) – has been central to the state’s economic success over the years, enabling it to diversify its economy and create jobs.
StarMetro examines this year’s outlook for Penang, focusing on key drivers of growth in manufacturing and services.
Banking on tourism
Hon Wai says introducing numerous airline routes will see higher tourist arrivals this year.The state’s tourism sector is poised for substantial growth in 2025, fuelled by an expansion in airline routes and strategic promotional efforts.
Penang tourism and creative economy committee chairman Wong Hon Wai said the introduction of numerous airline routes in late 2023 and throughout last year would see higher tourist arrivals this year.
“Currently, Penang boasts 36 direct international flight routes connecting 20 cities worldwide.
“These include major hubs such as Shanghai, Shenzhen, Guangzhou, Xiamen, Hong Kong, Dubai, Singapore, Bangkok and Taipei,” he said.
According to statistics from Malaysia Airport Holdings Bhd, Wong said passenger movement underscored Penang’s growing appeal.
“In 2023, Penang International Airport (PIA) recorded 3.08 million passengers, comprising 1.41 million international and 1.67 million domestic travellers.
“This figure rose to 3.36 million in 2024, with 1.72 million international and 1.64 million domestic passengers, reflecting an 8.9% increase.
“By November 2024, PIA was handling 317 international flights weekly, compared to 281 the previous year,” he said.
Indonesia led international tourist arrivals between January and November 2024, with 336,582 visitors, followed by Singapore (154,587) and China (108,029).
Hon Wai said these figures excluded travellers who transited through Kuala Lumpur or arrived by land.
Penang’s tourism boom has translated into significant economic benefits.
A water salute being given to an aircraft arriving at the Penang International Airport from Pudong, Shanghai.
“Penang receives a tourism tax grant from the Federal Government, where 50% of tourism tax collected in Penang is channelled back to the state.
“In 2024, we collected RM7.4mil in tourism taxes.
“Of that, 70% was deposited into the Tourism Committee Trust Account to fund major tourism programmes and promotions, while the remaining 30% goes into the state government’s Revenue Account,” he said.
Association of Tourism Attractions Penang (Atap) chairman Datuk Ch’ng Huck Theng expressed confidence in Penang’s position as a “diverse, safe and healthy” tourist destination.
He predicted that South-East Asia would be a promising region for tourism this year, given the global geopolitical climate.
“Penang is an established destination that offers affordability.
“Compared to Singapore’s high costs, Thailand’s political instability, rising expenses in Vietnam and natural disaster risks in Indonesia and the Philippines, Malaysia stands out as a strategically located, multicultural hub.
“We preach the spirit of unity through the celebration of festivals and inclusivity across races and communities,” he said.
Ch’ng said domestic tourism could be an effective tool for education.
“Students will learn through research and exploration via domestic tourism.
“Besides generating traffic for the tourism sector, it will expose young people to Penang’s local culture and heritage.”
He suggested that Atap’s 60 members could assist in making student travel affordable.
“Iconic sites such as Penang Hill, Pinang Peranakan Museum, Penang State Museum, Kek Lok Si Temple, the clan councils and Ghee Hiang Bakery, which will be celebrating its 170th anniversary in 2026, are part of Penang’s legacy that the younger generation should be encouraged to explore.”
Penang Tourist Guide Association (PTGA) chairman Clement Liang said tourist guides remained essential intermediaries between visitors and locals.
He said the association’s members were preparing to cater to a new generation of more informed and discerning tourists.
“With the advent of technology and the vast amount of information available online, many tourists, especially younger ones, are more keen to explore on their own.
“Guides who excel as storytellers can provide deeper insights into attractions, making vast amounts of information easier to comprehend.
“Tourist guides are the first locals whom tourists encounter. They serve as representatives of the country and help visitors connect more deeply with its culture and heritage,” he said.
With approximately 700 active members in Penang, out of the 8,000 across Malaysia, Penang boasts the second-largest number of tourist guides in the country, after Kuala Lumpur.
