GEORGE TOWN: Penang has projected a record-low budget deficit of RM5.62mil for 2027, down from RM19.92mil this year, as the state seeks to balance spending with economic growth and public needs.
Chief Minister Chow Kon Yeow said the state expected to collect RM1.069bil in revenue next year, against estimated expenditure of RM1.074bil.
Tabling the 2027 state budget at the Penang state assembly on Friday (Oct 30), Chow said the budget, themed "Making the Vision People-Centred, Forging a Legacy", would focus on economic growth, infrastructure, talent development, public well-being and good governance.
According to the Chief Minister, development should not be measured by economic figures alone, but also by better jobs, higher incomes, affordable housing, efficient transport and access to education and healthcare.
"The state government will continue to drive quality investments, strengthen economic competitiveness and create more high-value employment opportunities so that the benefits of development can be enjoyed comprehensively and equitably," he said.
Chow said Penang's economy grew by 7.3% in 2025, surpassing the national growth rate of 5.2%.
The state's gross domestic product (GDP) rose to RM130.3bil from RM121.4bil in 2024, with manufacturing contributing 47.3% and services accounting for 46.7%.
Penang also remained the country's leading exporting state, recording RM113.2bil in exports in September this year, up 96.2% from the same month last year.
The figure represented about 52.6% of Malaysia's total exports.
In the first six months of 2026, Penang secured 177 approved manufacturing projects worth RM17.32bil, comprising RM12.83bil in foreign direct investment and RM4.49bil in domestic investment.
These projects are expected to create 19,337 jobs.
Chow also noted that the state recorded stronger financial performance in 2025, with revenue rising 55.46% to RM1.26bil from RM810.46mil in 2024.
The state registered a surplus of RM366.93mil in 2025, reversing a deficit of RM174.09mil the previous year.
Its Consolidated Revenue Account balance rose from RM155.94mil at the end of 2024 to RM522.87mil at the end of 2025, before increasing further to RM651.28mil as of Friday.
For 2027, the state has allocated RM280.17mil for development expenditure, a reduction of RM38.4mil or 12.1% from this year.
A total of 514 projects have been identified, covering public infrastructure, community facilities, sports development and strategic economic initiatives.
"Priority will be given to strategic projects that strengthen the state's capacity, improve quality of life and deliver tangible benefits to the people," Chow said.
Meanwhile, operating expenditure is expected to decline by RM13.49mil or 1.24% compared with 2026.
However, spending on salaries, services and supplies is expected to rise due to annual civil service salary increments, higher minimum wages and increased fuel costs.
Chow said the increase in the minimum wage from RM1,700 to RM2,000, scheduled for June 2027, would raise contract costs for cleaning, maintenance, security and other outsourced government services.
Spending on grants and fixed charges is projected to fall by RM36.63mil or 5.68%, partly due to a reduction in the state's contribution to the State Development Fund from RM265mil to RM240mil.
The state expects RM224.94mil in tax revenue, RM566.11mil in non-tax revenue and RM277.79mil in non-revenue receipts next year.
Non-tax revenue, mainly from land premiums, special payments and investment interest, will remain the largest source of income.
As of Friday, Penang had collected RM847.53mil in revenue, representing 79.35% of its RM1.068bil target for 2026.
Chow said the state government would continue working with revenue-collecting departments to meet this year's target.
