Penang CM asks fed govt to review state revenue distribution

PARLIAMENT | Penang Chief Minister Chow Kon Yeow (Harapan-Batu Kawan) urged the federal government to review the distribution of state revenue, calling for an agreement to be signed on the issue.

During his speech debating Budget 2026 today, he said this agreement, as well as the necessary amendments to the Federal Constitution, would produce a more relevant model of sharing revenue between states.

He told the Dewan Rakyat that a meeting last month between menteris besar and chief ministers saw the rejection of his memorandum proposing a review of the revenue sharing model between the federal and state governments through the establishment of a special commission.

“Generally, this matter is worth discussing because logically, if a state, not just Penang, has strong financial resources, then it will continue to be able to contribute and positively impact the country’s development as a whole.

“Of the billions in revenue that Penang contributes to the federation, we only hope for a 20 percent share, or this percentage can also be reviewed, perhaps in stages at an appropriate rate,” he added.

Chow previously raised this matter in June, when he said Penang has been “shortchanged” in federal allocations despite the state being a top contributor to national coffers.

According to the New Straits Times, he said if 20 percent is too high, Penang would accept 10 percent as a start.

Last month, Deputy Finance Minister Lim Hui Ying told Chow that Putrajaya will retain its current system of dividing tax revenue between states.

She was quoted by The Star as saying that Penang has been allocated RM2.5 billion for this year, adding that the state had received major development projects as well.

Rejected financial centre

In today’s debate, Chow regretted that a proposal to establish an international financial centre in Penang was rejected.

He said the relevant ministry expressed an unwillingness to implement the proposal, despite its potential to boost the state and country’s long-term economic growth.

“However, Penang hopes that the leadership led by the prime minister can and will continue to provide guidance, and then realise this plan so that Penang can diversify its existing expertise.

“Most importantly, we need an economic catalyst so that it does not remain stagnant as a state based solely on the electrical and electronics (E&E) industry and tourism,” he added.

Budget 2026 balances national priorities and state development

Anwar pledges more aid for Sabah, says normal procedures too slow

Federal capitation grant for states up 25pct to RM548m

'K'tan, T'ganu got more federal funds despite being opposition states'