Malaysian Association of Hotels (MAH) Penang chapter chairman Datuk Tony Goh said there would be eight to nine new hotels in 2025.“This roughly adds up to about 1,000 to 1,200 rooms. Most of these hotels will be in the town area.”
Some of these hotels would open before Chinese New Year at the end of this month, he said.
“This means we will experience an increase of 5% to 8% in hotel room inventory,” he added.
A housing development in Bukit Gelugor, featuring a children’s playground, swimming pool and well-designed community amenities, is eradicating the stigma associated with affordable housing.
Housing matters
Sundarajoo says developers will be given a deadline to fulfil their affordable housing obligations.Penang will rebrand affordable housing as Rumah Mutiara Ku (My Pearl Home) this year.
Penang housing committee chairman Datuk Seri S. Sundarajoo said the current name – Rumah Mampu Milik (Affordable Housing) – gave the impression that such homes were low cost.
“The fresh branding will eradicate the stigma associated with low-cost and affordable housing,” he said.
Sundarajoo said the state government had introduced a new affordable housing category last July for those with a monthly income of less than RM5,000.
“This category’s first project is expected to be launched in early 2025.
“The new housing product, categorised as ‘B2’, introduces 750sq ft homes priced at RM100,000.
“The first ‘B2’ project will be introduced in Batu Maung in the first quarter of 2025 via a private developer,” he said.
According to Sundarajoo, developers could build 40% of “B2” homes or 30% of low-cost houses.
He said that he would soon give developers, who still needed to fulfil their affordable housing obligations, a deadline.
“Some 70,000 affordable units with rezoning and planning permission approval have yet to be launched.
Passengers from a cruise ship enjoying a two-hour sightseeing tour on trishaw around George Town. Photos: — ZHAFARAN NASIB, LIM BENG TATT/The Star
“I want to see developers start construction for these homes during my term. Otherwise, we will withhold approval for their new projects,” he said.
The state government has provided 170,000 affordable housing units to help low- and middle- income groups own homes, which aligns with the Penang2030 vision of delivering 220,000 housing units by 2030.
Sundarajoo said the state government was focused on delivering the remaining 50,000 houses by 2030.
“The Penang government is probably one of the few states that provide affordable housing catering for more than 50% of the population.
“If we achieve building 220,000 homes, about one million people in Penang, out of the current population of 1.8 million, will benefit from affordable housing,” he said.
The state government’s affordable housing is priced between RM42,000 and RM250,000 per unit on the mainland and between RM42,000 and RM300,000 on the island.
Penang Real Estate and Housing Developers Association (Rehda) chairman Datuk Khoo Teck Chong said Penang had seen a significant industrial investment such as in Batu Kawan over the past two to three years.
He, however, said the property market could face headwinds such as inflation and rising material costs which continued to pose challenges for the economy.
He said the upcoming petrol subsidy rationalisation might dampen buying sentiment as consumers would grow more cautious about property investments.
“We are discussing with the state government on ways to support the industry and identify initiatives to strengthen it,” he added.
Semiconductor, manufacturing
Prime Minister Datuk Seri Anwar Ibrahim launched the Penang Silicon Design @5km initiative last Dec 7 before approving RM50mil for the programme.
The initiative is spearheaded by Penang government through its lead agency, InvestPenang, which aims to revolutionise the country’s semiconductor industry.
It is aligned with the National Semiconductor Strategy (NSS), offering a comprehensive integrated circuit (IC) design ecosystem comprising three key components.
The Penang Silicon Design @5km initiative aims to revolutionise the country’s semiconductor industry.
The first is the Penang IC Design and Digital Park @Bayan Lepas, developed by the Penang Development Corporation, meant to provide about one million sq ft of hybrid office and lab space tailored for IC design, research and development and digital companies.
Siew Hai expects demand for semiconductors in telecommunications, electric vehicles, and medical devices to rise.The second is the Penang Chip Design Academy at Penang Skills Development Centre, which will deliver a Chip Design Talent Cultivation Programme aimed at upskilling and reskilling at least 500 fresh graduates and engineers in IC design-related fields over the next two years.
