Penang’s industrialization and economic transformation, 1960s to 1980s

Koay Su Lyn, Master’s Degree Graduate, National University of Singapore1

Once a thriving British colonial port settlement, Penang suffered a significant post-war economic downturn after joining the Federation of Malaya. To salvage the economy, its first Chief Minister, Wong Pow Nee (1957–1969) emphasized import-substitution industrialization (ISI)—a strategy that focused on domestic market production and was adopted by Malaysia. However, its unanticipated flaws, inherent issues, and the abrupt repeal of Penang’s free port status in 1969 did not allow easy reversals of Penang’s economic misfortunes. His successor, Dr. Lim Chong Eu (1969–2010) reoriented the economy towards export-oriented industrialization (EOI), catering to international markets. Complemented by new administrative structures under a strong state leadership, Penang successfully rode the wave of electronics manufacturing exports. Yet for all Pow Nee’s supposed shortcomings, he laid the foundation for Penang’s later industrialization that came to fruition under Chong Eu. This article shows how Penang’s economic transformation was a progressive and interlinked process, and how both these men’s contributions were important for securing Penang’s industrial breakthrough.

Penang’s first two Chief Ministers, Wong Pow Nee and Dr. Lim Chong Eu
Courtesy of Peter Wong, son of Wong Pow Nee

Penang’s irreversible decline and move to industrialize

The northern state of Penang, with a population of 572,000—the majority Chinese (57 per cent), with the next largest communities Malays (29 per cent) and Indians (12 per cent) (Fell, 1960)—faced turbulent social, economic, and political times after Malaya’s independence in 1957. Despite the international trade recovery of the 1950s, following a post-war boom in Malaya’s tin and rubber industries, the outlook for Penang’s entrepôt economy turned bleaker with the development of Port Swettenham (renamed Port Klang in 1972), which is closer to the federal capital of Kuala Lumpur. Although Penang was part of Malaya’s newly elected Alliance government, through the MCA (Malaysian Chinese Association), it chose to prioritize and promote Port Swettenham, and by the early 1960s, Penang saw an immediate 15–20 per cent trade decline (PSG, 1964, p. 28).

Penang faced further difficulties after Malaysia’s formation in 1963. Indonesia’s Konfrontasi against Malaysia helped cause a nearly 40 per cent fall in Penang’s trade, while the total share of its entrepôt trade dropped to 38 per cent (PSG, 1964, p. 31). Indonesia had accounted for some 50 per cent of Penang’s trade in 1962. The rise of economic nationalism among the countries surrounding Penang also fed into new protectionist measures to restrict imports (Koay and Wong, 2019, p. 38). Consequently, Penang’s total trade with Indonesia, Thailand, and Burma (now Myanmar) fell by about MD$70 million (a drop of nearly 20 per cent) by 1963 (PSG, 1964, p. 31). This drop cast doubt on the viability of Penang’s sole reliance on its free port status—its trade and commerce were thought unlikely to accommodate its expanding population.

Yet the new national trajectory entailed standardized economic regulations across all states. The Report on the Economic Aspects of Malaysia (World Bank, 1963) prescribed a common market within Malaysia for domestically produced goods as a major economic stimulus. Although it recommended preserving the entrepôts until Singapore and Penang were ready to industrialize (World Bank, 1963, pp. 41–42, 55–59, 64–66), its publication imposed immediate pressure on Penang, given already-declining trade and Singapore’s agreement to reduce its trade for duty-free access in Malaysia. Penang’s participation was expected to facilitate the young nation’s economic development, mitigate losses, and pave the way to industrialization.2  After all, maintaining its crumbling port while curbing associated smuggling lost the federal government about $10 million annually (The Straits Times, 1961, p. 4). A Tariff Advisory Board was established with a tentative list of protective tariffs, and more imported goods were taxed at both Penang and Singapore’s ports (World Bank, 1963, pp. 59–60).

With most of Penang’s labour force engaged in commercial sectors (PSG, 1964, p. 54), their scaling-down entailed rising unemployment that could only be absorbed by industrial sectors. Yet with little industrial drive save for agriculture the lack of a uniform national policy to evenly promote industrialization across all Malaysian states resulted in the centralization of capital and development in certain states (mainly Selangor). Penang’s only mainland industrial site, Mak Mandin Industrial Estate, remained in its initial stages after its launch in the late 1950s. The island lacked suitable sites and, without a connecting link, access to the Malaysian market proved costly (The Straits Times, 1963, p. 5). Inevitably, the call for Penang’s industrialization required a more ambitious plan, and this challenge was taken up by Wong Pow Nee, its first Chief Minister, on independence in 1957.

