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Penang South Island

Maintaining Penang’s Edge

The idea to build the Penang South Island (PSI) reclamation project stems from Penang’s modern development history, which has led to the state’s growth as an international investment and tourism destination.


Known internationally as the Silicon Valley of the East, a Unesco world heritage city and food haven, Penang’s economy and prosperity have been driven by its manufacturing and services sectors.


Since setting up Malaysia’s first free trade zone in Bayan Lepas in the early 1970s, Penang attracted multinational companies Intel Corporation, Keysight Technologies and Agilent Technologies (previously Hewlett Packard), Robert Bosch, AMD, Osram Opto Semiconductors, Renesas (previously Hitachi), Clarion and National Semiconductor. According to the Statistics Department and UN Comtrade, Penang commanded about 5% of the global semiconductor export in 2019.


However, Penang has also become a victim of her own success. The economic and population growth spurred by the two sectors have concentrated developments in George Town, Bayan Lepas and their vicinities, leading to land scarcity and congestion on the island, the preferred location in Penang for investors and businesses.


Although nine other industrial zones have opened on mainland Seberang Perai over the years, Penang still grapples with problems like insufficient land for new development, traffic congestion and reduced liveability, which are causing the state to lose its appeal to investors, leading to loss of investment dollars and high-paying jobs to other countries in the region.


With need to breathe new life into the state’s economy and create jobs, especially with the slowdown caused by the Covid-19 pandemic, Penang has to provide a long-term stimulus package that can bring positive impact to the business environment and the people. This stimulus package needs to be one that also shifts the development pressure from George Town and Bayan Lepas, create new industrial, residential and commercial land, as well as addresses climate change.


Therefore, in line with the State Government’s Penang2030 vision to build a green and smart family-focused state that inspires the nation, Penang is introducing the reclamation of the Penang South Island, which will play a major part in the future expansion of the state’s electrical and electronic (E & E) section and economic growth for decades to come.


The PSI development – now known as Silicon Island – is currently undertaken by the developer Silicon Island Development Sdn Bhd (SIDSB), which is a 30:70 joint venture between the Penang Government’s representative PIC PD Sdn Bhd and SRS PD Sdn Bhd.

Transforming Penang for the Future

Transforming Penang for the Future

With a new green high technology industrial park for E & E manufacturers of tomorrow in the pipeline, the Penang South Island (PSI) is the State Government’s strategic transformative development plan that will reconstruct the sleepy southern coast into a Smart City, and a world-class trade and tourist destination.


The new manmade island – named Silicon Island – will measure 2,300 acres and be located strategically close to the Bayan Lepas free industrial zone that has led to the growth of a healthy ecosystem of 300 MNCs and 3,000 SMEs statewide, the Penang International Airport and the Sultan Abdul Halim Muadzam Shah Bridge.


Connected to good infrastructure, PSI will attract new investors and retain existing ones that want to grow their operations in a strategic location that has the right working and living environment.


Also not far from PSI are education institutions like Universiti Sains Malaysia; the Collaborative Research in Engineering, Science and Technology Centre (CREST); and the Penang Skills Development Centre (PSDC) that will nurture a new generation of skilled and knowledge workers. This will help Penang grow and attract talent for its high-tech industries at PSI’s Green Tech Park.


Silicon Island, which will take 10 to 15 years to reclaim, will also provide new land for commercial and residential development, including affordable housing, and tourism.


The PSI development will be supporting over 220,000 jobs, especially in the high-tech industries; and bring a total of RM1.1 trillion national gross domestic product (GDP) impact and over RM74.7 billion in investments to Penang and Malaysia.

Holistic Development



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Artist Impression

Masterplan Design Competition

For a design that fulfils the state’s aspirations and ambitions, the Master Design Competition was launched in November 2019 to attract the best minds among international and Malaysian architects and master planners to design the Penang South Islands’ topside development. The MDC attracted 124 submissions.


In August 2020, Danish architecture firm Bjarke Ingels Group (BIG) was announced the Lead Masterplan Designer for the project. Its Malaysian associate for the MDC is Hijjas Architects and Planners.


Supporting the Penang2030 vision, BIG envisions the creation of a global destination that facilitates sustainable economic and cultural growth for Penang Island. BIG’s concept for PSI is as an urban mosaic of three diverse islands with a clear focus on liveability, environmental sustainability, and social and economic inclusivity.


BIG founder and creative director Bjarke Ingels said being chosen to contribute to the PSI project was “an immense honour”.


“We have decided to set the bar as high as humanly possible by imagining a new archipelago that aims to be both more culturally and biologically diverse than previous developments,” he said.


Click HERE for details and to visit the Masterplan Design Competition website.

