The 19th Century
The 19th century saw the Penang economy enjoying a trade boom. Initially famed for clove and nutmeg, it gradually turned to sugar and coconut as cash crops. Pepper was imported from Aceh in Sumatra for re-export.
With the commencement of British administration in the Malay states, the island thrived. It soon attracted immigrants from various parts of the world, especially those from southern China and southern India.
The Penang Port was linked by ship to Madras, Rangoon, Medan and Singapore. It became a very important entreport for region.
The 20th Century
The 20th century saw the Penang economy becoming a centre of export for rubber and tin. The European planters and Chinese towkays (businessmen) made their money in the plantations and mines. They but built their mansions, which were locally called 'bunglows', in Georgetown and sent their children to school here.
The state is presently the 3rd largest in terms of wealth amongst the states of Malaysia, after Selangor and Johor. Manufacturing is the most important industry, contributing up to 50% of the state's gross domestic product.
Most industries are located in the Free Trade Zone area of Bayan Lepas at the southern end of the island. They are mainly involved in the production of semiconductors and high tech electronics.
The Bayan Lepas Free Industrial Zone was accorded the Multimedia Super Corridor (MSC) status in 2005. The MSC which was a brainchild of the fourth Prime Minister of Malaysia, Mahathir Mohammad. The aim of the MSC was to attract investments towards making Malaysia a futuristic country.
The Decline of Entreport
The entreport trade has seen a gradual decline over the years with the development of ports in Selangor and Johor. Nevertheless, there is a busy container port at Butterworth.
The Penang Development Corporation is tasked to develop, plan, implement and promote development projects in the state. It is also the investment arm of the state government. The success of the Penang economy depends a lot on the performance of the corporation.
The Importance of Tourism
Tourism, finance, shipping and other services also play an important role in the economy.
Major export crops like rubber and oil palm does not play a significant role in the Penang Economy. This is due to its emphasis on industries and also its relatively small land size, agriculture contributes only 1% towards the wealth of the state. It accounts for 5% of the national paddy production.
The Standard Chartered Bank (then the Chartered Bank of India, Australia and China) opened its branch here in 1875. Followed by HSBC (then known as The Hongkong and Shanghai Banking Corporation) in 1885. And the UK-based Royal Bank of Scotland (then ABN AMRO) in 1888.
This banks catered to the financial needs of the early European traders. Many banks still maintain their local headquarters on Beach Street, the old commercial centre of George Town.
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