The State of Penang, one of the most developed and urbanised Malaysian states, is located at the nation's northwest coast along the Malacca Strait. To a greater degree than other Malaysian states, the history of modern Penang was shaped by British colonialism, beginning with the acquisition of Penang Island from the Sultanate of Kedah by the British East India Company in 1786. Developed into a free port, the city state was subsequently governed as part of the Straits Settlements, together with Singapore and Malacca; the state capital, George Town, briefly became the capital of this political entity between 1826 and 1832. By the end of the 19th century, George Town prospered and became one of the major entrepôts in Southeast Asia.
During World War II, Penang was conquered and occupied by the Japanese Empire from 1941 to 1945. At the end of the war, Penang was also the first state in the Malay Peninsula to be liberated by the British, under Operation Jurist. The Straits Settlements was dissolved in the following year and Penang was merged into the Federation of Malaya. In spite of a secession movement within Penang, the merger with Malaya went ahead and the federation attained independence from the British Empire in 1957. Malaya later evolved into the present-day Malaysia in 1963.
Following the revocation of George Town's free port status in the 1960s, the state suffered economic decline and massive unemployment. The state government at the time led a push to reorient the economy towards hi-tech manufacturing, successfully recovering Penang's economy and lending the state its moniker the Silicon Valley of the East. Growing recognition of George Town as a bustling tourist destination, particularly since the city's inscription as a UNESCO World Heritage Site in 2008, also boosted the state's services sector, and today, both the manufacturing and services sectors are the two strongest economic pillars of Penang. Moreover, the state enjoys one of the lowest unemployment rates and Gini coefficients within Malaysia, as well as the second highest gross domestic product (GDP) per capita within the country after Kuala Lumpur.
Ancient Penang Evidence of prehistoric human settlement in what is now Penang has been discovered in Guar Kepah within Seberang Perai (formerly Province Wellesley), the mainland half of Penang. Human remains, dating back to about 5,000 to 6,000 years ago, have been found at the site south of the Muda River, along with seashells, pottery and hunting tools. These indicate that Seberang Perai had been inhabited by nomadic Melanesians from as early as the Neolithic era.
Seberang Perai also became part of the Bujang Valley civilisation. The Cherok Tok Kun megalith in Bukit Mertajam, discovered in 1845, contains Pali inscriptions, indicating that an early Hindu-Buddhist political entity in what is now Kedah had established control over parts of Seberang Perai sometime between the 5th and 6th centuries. The entirety of what is now Penang would later form part of the Sultanate of Kedah up until the late 18th century.
Meanwhile, Penang Island was first documented by Chinese sailors of the Ming dynasty in the 15th century. At the time, Ming Emperor Yongle was in the midst of launching naval expeditions that would eventually reach all the way to eastern Africa. The island, known as Bīnláng Yù (), was mapped by Admiral Zheng He's fleet in the 'Nautical Charts of Zheng He'.
One of the first Englishmen to arrive on Penang Island was the privateer James Lancaster who commanded the Edward Bonaventure. He landed in June 1592 and remained on the island until September, pillaging every vessel he encountered. He was aided by Orang Asli he encountered in Seberang Prai.
Penang Island was also indicated as Pulo Pinaom in Portuguese historian Emanuel Godinho de Eredia's 1613 map of the Malay Peninsula.
In the early 18th century, ethnic Minangkabaus from Sumatra, led by Haji Muhammad Salleh (also known as Nakhoda Intan), landed on Penang Island, establishing a seaside settlement at Batu Uban in 1734. They were followed by the Arabs, who subsequently intermarried with the Minangkabau; this gave rise to the Arab-Minangkabau admixture now described as Malay, as they have assimilated into the local Malay community.
Founding of Penang
The history of modern Penang only began in earnest in the late 18th century. Up until then, the Sultanate of Kedah, which had control over Penang, had maintained turbulent diplomatic relations with Siam to the north. In the 1770s, the British East India Company instructed Francis Light to establish trade relations in the Malay Peninsula. Light subsequently landed in Kedah, which at that point was threatened by both Siam and Burma, as well as an internal Bugis rebellion.
Aware of this situation, Light formed friendly relations with the then Sultan of Kedah, Sultan Muhammad Jiwa Zainal Adilin II, and promised British military protection. As part of his promises, Light assisted in the quelling of the Bugis revolt by recapturing a Bugis-held fort for the Sultan. The Sultan reciprocated by offering Penang Island to Light. Light subsequently wrote to his superiors regarding the offer, arguing that Penang Island could serve as a "convenient magazine for trade" and its strategic location would allow the British to check Dutch and French territorial gains in Southeast Asia. He also made the case that, with the other ports in the region, such as Aceh and Phuket, riddled with piracy and despotic governments, the British East India Company could seize the opportunity to establish a tranquil harbour on Penang Island conducive for free trade, noting that if "Malay, Bugis and Chinese will come to reside here, it will become the Exchange of the East if not loaded with impositions and restrictions".