In Line with U.N. Sustainable Development Goals, Penang2030 Vision & ESG-Compliance

Green, Inclusive & A Cut Above the Rest

Aligned with the Penang2030 vision, the United Nations’ Sustainable Development Goals (SDGs) and Intergovernmental Panel on Climate Change (IPCC) recommendations, as well as the Low Carbon Cities Framework, the Penang South Island (PSI) will promote ESG (environment, social and governance) practices that will transform Penang into a greener, more inclusive and sustainable economy.


Enhancing Penang’s long-established E & E ecosystem in the Bayan Lepas FIZ, the 700-acre Green Tech Park on Island A will be home to high-tech multinationals looking to expand or set up new operations in the region; as well as SMEs serving the global supply chain for the next next few decades.


Overall liveability will also be improved through world-class transport infrastructure, vibrant waterfront parks, ample green open spaces, and green practices to be implemented in the PSI development.


Low Carbon

The Penang South Island (PSI) will allocate 17.6% or 405 acres of Island A’s 2,300 acres for public parks, water canals, wetlands, floodplains and bioswales to enhance biodiversity and cool the environment by 1-2 degrees Celsius.


The 7km Central Canal will run through the island, which will also boast water taxis, e-trams, e-buses, a bicycle and walking track network of 110km, and a light rail transit system.


Heeding the National Physical Planning Council’s recommendation to reduce carbon emissions by 40%, the project has set a goal to achieve 45% carbon reduction through various green city initiatives.


Targets to achieve this goal include:

• 100% renewable energy use to power the Green Tech Park
• reducing urban planning emissions through sustainable master planning, shared facilities, climate responsive design and green features
• reducing transport emissions through integrated transport planning that put bicycles before cars, and enabling green mobility for a mode share shift from 5% public transportation use to 70%.
• reducing non-renewable energy use through super low energy buildings with efficient cooling systems, smart features and renewable energy installations
• 34% reduction in freshwater demand through a dual-purpose water treatment plant, rainwater harvesting and water saving devices
• 63.5% reduction in landfill waste with extensive recycling, food maceration and composting


These initiatives are aligned with the Low Carbon Cities Framework and the 13th Sustainable Development Goal that calls for greater efforts in reducing greenhouse gas emissions and increasing resilience against climate change.


In February 2023, PSI’s low-carbon development design was honoured with a five-diamond recognition by the Malaysian Green Technology and Climate Change Corporation (MGTC) at the Low Carbon City 2022 event.


The Low Carbon City 2022 award was part of MGTC’s Low Carbon Cities 2030 Challenge (LCC2030C), which promotes a low carbon future in Malaysian cities.


Ecology Protection

The Penang South Island (PSI) project comes with the PSI Ecology Offset Master Plan (PEOM) that will provide coastal protection, carbon sequestration, and new habitats for marine life that contribute towards the sustainability of the fisheries industry.


The PEOM, which is outlined in the Environmental Impact Assessment (EIA) report as an offset to the environmental components impacted by the development, includes:

• planting of mangroves at locations advised by the Forestry Department;
• deploying artificial reefs near Pulau Kendi, and fish aggregating devices (FADs);
• releasing fish and prawn fry;
• building eco-shorelines along the reclaimed islands’ perimeter;
• funds for marine ecology, fisheries, turtle, coral reef research and others.


Since 2016, the project has planted 1,500 mangrove saplings to create new habitats for marine life.


The PSI project also proposes to plant 22,300 mangrove trees on Island A, which will set aside 20 acres of land for coastal vegetation to create new habitats and nurseries for marine life. The 4km mangrove forest will also serve as a recreational zone for the people.


Future Proofing Against Climate Change

The United Nation’s Intergovernmental Panel on Climate Change’s (IPCC) Special Report on the Ocean and Cryosphere in a Changing Climate in 2019 found that global mean sea levels would most likely rise between 0.29m and 1.1m by the end of this century.


The National Hydraulic Research Institute of Malaysia (NAHRIM) has also projected a sea level rise of 0.68m in Penang by 2100. Therefore, the Penang South Islands (PSI) project is designed to be resilient in facing climate change.


Heeding IPCC’s sea level rise projections, PSI’s perimeter will have a minimum platform level of 3m above sea level, providing for rising sea level and joint occurrences of high tides and storm surges. Beyond the perimeter, the islands’ central high points will be even higher (nearly 5m higher than the mean sea level). This provides a drainage system that can accommodate 30% increase in rain fall intensity.


PSI will also feature biodiversity designs in the form of green and blue networks that allow rainwater to flow into strategically located outlets to be discharged into the sea. PSI will also be developed as a “sponge city”, featuring urban landscaping and vegetation that retain, recover runoffs, control flooding, and recharge groundwater.


PSI’s wide coastal buffer of minimum 40m will allow flexibility for long term coastal adaptation to suit changing conditions. Additional climate change provisions will be implemented progressively and flexibly as part of the adaptive pathway design approach.