Wong Pow Nee and the birth of Penang’s industrialization

Unlike his political contemporaries from illustrious backgrounds with long-standing involvement in the Alliance’s socio-political affairs, Wong Pow Nee was a Bukit Mertajam schoolteacher who became Chief Minister through an unofficial vote after his contemporary, Chong Eu, declined the post.3  Guided by the Penang Master Plan of 1964, Pow Nee attempted to revive Penang’s declining economy by focusing on the mainland’s industrialization, while developing the island’s tourism potential (PSG, 1964) and creating infrastructure support to attract capital investment and increase tourist arrivals (Jomo, et al., 1997, pp. 95–96).

Given its proximity to transportation and shipping, Mak Mandin was transformed with numerous infrastructure elements, including the New Prai Bridge, steel mills, deep-water wharves, and the Prai Power station. By 1965, 10 new substations were supplying electricity to giant industrial consumers—Malaysia Weaving Factory, Southern Iron & Steel Works, Pacific Garments, and Din Wai Electrical (PSG, 1969a, pp. 4–6). With 75 acres of Mak Mandin’s first phase occupied by textiles, clothing, wire manufacturing, and sugar factories by 1967,4  Prai was Malaysia’s largest industrial estate,5  with the establishment of the joint Malayan–Japanese iron and steel works—Malayawata Steel Ltd, Southeast Asia’s first integrated iron and steel plant (The Straits Times, 1967, p. 13). Interestingly, Prai was envisaged to broaden the port’s scope as a ‘clearing house’ for regional exports and as an inlet for imports (PSG, 1969a, pp. 5–6). This could salvage Penang’s entrepôt trade via free trade zones (FTZs), bonded warehouses, and storage godowns. Pow Nee also proposed a connecting link (ultimately the Penang Bridge) to further Penang’s national and regional market (Figure 1). But unlike in later years, there was only very limited federal investments in FTZs s and industrial parks.

Figure 1: Penang’s early industrial zones and Pow Nee’s proposed linkage connecting the island and mainland, 1969
Source: Penang Today, 1969c

To promote tourism, Pow Nee drafted massive urban renewal schemes for George Town’s Prangin and Maxwell areas for well-defined civic, cultural, and office zones, and slum-clearing (PSG, 1969, p. 9). From initiating the annual ‘Penang Pesta’ in showcasing Penang’s diverse cultural and social activities,6  to access lanes to the scenic Muka Head via the Pantai Acheh Park project, and a road up Penang Hill, Pow Nee also had the Bayan Lepas airfield extended for heavier and faster aircraft. Among the largest tourism projects he embarked on was the construction of Dewan Sri Pinang, a huge multipurpose hall, to host 1972’s Pacific Area Travel Association Conference (PSG, 1969a, pp. 1–8; The Straits Times, 1965, p. 8). Unfortunately, not only were most of Pow Nee's schemes completed by and attributed to his successor, Chong Eu, but his dream of single-handedly raising Penang as a national and regional manufacturing centre was doomed to shatter.

Abrupt economic changes, unforeseeable setbacks, and downfall

By the late 1960s, ISI’s flaws became apparent, leading to a shift in global manufacturing towards EOI. As efficiency was less likely to be achieved by large-scale employment than by sophisticated production and management techniques, ISI was unsuccessful in reducing poverty or fostering local technological capabilities (Hutchinson, 2006, pp. 90–91). ISI did little in easing Penang’s unemployment—only 24 firms employed 200 or more workers, whereas 70 per cent employed no more than 10 by 1968 (Tang, 1993, pp. 75–75). Having assured Penangites of more jobs with more factories (The Straits Times, 1964, 1966, 1969), Pow Nee banked entirely on its long-term success without any backup plans.7  ISI did, however, help diversify the national economy—reducing overall reliance on imported goods and successfully laying Penang’s infrastructure foundations for later industrial development. Thus, Pow Nee can be credited with pioneering a popular economic strategy, later embraced by most Southeast Asian countries, that propelled Penang’s early industrialization.

