GEORGE TOWN, May 22 — Penang’s RM100 million advance application to the federal government last year was to cover the state government’s projected deficit.
Chief Minister Chow Kon Yeow said the application was in line with the provisions of Article 109(6) of the Federal Constitution, which places the responsibility on the federal government to assist state governments.
He said the application was approved by the Finance Ministry (MOF) and the funds were disbursed to the state government the same year.
“With the disbursement of this advance, the MOF will offset the amount by reducing four types of grants allocated to the state government — the Capitation Grant, Service Charges Grant, Concurrent List Grant, and the Tahap Grant — in the years 2027 (RM33 million), 2028 (RM33 million), and 2029 (RM34 million),” he said during his winding-up speech at the Penang State Legislative Assembly today.
“From an accounting standpoint, to ensure that the advance amount matches the MOF’s offset (mechanism), the state government will record the advance as non-revenue receipts in 2027 (RM33 million), 2028 (RM33 million), and 2029 (RM34 million),” he said.
Meanwhile, Chow said the state Finance Department had reviewed the state revenue from two perspectives: increasing collection from existing revenue sources, including arrears, via methods such as data cleansing and revising outdated rates.
He said the second perspective involves identifying new sources and methods to generate state revenue, including reviewing land tax rates and reclassifying rural to urban areas, as well as empowering statutory and state organisations to enable new revenue collection.
Chow, who is also the state finance, economic development, land, and communications committee chairman, said several strategies are being implemented to boost revenue this year, including collecting RM1 million in arrears from parcel rent in 2025.
He also proposed government land auctions, such as land forfeited under Section 100 of the National Land Code or other high-value and auction-worthy state-owned land.
Other strategies include reviewing processes for changing land conditions and categories, and proposals for partnerships with private entities to operate or manage state government quarters.
Chow, currently serving his second and final term as Chief Minister, pledged to hand over the leadership with the state in a strong financial position.
“I am confident that it will be in an excellent financial standing — perhaps even with the Consolidated Revenue Account restored to RM1 billion — when my successor takes over,” he said. — Bernama