PSI’s main internal waterways will also provide additional water storage capacity. Should there be excessive sea level rise, the coastal buffer allows space for a polder (raised edges) and dune system that will further increase this storage. A pumping system can be incorporated to drain excessive stormwater runoff. Gates at the outlets can also be upgraded to cope with any increased levels of protection.



Reclamation Method

Hydraulic sand fill is the most common reclamation method in the world. In general, hydraulic sand fill with PVD (prefabricated vertical drains) and surcharge as ground treatment will be applied.


Sand and rock filling accounts for about 85% of the reclamation works. Studies are ongoing to see if dredging materials can be used as fill material at specific PSI locations.


The reclamation of the first Penang South island will take about 9 years.

Sand Source

The project will be using sand from sites in federal waters off Perak and Selangor. Considerations are made to ensure minimal impact on the environment and logistics.


Sand will only be sourced from Environmental Impact Assessment-approved sites. All sand concessionaires need to get EIA approvals before they are allowed to extract sand from the sea. The DoE will not issue any approvals for sand mining activities that will cause significant impact.


A Trailer Suction Sand Dredger will be used to extract sand from sand source. Sand extraction activities will only be confined to localised areas. The activities will not cause major impact to the sea.


The sand extraction sites are some 20 nautical miles (equivalent to about 37 kilometres) from nearest shoreline, far from coastal fishing ground. These sites are in trawlers’ fishing zones (Zone C). The sand dredging will have minimum impact on trawlers, as they have a vast area to fish.

Dredged Materials Disposal Site

During reclamation, dredged materials to be discarded will be sent to a site north of Muka Head, which has been approved by the Marine Department.


Barges carrying dredged materials will be tracked using a dredging and disposal management system (DDMS) to prevent illegal dumping.

Environmental Control Measures for Reclamation

Mitigation measures, as per the Environmental Management Plan (EMP) and compliance of best practices can minimise these impacts to ensure the development can be carried out sustainably.


These measures will be monitored for efficiency and reported periodically to the DOE for compliance. Non-compliance will result in fines and order to stop work. Pollution controls under DOE’s approval conditions to ensure the environment and reclamation site are protected include:

• water quality monitoring programme
• real-time TSS (total suspended solids) and turbidity monitoring programme
• air quality monitoring programme
• noise and vibration monitoring programme
• wastes, material and pollutant management
• disposal of dredged materials


Sediment quality will be monitored at dredging areas, with analysis reports sent to Penang DOE every quarterly.


Silt curtains will be installed to demarcate the work area and act as screens to trap sediments and reduce turbidity during construction. They prevent water pollution.


Containment bunds, which act like dykes, are built around the reclamation to stabilise the ground and work together with the silt curtains as physical barriers to block fine material from dispersing into the surrounding areas during the sand filling process, preventing water pollution.


Sand for the reclamation will be transported by sand carriers to the project site’s sand rehandling area. The sand will then be pumped into the contained reclamation site in a measured and controlled manner.

Turbidity monitoring devices are placed on-site to provide continuous and real-time monitoring allowing remedial works to be immediately carried out should the level of turbidity exceed the permissible level.


Air pollution controls include prohibiting open burning within project site and workers’ quarters; and ensuring all machineries are well maintained and are in good condition.


Noise and vibration control will be implemented to ensure noise levels do not exceed DOE’s requirements. All ancillary plants, machineries and equipment will be fitted with exhaust silencers, maintained in good working order, placed behind physical barriers or away from sensitive locations. Working hours for activities with noise impact to sensitive receptors, such as piling and rock bund construction will be confined to 7am to 9pm where practical.


Wastes and pollutants will be properly managed. Solid wastes will be disposed at a site permitted by the local authority.


Fuel, oil and chemical storage onboard a vessel will be according to correct Best Management Practices (BMP). An emergency response plan must be in place for oil spill prevention and response. DOE must be alerted if an oil spill incident occurs.


Ballast water, bilges, spent oil and other scheduled waste will be managed according to the Environmental Quality (Scheduled Waste) Regulation 2005. Water from toilets and kitchens on ships must be stored and treated in septic tanks and greywater tanks. Direct discharge into the sea is strictly prohibited.

Centralised Labour Quarters (CLQ)

Workers will be housed at a centralised labour quarters approved by relevant local and federal authorities to ensure workers are provided with conducive accommodations and prevent potential public disturbance.


The State Government is currently looking at several potential locations with suitable existing facilities to set up the CLQ.


The CLQ will have proper housing amenities like bedrooms, water, electricity, kitchen, convenience store, sanitary facilities, clinic, as well as adequate Covid-19 preventive measures and quarantine facilities.