Without manpower development, however, Penang was caught unprepared for the shift to EOI. The lack of technical institutions to groom high-skilled labour and vocational schemes to train the annual influx of school-leavers left many of the state’s youthful labour force occupationally immobile. Without institutional reforms, Penang’s progress lagged within the state bureaucratic apparatus. Entrenched federal–state dynamics allowed for little independence in prioritizing state-level projects, which were hampered by onerous red tape because all industrial inquiries had to be approved by Kuala Lumpur.8  The lack of expertise in managing industrial demands also resulted in Prai completing barely 50 acres by 1969 (Lim, 1969, pp. 26–27). Pow Nee did realize this setback, although admittedly only in 1968, with his impetus for passing the Penang Development Corporation (PDC) Act at first reading in the State Assembly.9  It was not until PDC’s establishment in November 1969 under Chong Eu that Penang enjoyed a greater degree of autonomy (Hutchinson, 2008). Thus, Pow Nee could have done little regarding federal failure to hasten the pivotal East–West Highway extension. Despite his assurances to press for its construction, it was held in abeyance at the federal level—a decision a state could not overrule.10

Perhaps as seriously, Pow Nee failed to effectively mobilize his limited political forces in favour of Penang. He was, after all, a relatively unknown figure even at the time of his election to the Settlement Council in 1955—even Tunku Abdul Rahman did not know him,11  despite being a well-respected minister. When urged on numerous occasions to frankly discuss Penang’s plight before Malaysia’s first prime minister, he declined out of reluctance to perturb the Tunku over a ‘small matter’.12  Indeed, his mellowness can be attributed to his reluctance to become Chief Minister—he had to be persuaded by Chong Eu and the United Malays National Organisation (UMNO) leader, Hashim Awang.

With mounting campaigns against the Penang Alliance government in the face of the 1969 general election led by Chong Eu’s Parti Gerakan Rakyat Malaysia (Gerakan), the free port’s abrupt abolition sounded the death knell for Pow Nee. The state’s per capita income dropped to 12 per cent below the national wage, with an increased unemployment rate of 16 per cent. Plagued by numerous economic uncertainties, the Penang Alliance government suffered a major electoral loss with Gerakan’s victory (Vasil, 1972, p. 35) and Chong Eu’s takeover of Penang, which now bore the onus of reviving Penang’s economy after the election and the 13 May 1969 ethnic riots.

Dr. Lim Chong Eu and the realization of Penang’s industrial dream

The 13 May racial clashes temporarily pushed politics into the background, with Parliament and state assemblies suspended and superseded by the National Operations Council. As fresh administrative dynamics were required, Chong Eu forged close cooperative ties with Malaysia’s second prime minister Tun Razak’s new central government. These unparalleled federal–state relations, which enabled the resumption of Penang’s development by November 1969, would not have been possible without Chong Eu’s personal relationship with Tun Razak, whom he had befriended in the Razak Education Committee in 1955 (Tan, 1997, pp. 165–6, 175–6).

Despite their stark political differences, the Pahang Malay aristocrat Razak, regarded as an ultranationalist UMNO leader, and the ferocious ex–MCA leader but now leader of Gerakan successful in the 1969 Penang state elections, who defended Chinese education, achieved a consensus through mutual respect and cooperation owing largely to their life trajectories.13  This relationship not only unlocked Penang’s long-term development interests amid Malaysia’s New Economic Policy of 1971 (Milne and Mauzy, 1978, pp. 322–329), but removed state–federal red tape with Tun Razak’s personal appointment of Dato’ Yaakob Hitam, a federal development officer, as Penang’s state secretary. Coupled with Chong Eu’s administrative capabilities, given his solid political record and networks that were crucial for mobilizing political forces for development efforts, Penang witnessed a new dawn.

As the second wave of globalization was gathering momentum through technological and communication advances, especially containerization, the 1970 Penang Master Plan (the Nathan Report)14  recommended an economic redirection of ‘plugging’ into growth industries with global trade. The Plan sought to break the self-perpetuating cycle of low income, deficient demand, stagnant production, and unemployment (PSG, 1970, Vol. 1, pp. 36–37). Compatible with the national objectives of EOI, Penang had the greatest comparative advantage in labour-intensive technologies, using both imported and domestically produced raw materials, parts, and components. Penang’s tourism could also be advanced more effectively through capital expenditure and a reorganization of resources (PSG, 1969b, p. 14). Still, Chong Eu knew that this redirection alone was insufficient—he embarked on engineering a new administrative system geared towards state objectives to kickstart operations.

