GEORGE TOWN, 6 March 2026 (The Capital Post)— The Penang government expects to receive an additional RM10 million to RM20 million in federal grants following a decision to increase allocations to state governments nationwide.
Chief Minister Chow Kon Yeow said the projected increase would help strengthen the state’s financial position and support ongoing development initiatives, including infrastructure upgrades and community programmes.
The anticipated boost comes after the National Finance Council agreed to enhance federal grants to states, with the overall allocation expected to reach about RM10.5 billion this year. The increase is part of efforts by the federal government to improve the fiscal capacity of state administrations and accelerate socio-economic development.
Chow noted that the higher allocation would allow the Penang government to better manage its spending priorities while continuing to deliver public services and development projects for residents.
He added that federal grants play an important role in helping state governments finance initiatives such as road maintenance, welfare programmes and infrastructure improvements.
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The revised grant framework includes adjustments to several funding components, including capitation grants based on population size as well as allocations for state road maintenance and other shared responsibilities between federal and state governments.
The federal government has also agreed to channel the full amount of tourism tax revenue collected back to state governments in conjunction with Visit Malaysia Year 2026, providing an additional financial boost for states with strong tourism sectors.
Penang officials believe the enhanced federal support will contribute to the state’s ongoing development efforts and help sustain economic growth while improving public infrastructure and services.-The Capital Post
