GEORGE TOWN: Penang’s financial reset is now firmly underway, claims Chow Kon Yeow.
The Chief Minister reassured the state that the toughest period was over, declaring that Penang was “back on stable ground” as he wrapped up the debate on Budget 2026.
In a detailed reply that covered taxes, reserves, mega projects, investments and relations with Kedah, Chow said Penang had pulled itself out of the deep deficits of recent years and was entering a phase of fiscal rebuilding supported by strong economic fundamentals.
He told the House that the state’s deficit was set to shrink to RM19.92mil next year — its lowest in recent memory — while revenue collection was on course to cross RM1bil again for the first time since 2016.
Chow said Penang was now “on the correct trajectory” to rebuild RM1bil in reserves by 2028, marking what he described as “a turning point in Penang’s post-pandemic financial recovery”.
He said the state economy remained robust, with the 2025 GDP estimated at RM121.5bil at a growth rate of 4.8%, driven by high-tech manufacturing, E&E activities and resilient trade. Penang’s GDP per capita for 2024 stood at RM76,033, well above the national average of RM56,734.
"Penang had 'entered a different league', with approved manufacturing investments soaring from RM65.67bil (2009–2018) to RM217.42bil between 2019 and the third quarter of 2025. As of September this year, Penang had already recorded RM15.79bil in new manufacturing investments despite global uncertainties.
Chow also rejected claims that RM1bil had “gone missing”, stressing that the fall in the Consolidated Revenue Account (AHD) from RM1.15bil in 2019 to RM155.94mil in 2024 was due to planned deficit spending.
He said RM998.88mil in cumulative deficits from 2020 to 2024 funded direct assistance programmes, including i-Sejahtera, Covid-19 support, grants to religious and vernacular schools, incentives for taxi and bus operators, and subsidies for BEST, CAT and ferry services.
As of Nov 20, 2025, state revenue stood at RM927.63mil — already exceeding the RM906.59mil full-year target. The AHD balance has also risen to RM397.71mil.
Chow said Penang was driving nine major revenue-enhancement strategies, with annual land and strata taxes projected to rise from RM140mil–RM145mil to RM300mil–RM350mil within five years.
"Non-tax revenue, such as land premiums and transaction fees is expected to climb from RM300mil to RM400mil–RM450mil.
He acknowledged concerns over land tax revisions and boundary reclassifications but stressed that the state had implemented safeguards.
"All landowners will receive a 32.5% rebate in 2026, followed by 20% rebates in 2027 and 2028. Penalties for land and strata parcel tax arrears will be waived throughout 2026, covering RM25mil in accumulated fines.
"A 50% premium discount will also be given in 2026 for converting long-urbanised agricultural lots to residential building status.
Chow said strategic land development would continue shaping state revenue.
PDC-linked developments such as Penang World City and the Penang Linear Waterfront are expected to deliver RM1.31bil in shared land-revenue returns to the state. For Pulau Andaman, total land premiums are estimated at RM561.3mil, with annual land and parcel taxes of about RM5.18mil once the RM60bil-GDP island is fully developed.
He also outlined the long-term role of Penang Silicon Island as a major economic engine.
"The project is expected to attract RM74.7bil in investments and contribute up to RM1.1 trillion in cumulative GDP impact by 2050, creating more than 220,000 jobs. The Finance Ministry has approved a special tax-incentive package for the development.
Chow said the state strengthened global ties in 2025 through 22 official overseas missions costing RM2.9mil, partly funded by PDC and the Investment, Trade and Industry Ministry.
He cited concrete outcomes, including MoUs with FedEx, DHL and Shizen International & Atlantic Blue worth RM426mil in potential investments, RM23mil in halal-related deals in Shanghai, and expanded direct air links to Xiamen, Shanghai, Shenzhen, Chennai, Yangon, Dubai and Doha.
On Seberang Perai Selatan (SPS), Chow dismissed claims of neglect.
"Thirty major projects worth RM1.06bil under Rolling Plan 1 of the 13th Malaysia Plan were underway, with RM125mil allocated for 2026." PBAPP is carrying out eight water-supply projects worth RM532mil, while the Penang–Perak raw water pipeline MoU provides long-term supply security.
Touching on natural-resource revenue, Chow said Penang has an inferred deposit of 1.7 million tonnes of non-radioactive rare earth elements (NR-REE) worth an estimated US$21bil. "State regulations are being finalised before any exploration proposals are considered, he added.
He also denied claims that Penang opposed the UTC project in Seberang Perai, stressing that UTCs fall under Federal jurisdiction and the state had never blocked it.
"We have always supported any projects by the Federal Government in the state, and it is not true that we opposed the UTC project.
On the longstanding Kedah-Penang rhetoric, Chow reaffirmed that Penang is a sovereign state within Malaysia with no obligation to pay any form of “rent”, as historical commitments rest with the Federal Government.
“Budget 2026 is not just numbers,” he said. “It reflects fiscal discipline, long-term economic confidence and shared prosperity as we advance towards Penang 2030.”
The Budget 2026 was approved with a unanimous vote before the assembly was adjourned sine die.