Engineering governance, adopting social reorganization, and nurturing human capital

New frameworks began with PDC’s establishment as the principal state agency with the operational autonomy to manage industrial development, including state land.15  Supported by competent expertise, they strengthened promotional efforts in competing for and attracting foreign direct investment (FDI) (Chet Singh, 2019, pp. 63–69). Despite the autonomy, a close working relationship with federal authorities was nurtured with board representatives from key federal institutions like the Malaysian Industrial Development Authority (MIDA), the Treasury, and the Malaysian Industrial Development Fund, which helped secure smooth facilitation akin to the ‘developmental’ state ideal (Hutchinson, 2008, pp. 115–127).

Chong Eu’s charisma, too, played a crucial role in instilling a sense of partnership and mission within both PDC and the state’s civil service, reminding them that ‘this [work] was for Penang’ (Khoo and Toh, 2019, pp. 13–15). This relationship also went beyond work—the Chief Minister personally knew their families and many young officers regarded him as a ‘father figure’.16  Coupled with his ‘no-nonsense’ ethic that induced a sense of respect and authority, his personal touch accounted for the loyalty, dedication, and camaraderie within PDC and among state administrators who stood by him, often performing projects ahead of schedule (Penang Institute, 2011, pp. 30–33).

Because administrative support remained incomplete without new governance, Chong Eu boldly restructured Penang’s local authorities by integrating the island’s two local authorities with the mainland’s three by July 1974 into a single, local authority for the entire state (Norris, 1980, p. 80). This was paramount for efficient administration—minimizing conflicting building and planning criteria while standardizing the level of professionalism and administration state-wide. The implementation of the Local Government Act 1976 also entailed state-nominated councils, and Chong Eu’s administration became the supervisor of local authorities (Norris, 1980, p. 100). Because the envisaged epicentre of growth on the island and mainland fell under these local administrations, this unprecedented move hastened development progress.

To develop a well-trained labour force, the City In-Service Centre—Malaysia’s first skills development centre based on a tripartite partnership between industry, academia, and state government—was established in February 1970.17  It equipped school-leavers with essential vocational skills, and included management and supervisory courses.18  With a syllabus inspired by the City and Guilds of London, the centre collaborated with Universiti Sains Malaysia for graduate certification with experienced trainers from George Town Council providing hands-on lessons spanning mechanical engineering, electronics servicing, draughtsmanship, and bookkeeping. German trainers were also engaged to expose trainees to new technologies and skills (George Town City Council, 1970, pp. 1–3). Later, a separate training centre was formed in Prai (Tew, 2001, pp. 231–233). All these effectively prepared Penang for the ‘electronics wave’.

Riding the electronics wave and pinning Penang on the global tourist map

The Free Trade Zone Act of 1971 led to the opening of Malaysia’s first FTZ in Sungai Kluang off Bayan Lepas in January 1972. Tun Razak was said to have personally fast-tracked its gazettement by a wave of his walking stick on-site.19  Penang had three FTZs in Bayan Lepas, Prai, and the southern side of Pulau Jerejak (a small island off the main island). Each served specific purposes: Bayan Lepas, near the airport, catered to light industries heavily dependent on air-freight services; Prai, already well-equipped with Pow Nee’s deep-water berths, served heavy industries requiring sea transport; and Jerejak was designed to process raw materials and cater to industries requiring deep-water facilities (The Straits Echo, 1970, p. 6).

Keen on gateways for plugging into international markets via electronics manufacturing, Chong Eu was proactive as Chief Minister/PDC chairman in personally leading trade missions to technologically advanced economies with high labour costs—the United States (mainly to California), Europe, Canada, Australia, the Republic of Korea, and Japan—to meet potential investors. His charisma, intellect, and interpersonal skills impressed many investors who outsourced their businesses to Penang, where he personally hosted them with authority and confidence (Khoo and Toh, 2019, pp. 13–14). It took great persuasion to convince foreign investors who were largely unaware of Penang’s existence, let alone its workforce’s capabilities.

