Penang urges federal government to review decision on international financial centre

FACED with uncertainty due to the threat of US import tariffs on the semiconductor industry, Penang Chief Minister Chow Kon Yeow has pleaded with the Federal Government to review its decision to reject the state’s move to become an international financial centre.

The state needs a new stimulus for its economy, said Chow when debating the proposed national fiscal budget for next year in Parliament.

Chow told Parliament that the finance ministry indicated that it was not ready to proceed with the plan.

The financial centre is part of a state plan to diversify the state’s economy beyond manufacturing and services such as trading and tourism.

It is meant to bring in new segment for the economy such as fund and wealth management; and fintech to turn Penang into a regional financial hub following in the footsteps of Labuan as an international financial offshore center  or Singapore – the heartbeat of financial services in the region.

Penang earlier engaged with developers like IJM Corp Bhd, Gamuda Bhd, and E & O Bhd over the project while the state public think tank – Penang Institute was appointed to help plan the concept.

However, the proposed financial center still needs approval from the Finance Ministry, Bank Negara Malaysia, and the Securities Commission.

Chow reiterated his call for a revised  federal – state revenue sharing model in view of a pressing need for states to have more allocation to drive the development needs of their respective states.

Chow said that the state government had proposed setting up a special commission to study a fairer tax-sharing formula for all.

On the Silicon Island project, Chow said reclamation work had reached 101ha and urged Putrajaya to approve tax breaks, import duty waivers, and skilled foreign worker permits requested from 2022. to help the project realised its objectives. – October 16, 2025.