Thirdly, the Silicon Research and Incubation Space @GBS TechSpace is to serve as a one-stop innovation hub to support chip design companies, offering cutting-edge infrastructure, design services, essential electronic design automation (EDA) tools, intellectual property and expertise in packaging and technical disciplines for new product introduction preparation.
The total investment for the Penang Silicon Design @5km initiative is projected at RM120mil over the next five years.
Malaysia Semiconductor Industry Association (MSIA) president Datuk Seri Wong Siew Hai said the current industry’s outlook for this year was good, given the rising demand for AI and server computing electronics.
“We expect the demand for semiconductors in telecommunications, electric vehicles and medical technological devices to rise in 2025, positively impacting our electronic exports.
There are currently 25 active IC design companies in Malaysia, of which 21 are in Penang.
Siew Hai had earlier said that Penang had a strong base for IC design with a headcount of over 7,000 engineers and these initiatives would allow the industry to continue to grow.
“The semiconductor industry here has experienced significant growth over the last few years, driven by substantial investments.
Lee says government policies and initiatives will fortify Malaysia’s industrial competitiveness.“This reinforces Penang as the Silicon Valley of the East,” he noted.
Federation of Malaysian Manufacturers Penang branch chairman Datuk Seri Lee Teong Li said government policies and initiatives, including the New Industrial Master Plan (NIMP) 2030 and targeted incentives for the manufacturing sector, would fortify Malaysia’s industrial competitiveness.
“Such efforts would empower local manufacturers to embrace advanced technologies, enhance productivity and solidify their standing within global supply chains.
“The manufacturing sector constitutes the backbone of Malaysia’s economy, and its sustained growth is crucial for the nation’s long-term economic resilience.
“With robust electronics and electrical foundation and a steadfast commitment to innovation, Malaysia is primed to remain a key player in global manufacturing,” said Lee.
New Year outlook
Neoh says Malaysians deserve quality of life and affordable access to essential services.Store manager Christy Neoh, 35, is prioritising her family’s health in 2025.
“A balanced diet, regular exercise and stress management are key components of a healthier lifestyle.“All of us in the family will do this to improve overall well-being, boost energy levels and enhance mental clarity,” she said, emphasising the importance of maintaining good health as a long-term priority.
Neoh’s resolution reflects a growing awareness of the need for self-care, both physically and mentally, especially in today’s fast-paced world.
“Malaysians deserve quality of life, with affordable access to essential services and opportunities,” she added.
Siti Fatimah feels the financial strain of high living costs.Assistant shopkeeper Siti Fatimah Basirah, 38, said saving money had become increasingly challenging due to the high cost of living.
As a mother of five children aged between three and 14, Siti Fatimah said the financial strain could be felt, especially during the back-to-school season and the Hari Raya celebrations.
“Imagine having to buy five sets of school uniforms when the new school year begins,” she said.
On the topic of tax on sweetened beverage, Siti Fatimah described the initiative as a positive step in encouraging Malaysians to reduce their consumption of sugary drinks.
She said the move could help prevent or reduce the risk of diseases like high blood pressure and diabetes.
“By discouraging the consumption of sugary beverages, we can protect the health of our community and foster healthier habits for the future,” she added.
Tan says the increase of tourists has also worsened traffic congestion.Business executive Tan Choon Theng, 35, observed the significant increase in tourists had benefitted local businesses.
But the resulting traffic congestion, he said, had become a challenge.
“I have learned to avoid certain areas on weekends to avoid the jam, but when necessary, we still navigate through the traffic.
“Double parking and roadside parking worsen the situation,” he pointed out.
“While there has been enforcement, illegal parking resumes as soon as the officers leave an area.”
Roopinder says development must be accompanied by better road infrastructure and parking facilities.Roopinder Kaur Sandher, 37, praised the abundance of events in Penang, particularly the recent food festival, which provided locals with a platform to sell local delicacies.
However, she highlighted the need to improve traffic flow.
“Traffic congestion has made driving in Penang stressful. With increased development and local tourists, the daily commute has become more challenging.
“Development must be accompanied by better road infrastructure and parking facilities,” said Roopinder, a company communication division head.
