WHILE Penang acknowledges receiving aid from the Federal Government for various projects, additional Federal funding could further support the state due to its limited revenue base.
Chief Minister Chow Kon Yeow noted that the state appreciates the Federal Government’s assistance with project approvals, including significant initiatives such as the upgrading and expansion of the Penang International Airport (PIA) and the Penang Light Rail Transit (LRT) project.
“We are grateful for the Federal Government’s support, which amounts to nearly RM1 billion annually in project approvals.
“However, additional Federal funds would be beneficial for Penang. Not every state has adequate natural resources to support its expenditures,” Chow said.
Chow highlighted that Penang’s rapid development might give the impression of prosperity due to substantial foreign direct investment (FDI) and a robust economy.
Nevertheless, most of the state’s revenue is directed to the Federal Government. The primary sources of state income, such as land transactions and premiums, are insufficient, resulting in Budget deficits over several years.
Chow also mentioned that when he proposed a review of the Federal tax distribution system, some states agreed that it deserved reconsideration. Penang has suggested a 20% tax redistribution back to the state to address fiscal challenges.
It was reported that Penang’s proposal to review the Federal tax distribution system to benefit the states could not be implemented at this time due to the country’s fiscal constraints.
Chow reassured that Penang still has reserves to fund its Budget and that if necessary, the Federal Government could consider advance allocations.
However, these advances would be considered loans to be repaid later.
“Some states have received such loans but are unable to repay them, causing these debts to accumulate.
“We are not currently in this situation, but we are taking steps to avoid potential financial issues,” Chow added.
Story by Christopher Tan
Pix by Muhamad Amir Irsyad Omar
Video by Siti Nuratikah Rahmat