Penang appeals for tax sharing to boost state development
GEORGE TOWN: The Penang state government hopes the federal government will consider sharing tax revenue to support the state's development and social welfare programmes, especially considering the implementation of the revised and expanded Sales and Services Tax (SST) on July 1.
Chief Minister Chow Kon Yeow said he had taken the initiative last year to request a 20 per cent share of tax revenue collected within Penang, but the proposal was neither approved nor taken up by the federal government.
"We always welcome approval and allocations from the federal government for infrastructure projects, but we also require funding to implement other state-related projects as well as welfare and social programmes.
"If 20 per cent is a burden, why not start with 10 per cent? We can understand their (the federal government's) position as well, but I think it is an appropriate time for them to consider this seriously," he told a press conference on Penang's approved manufacturing investment for the first quarter of 2025 (1Q 2025), here today.
Chow added that every state faced constraints in terms of getting sufficient revenue to run operations, and that he is mulling the decision to lobby other Menteri Besar and Chief Ministers to raise this matter as a group.
Commenting on the state's investment prospects, he said Penang remained optimistic about its short- to medium-term outlook despite ongoing external uncertainties, including the global tariff uncertainty.
"Despite these uncertainties, InvestPenang continues to report strong investor inquiries from various countries every month, signalling sustained interest in both new investments and reinvestments," he said.
In 1Q 2025, the state secured RM6.7 billion in approved manufacturing investments, representing 22 per cent of Malaysia's total, positioning Penang as the second-highest contributor among all states.
These investments, stemming from 36 approved manufacturing projects, are expected to create 4,577 new job opportunities, further strengthening Penang's position as an economic powerhouse.
Significantly, he said 90 per cent of the total investment, amounting to RM6.1 billion, came from foreign direct investments, reaffirming Penang's position as a trusted global hub for advanced manufacturing and innovation.
"The breakdown further reflects our industrial strengths, with 79 per cent directed to the electrical and electronics sector, and 15 per cent into machinery and equipment.
The United States led foreign investments with RM2.4 billion, followed by Hong Kong (RM1.3 billion) and Taiwan (RM1.1 billion).
"As we look ahead, Penang remains firmly committed to unlocking new frontiers of economic opportunity by cultivating innovation, empowering our workforce and building a resilient ecosystem that welcomes high-impact, transformative investments," he added.
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