PDC established the state’s first electronics company, Penang Electronics, with two pioneering multinationals, Clarion and International Telephone & Telegraph (ITT). By mid-1972, these firms were joined by Intel Corporation, Hewlett-Packard, Hitachi, Motorola, Nordmende, and Toray Group (PDC, 1970, p. 5). Chong Eu also rallied support from local business circles through monthly lunch meetings to realize his industrial goals for Penang, which went beyond generating FDI or jobs alone. 

Dr Lim Chong Eu, Chief Minister of Penang hosting Intel representatives, 1972
Source: Courtesy of Ganesh Kolandaveloo, Independent Researcher
Chong Eu viewed industrialization as a long-term endeavour, a means of steering rural urbanization, and one that resonated with the New Economic Policy’s attempted redress of ethnic economic and social imbalance. Thus, urban townships in Bayan Lepas (Bayan Baru) and Prai (Seberang Jaya) were launched in 1975 when industrialization progressed steadily having been foreshadowed earlier (The Straits Echo, 1972; The Star, 1973). More significantly, these townships were offered to the booming industrial workforce, indirectly facilitating progress by cutting travel time and costs. By 1989, 33,000 people lived in Bayan Baru and 24,500 in Seberang Jaya.20  Bayan Lepas not only housed PDC’s headquarters but also the luxurious Hotel Equatorial on Bukit Jambul hill, boosting Penang’s image as a first-rate industrial zone and premier tourist spot, demonstrating Chong Eu’s visionary embrace of a new economic paradigm that Pow Nee could not have envisaged, given different global trends.

Chong Eu not only completed Pow Nee’s proposed Dewan Sri Pinang and hosted 700 representatives from 30 countries, but established connections with overseas travel agencies and distributed promotional kits, taxi leaflets, and brochures in domestic and foreign airports. Incentives and tours were also provided to travel writers, journalists, and film agencies (Tew, 2001, pp. 175–177). Further, he completed Pow Nee’s existing road up Penang Hill, and with federal assistance he expanded the Bayan Lepas airport again, making it suitable for Boeing’s 747 Jumbo Jets and more foreign tourists (The Nanyang Siang Pau, 1979, p. 5), and permanently located Pow Nee’s annual Penang Pesta in Sungai Nibong. The festival’s economic importance indirectly generated an estimated 1,500 jobs by end-1971 (The Straits Echo, 1971, p. 4).

Pow Nee’s urban renewal scheme transformed into an ambitious, integrated development known as KOMTAR—the largest in the country—combining civic, administrative, and commercial functions.21  Its completion in 1985, the same year that Malaysia emerged as an ‘Asian Tiger’, even included the tallest building in Southeast Asia (232 metres). This was followed by the Penang Bridge’s completion (the world’s third-longest at 13.5 kilometres), marking an important milestone in Malaysia’s overall economic development. Although these projects were completed under Tun Razak’s respective successors, Tun Hussein Onn and Dr Mahathir Mohamad, approval and funding were secured during Tun Razak’s tenure, and again, Chong Eu’s warm federal relations were a significant factor that combined with his perseverance towards their final push. 

From crumbling entrepôt to the ‘Silicon Valley of the East’

By 1975, following the first FDI wave, 99 factories occupying 653 acres of FTZs with a paid-up capital of MD$282.4 million had been established.22  The number of jobs created by end-1972 was 11,766—against 3,096 in 1969—rising to 18,700 jobs in 1978.23  Penang’s manufacturing sector became its leading contributor to its gross domestic product (GDP), increasing from 11.9 per cent in 1969 to 21.7 per cent in 1975 (Table 1), surpassing the national figure of 20.4 per cent (World Bank, 2021). Save for agriculture, other sectors that catered directly to manufacturing—transportation, communication, and utilities—increased, highlighting the success in industrializing Penang, putting it on an equal—if not greater—footing than Klang Valley. The success of the Pacific Area Travel Association Conference ushered in a tourist boom, with 92,367 arrivals in 1973(PDC, 1974, p. 23), increasing to 160,027 by 1978, leading to first-class hotels mushrooming at the coastal sites of Tanjung Tokong and Batu Ferringhi. These achievements triggered a new economic trajectory—from declining entrepôt to a revitalized tourist destination and the ‘Silicon Valley of the East’.

Table 1: Changes in Penang’s economic structure, 1969 to 1975
Source: PDC, 1975, p. 2.