The State will also ensure that the CLQ is compliant with Construction Industry Development Board and Labour Department requirements.


Fishermen Benefits

As immediate neighbours of the Penang South Islands (PSI), south Penang Island fishermen will begin receiving benefits during the reclamation process. When the islands are developed, they will also enjoy economic spill over from the project – opportunities that will transform their lives and that of their children and grandchildren.


From the onset, fishermen will benefit from the Social Impact Management Plan (SIMP) that uplifts the community, and the implementation of the ecology offset programme that creates new habitats for marine life.


The SIMP, with a RM100 million state government allocation, provides the fishermen ex-gratia payments when the reclamation begins, and modern jetties with facilities, along with a dedicated navigation channel that enables 24-hour access to the sea.


Skippers (tekong) from the Permatang Tepi Laut, Sungai Batu, Teluk Kumbar and Gertak Sanggul fishermen units each will receive a new boat and engine.


The local fishermen will still be able to continue fishing during and after the reclamation.

New Entrepreneurs

The first jetty in Permatang Damar Laut will feature amenities such as storage area, ice-making facilities, stalls, restaurants, tourism facilities and a river promenade that will attract tourists, bringing business opportunities and more income to the local community.


There will be job opportunities generating stable income for the fishermen and other locals, who can provide services like water transportation, jetty construction, delivery and supply of food and other necessities to construction workers, and others.


Some local fishermen have already found new jobs in the PSI project before the reclamation even takes off. With steadier income and social security benefits, they have secured a more stable life for themselves and their families.

Empowering the Next Generation

To move the community up the value chain, the SIMP also provides training, upskilling and empowerment programmes for fishermen and their children, who are interested to broaden their horizons and take up Penang South Islands-related jobs. Examples of such programmes are boat piloting, boat making and engine maintenance courses.


Fishermen’s children will also benefit from free tuition classes and other education schemes to improve their academic performance and qualifications. Those who successfully enroll in university or college, and do well in their exams will also receive cash incentives.


Fishermen facing housing difficulties and yet to own homes will be given priority by the State Housing Department in home-ownership schemes.

Bringing Benefits to the Community

The implementation of SIMP will be coordinated under the Community Participation Programme known as PELITAKU for short. The programme is managed by the Fishermen Taskforce chaired by Deputy Chief Minister 1 YB Dato Ir Ahmad Zakiyuddin Abdul Rahman, and will be implemented by the Penang Infrastructure Corporation, State Economic Planning Unit and Pusat Perkhidmatan Setempat Nelayan (PPSN).


PELITAKU involves the Penang Government, local community, fishermen, related agencies, non-governmental organisations, higher education institutions and others to implement the SIMP and the ecology offset master plan in compliance with ESG (environment, social and governance) principles.


PELITAKU’s four pillars are:

• Pillar 1: Corporate Social Responsibility (CSR) & Environment Programmes
• Pillar 2: Education, Training and Upskilling Programmes
• Pillar 3: Job Opportunities
• Pillar 4: Business Opportunities


Through PELITAKU, the Penang Government encourages the south Penang Island community, the private and public sectors to take part and take advantage of opportunities created in the Penang South Islands development.

Fishermen’s Centre: Exclusive Space for Communion

Keeping the fishermen in mind, the Penang State Government, with the cooperation of SRS Consortium, set up Pusat Perkhidmatan Nelayan Setempat (PPSN) in Permatang Damar Laut (2016), Gertak Sanggul (2017) and Sungai Batu (2021) to act as a “one-stop” platform to disseminate accurate project information and organise social activities for the community, bringing the people and the government closer.


PPSN’s roles are:

• Mediator between the state government and the people;
• Identify and help address local fishermen’s issues and needs;
• Provide free tuition for children sitting for national exams like SPM;
• Provide long and short-term technical courses and training for locals;
• Serve as a job registration centre for locals interested in jobs during the reclamation;
• Managing PSR work visits;
• Assist in implementing the Environment Management Plan (EMP);
• Manage the Social Impact Management Plan’s (SIMP) implementation;
• Manage local fishermen’s complaints and feedback through the PANTAS complaint management system
• Providing free space for fellowship and communion for sharing common interests

Contact Pusat Perkhidmatan Setempat Nelayan:


PPSN Permatang Damar Laut (expansion underway)

Pusat Perkhidmatan Setempat Nelayan, Permatang Damar Laut, 11950 Bayan Lepas

PPSN Gertak Sanggul

Pusat Perkhidmatan Setempat Nelayan, Jalan Gertak Sanggul, 11910 Gertak Sanggul


PPSN Sungai Batu

Pesisir Pantai Sungai Batu, bersebelahan Lot 1018, Mukim 11, 11000 Bayan Lepas


Office Hours

9am – 5pm, Monday to Friday, except on public holidays