However, nothing transpired until 1786, when by that point the British were fighting the Thirteen American Colonies, which were backed by France and the Netherlands. Faced with the Dutch dominance of the East Indies (now Indonesia) and a growing French threat, Light, who by then had risen to the rank of captain, was ordered to acquire Penang Island from Kedah. The British East India Company sought control of Penang Island as a Royal Navy base, and a trading post between China and the Indian subcontinent.
Light negotiated with the new Sultan of Kedah, Sultan Abdullah Mukarram Shah, regarding the cession of Penang Island to the British East India Company in exchange for British military assistance and a lease of 6,000 Spanish dollars to cancel Kedah's debts to Siam. With the agreement between Light and the Kedah Sultan successfully concluded, Light and his entourage sailed on to Penang Island, where they arrived on 17 July 1786. Fort Cornwallis would later be built at the spot where Light first set foot.
The area where Light first landed was originally a mangrove swamp covered in thick jungle. Once enough land was cleared, creating what is now the Esplanade, a ceremony was held on 11 August, during which the Union Jack was raised for the first time. This signified the formal possession of Penang Island by the British East India Company in the name of King George III. The island was renamed the Prince of Wales Island after the heir to the British throne, while the new settlement of George Town was established in honour of King George III. Thus, George Town became the first British settlement in Southeast Asia and a springboard for future British territorial expansion in the region, while its establishment by the British East India Company marked the start of a period of British imperialism in the Malay Peninsula.
Unbeknownst to the Kedah Sultan, however, Light had acted without the authority or consent of his superiors in India. When Light reneged on his promise of British military protection against Siam, the Kedah Sultan in 1791 assembled an army in what is now Seberang Perai to retake the Prince of Wales Island. The Sultan's force was also assisted by a fleet of pirates. Fortunately for Light, his garrison on the island was reinforced by two companies from Calcutta. After failing to persuade the Sultan to disband his forces, the British East India Company launched amphibious assaults at night, destroying Kedah's military installations in Perai, and defeating both the pirates and the Sultan's army. Light died from malaria in 1794 and was buried within the Old Protestant Cemetery in George Town. To this day, Light is honoured as the founding father of Penang.
In 1800, the first Lieutenant-Governor of Prince of Wales Island, Sir George Leith, gained a strip of Seberang Perai from the new Sultan of Kedah. The treaty, negotiated by Leith's First Assistant George Caunter, superseded Light's earlier agreement and gave the British permanent sovereignty over both Prince of Wales Island and the newly ceded mainland territory, which in subsequent years was named Province Wellesley.
The newly acquired land, which included a five-kilometre stretch of coastline south of the Perai River, turned the river into the international border between Province Wellesley and Kedah. At the time, Province Wellesley was heavily forested and sparsely populated, with a total population of only 5,000. The treaty gave Prince of Wales Island the entire command of its harbour for the first time, as well as control of the vulnerable mainland coastline, home to pirates and brigands. It further gave the island a controlled source of food and increased the value of its opium and arack farms. It provided for the free flow of food and commodities from Kedah to Prince of Wales Island and Province Wellesley. For Kedah it provided a protective strip against enemy attack from the sea. In exchange for this acquisition, the annual payment to the Kedah Sultan was increased to 10,000 Spanish dollars per annum. To this day, the Malaysian federal government still pays Kedah, on behalf of Penang, RM10,000 annually as a symbolic gesture.
Following the original acquisition in 1800, Province Wellesley was gradually expanded up to its present-day boundaries in 1874, when the Pangkor Treaty, which included the delineation of Province Wellesley's southern borders, was signed between the British and the neighbouring Sultanate of Perak. Province Wellesley thus gained the town of Sungai Acheh from Perak.
Early growth
Francis Light had established George Town as a free port, thus allowing merchants to trade without having to pay any form of tax or duties. In effect, this measure was intended to entice merchants from the Dutch ports in the region. As a result, the number of incoming vessels increased exponentially from 85 in 1786 to 3,569 in 1802; George Town's population had also risen to 10,000 by 1792. Immigrants came from various parts of Asia; in 1801, the then Lieutenant-Governor of the Prince of Wales Island, Sir George Leith, remarked that "there is not, probably, any part of the world where, in so small a space, so many different people are assembled together or so great a variety of languages spoken". For example, in May 1787 Light appointed Koh Lay Huan as the colony's first Kapitan Cina,Historical Personalities of Penang By Historical Personalities of Penang Committee, Historical Personalities of Penang Committee Published by Historical Personalities of Penang Committee, 1986; p. 82 after Koh arrived shortly after Light with several boatloads of Chinese and Malays to develop the island.The Patriarch By Joo Kim Yeap Published by Times Books International, 1984; , ; p. 21Asian Transformation: A History of South-East, South, and East Asia By Gilbert Khoo, Dorothy Lo Published by Heinemann Educational Books (Asia), 1977 A committee of assessors was also established for George Town in 1800, making it the first local government to be established within British Malaya.