Given Pow Nee’s foundational initiatives, Penang’s successful economic development was gaining momentum. Still, the state’s momentous transformation required Chong Eu’s determination, vision, and reforms under a formidable, charismatic leadership and unparalleled federal ties. Indeed, his political experiences with the Alliance, the United Democratic Party, and the Malaysia Solidarity Convention alerted him to the limitations in developing Penang alone with practical lessons on the limitations of communal parties and the benefits of coalition politics. Chong Eu thus cast his own political attainments aside—from switching Gerakan from its opposition stand to a founding partner of Barisan Nasional, and his resignation as its president in 1980 to focus on maintaining Penang’s industrial progress.24  By placing ideals above politics, and with a different life trajectory and personality from Pow Nee, he made all the difference in shaping Penang’s transformation.

Although the reversal of Penang’s misfortunes quickly became the ‘success story’ of Chong Eu’s administration, the state’s official motto, ‘Penang Leads’, became synonymous with his economic achievements and earned him the reputation as the Father of Modern Penang, persisting beyond his death in 2010. But Pow Nee’s pioneering groundwork was crucial, and Chong Eu did not industrialize Penang overnight nor single-handedly. Moreover, he was helped by an environment of increasing trade liberalization and globalization. Both men played significant roles during their respective tenures, gradually working out and enabling Penang’s later success and transformation in an era of social, economic, and political uncertainties. Without this fortuitous and fortunate combination, the trajectory of Penang’s economic transformation may well have been vastly different.

Further reading:
Chet Singh. 2019. ‘Penang Development Corporation and Penang's Catalytic Transformation’, in Chet Sing, et. al. (eds), From Free Port to Modern Economy: Economic Development and Social Change in Penang, 1969-1990, pp. 57–92. George Town: Penang Institute and Singapore: ISEAS Yusof Ishak.
Fell, H. 1960. 1957. Population Census of the Federation of Malaya, Report No. 14. Kuala Lumpur: Department of Statistics–Federation of Malaya.
George Town City Council. 1970. George Town City Council Annual Report 1970. Penang: George Town Printers.
Hutchinson, F. E. 2006. ‘Can Subnational States be ‘Developmental? The Cases of Penang and Karnataka’. PhD Dissertation. Canberra: Australian National University.
______ 2008. ‘ "Developmental" States and Economic Growth at the Sub-National Level: The Case of Penang’. Southeast Asian Affairs, pp. 223–244.
Jomo, K. S. 1997. Southeast Asia’s Misunderstood Miracle: Industrial Policy and Economic Development in Thailand, Malaysia and Indonesia. New York: Routledge, pp. 95–96.
Khoo, B. T. and Toh, K. W. 2019. ‘Lim Chong Eu and Penang: Glimpses of a Personal and Political Relationship’ in Chet Sing, et. al. (eds), From Free Port to Modern Economy: Economic Development and Social Change in Penang, 1969–1990, pp. 1–36. George Town: Penang Institute and Singapore: ISEAS Yusof Ishak.
Koay, S. L. and Wong, Y.T. 2019. ‘From Munro to Nathan: The Rise of a Modern Economy in Penang’ in Chet Singh, et. al. (eds), From Free Port to Modern Economy: Economic Development and Social Change in Penang, 1969-1990, pp. 36–56. George Town: Penang Institute and Singapore: ISEAS Yusof Ishak.
Lim, C-Y. 1969.A Survey of Malaysian Industrial Estates. Kuala Lumpur: First National City Bank.
Milne, R. S., and Mauzy, D. K. 1978. Politics and Government in Malaysia. Vancouver: University of British Columbia Press.
Norris, M. W. 1980. Local Government in Peninsular Malaysia. Britain: Gower Pub Co.
Penang Development Corporation (PDC). 1970. Annual Report of Penang Development Corporation. Penang: PDC.
______ 1974. Annual Report of Penang Development Corporation. Penang: PDC.
______ 1975. Statistical Handbook of 1975. Penang: PDC.
______ 1980. Annual Report of Penang Development Corporation. Penang: PDC.
Penang Institute. 2011. ‘Lim Chong Eu Revisited’. Penang Monthly, January 2011, pp. 30–33.
Penang State Government (PSG). 1964. Penang Master Plan. Kuala Lumpur: Jabatan Perancang Bandar dan Kampong.
______ 1969a. Penang Today: A Report on Government Achievements and Progress.
______ 1969b. Report of the Committee of Unemployment to the Penang State Executive Council on the Problem of Unemployment in Penang.
______ 1969c. Penang Today: ‘Economic Prospects of the 70s: A Bright Future’, p. 9.
______ 1970. Penang Master Plan. Volumes 1 & 2. Penang: Nathan Associates.
Tan, L. E. 1997. The Politics of Chinese Education in Malaya, 1945-1961. New York: Oxford University Press.
Tang, J. S. C. 1993. ‘Pembangunan Pulau Pinang semasa pentadbiran Ketua Menteri Tan Sri Wong Pow Nee, 1957-1969’ (The Development of Penang under the Administration of Chief Minister, Tan Sri Wong Pow Nee, 1957-1969). Academic Exercise for Bachelor’s Degree. Penang: Universiti Sains Malaysia.
Tew, P. K. 2001. ‘Kepimpinan Tun Dr Lim Chong Eu di Pulau Pinang sehingga 1974’ (The Leadership of Tun Dr Lim Chong Eu in Penang until 1974). M.A. dissertation, University of Malaya.
The Nanyang Siang Pau. 1979. ‘Penang’s aviation industry ushers in new era with the completion of RM78 million, Bayan Lepas International Airport’, 4 June issue, p. 5.
The Star. 1973. ‘The Pioneers’, 3 April issue, p. 4.
The Straits Echo. 1970. ‘Three free trade zones to be set-up in Penang’, 25 August issue, p. 6.
______ 1971. ‘Governor opens - Penang Pesta’, 19 December issue, p. 4.
______ 1972. ‘Bayan Lepas will be new urban centre’, 24 August issue, p. 3.
The Straits Times. 1961. ‘Move to Review Customs Duties is Defeated’, 8 August issue, p. 4.
______ 1963. ‘Industrial Penang? Prospects Dim Says —Mayor’, 18 December issue, p. 5.
______ 1964. ‘More jobs in Penang soon, says Dato Wong’, 13 July issue, p. 5.
______ 1965 ‘Penang to Lose Free Port Status: Dato Wong’, 9 January issue, p. 8.
______ 1966. ‘Another 12 factories to be built on pilot project at Butterworth’, 18 September issue, 10.
______ 1967. ‘Malaysia now on the World Industrial Map’, 9 September issue, p. 13.
______ 1969. ‘$100 mil projects planned for Penang’, 27 January issue, p. 4.
Vasil, R. K. 1972. The Malaysian General Elections of 1969. Oxford: Oxford University Press.
World Bank. 1963. Report on the Economic Aspects of Malaysia by the Mission of the International Bank for Reconstruction and Development under the Chairmanship of Jacques Rueff. Kuala Lumpur: Government Printers.
______ 2021, The Malaysia Economic Monitor Report. Accessed 7 May 2021.

This article is an updated edited summary of my Master’s dissertation “Reassessment of Penang’s Industrialization and Economic Transformation: From Chief Ministers Wong Pow Nee to Lim Chong Eu, 1960s–1980s” submitted in 2021.
2 Penang’s free port advantages (where customs duties were only imposed on goods passing from Penang into the rest of Malaysia) hindered the development of manufacturing industries to the extent that industrialization became dependent on the existence of a sizeable domestic market in which goods could be sold without tariff barriers. Hence, this transition necessarily entailed sacrificing the free port.
3 Chong Eu declined his appointment, citing the recent death of his father, Dr Lim Chwee Leong—an excuse which Pow Nee thought of as “lame”, given Chong Eu’s ambitious personality and charisma (Peter Wong Tet Phin and Koay Su Lyn, Unsung Patriot: Memoirs of Wong Pow Nee (Penang: Bumblogger Connextion Marketers, 2015) pp. 84–85; “P.W. teacher named Chief Minister”, Sunday Gazette (Sunday Edition of the Straits Echo), 11 August 1957; “Mourning- so he rejected post”, The Straits Times, 13 August 1957).
4 “Economic Prospects of the 70s: A Bright Future”, Penang Today, 1969, pp. 3–4. Since international electronic manufacturing was yet the norm, heavy industries (power stations, steel and metalwork, oil products and ancillary chemicals as well as processing, grading, canning, and packaging) and light or secondary industries (food products, toiletries, cutlery, chinaware, glass, machine parts, equipment, soft drinks, and household goods) proliferated. There was a relatively smaller focus on service and commercial manufacturing industries (mostly small, family-operated services, e.g., tailors, dressmakers, shoemakers, watchmakers, jewellers, bakers, and confectioners) (Penang Master Plan, 1964, p. 162).
5 The 2,252-acre estate was acquired at the cost of MD$14 million with federal blessing (“Transcript of an interview with Y.B Tan Datuk Wong Pow Nee”, interview by Sharifah Zauiyah Syed Kabeer, National Archives of Malaysia, 1979, 68; Lim, 1969, p. 9).
6 Pesta Pulau Pinang (Festival of Penang) booklet, 3–17 December 1966, p. 4.
7 When asked if the state had any other plans for tackling the serious increased unemployment in the State Assembly in March 1968, the chief minister simply avoided the question by citing the requirement of a notice (Report of the Proceedings of the Second Legislative Assembly Penang, 3rd Sitting of the 4th Session, 27 March 1968, pp. 229–35).
8 Interview with Dato’ Seri Chet Singh on 25 November 2021.
9 Report of the Proceedings of the Second Legislative Assembly, Penang, Second Sitting of the 5th Session, 9 October 1968, pp. 168–70.
10 Report of the Proceedings of the Second Legislative Assembly, Penang, Second Sitting of the 5th Session, 9 October 1968, p. 142.
11 When Pow Nee’s candidature was made known to the Tunku in 1955, the Tunku simply remarked, “Siapa dia ini - Wong Pow Nee?” (Who is this - Wong Pow Nee?). See “Transcript of an Interview”, 56.
12 Interview with Dato’ Seri Chet Singh, 25 November 2021.
13 Tun Razak’s participation in the left-wing Malayan Democratic Union in 1940s Singapore allowed him to relate to non-aristocrats (see Jae-Hyon Lee, “UMNO Factionalism and the Politics of Malaysian National Identity”, PhD diss. (Murdoch University, 2005), pp. 93–94). Chong Eu, an Anglophile Baba elite, was exposed to war-torn China as a medical doctor with the Red Cross during World War II, which made him sympathetic towards the Chinese cause in Malaya (Khoo and Toh, 2019, pp. 27–29).
14 The Nathan Report was drawn up by US economic consultants under a federal initiative (Robert Nathan & Associates, accessed 1 April 2021.
15 Inspired by Singapore's Economic Development Board, the federal government encouraged state economic development corporations (SEDCs) to oversee economic and social developments in the 1970s. During their early years, they were supervised by their respective state government with more leeway than most state institutions (Interview with Dato’ Seri Chet Singh on 25 November 2021).
16 Interview with Dato’ Seri Chet Singh, 20 October 2020.
17 Its role was subsequently taken over by Penang Skills Development Centre (PSDC) in 1987.
18 “Message to all members and branches from Acting National Chairman of Gerakan, Y.A.B. Dr Lim Chong Eu, 16 July 1971”, reprinted as “Party Crisis” in Lim Choon Sooi, ed., Towards the Future: Selected Speeches and Statements of Lim Chong Eu, 1970–1989 (Penang: Oon Chin Seang, 1990, pp, 15–16).
19 Interview with Tan Sri Dr Koh Tsu Koon on 16 March 2021.
20 “Penang: Looking Back, Looking Ahead, 20 years of Progress”, PDC’s 20th Anniversary Booklet, 1990, 24–26.
21 Lim Chong Eu. “Address of YAB Ketua Menteri on the occasion of the Pile Driving Ceremony to launch the Penang Urban Centre Project.” (1 January 1974).
22 “Speech by the National President, Dr Lim Chong Eu at the Extraordinary General Assembly at Ipoh on 27 September 1975”, reprinted as “National Politics and Economies” in Lim ed., Towards the Future, pp. 42–43.
23 Report of the Third Legislative Assembly Penang, Second Session, First Meeting, 6 June 1972, p. 14; PDC, 1980, p. 19.
24 “Presidential Address by Dr Lim Chong Eu at the National Delegates Conference held at Dewan Bandaran, Port Dickson, Negeri Sembilan on 16 and 17 August 1980” reprinted as “National Economy” in Lim ed., Towards the Future, pp. 95–97. This was affirmed by Tan Sri Dr Koh Tsu Koon. 


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University of Malaya,
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