# Doing Business in Penang: Two Councils, Two Sets of Rules

> Penang is licensed by two separate city councils whose by-laws still carry their predecessor councils' initials, its signboard rule is the opposite of Kuala Lumpur's, and PDC prices industrial land on the island at double the mainland rate.

- Category: business
- Language: en
- Status: published
- Updated: 2026-08-14
- Canonical: https://negaraku.md/en/business/doing-business-penang

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The first question about doing business in Penang is not what to register. It is which
side of the channel you are on.

Penang is one state with **two city councils**. Majlis Bandaraya Pulau Pinang licenses
the island and George Town; Majlis Bandaraya Seberang Perai licenses the mainland. They
issue different licences under different by-laws, on different fee schedules, and on at
least one point — the language rule on your signboard — they do not agree with each other
or with Kuala Lumpur.

## Who licenses you, and under what

Both councils license under the **Local Government Act 1976 (Act 171)**, the same
enabling frame as everywhere in Peninsular Malaysia: s.102 supplies the by-law powers,
s.107 governs fees, revocation and the three-year validity ceiling.

The difference from Kuala Lumpur is procedural but consequential. Penang has a **State
Authority**, so by-laws are confirmed under s.103 by the State and published in the
**Penang Government Gazette** as *Pg. P.U.* instruments — not in the federal gazette as
P.U.(A). The Seberang Perai advertisement by-law, for example, is **Pg. P.U. 1**, gazetted
**18 January 2001**, made by the Yang Dipertua on 23 October 2000 and confirmed by the
State Executive Council secretary on 7 December 2000.

There is a citation trap here worth knowing. **The by-laws still carry the predecessor
councils' initials.** MBPP became a city council in 2015 and MBSP in 2019, but the
operative instruments remain:

| Council | Business premises | Advertisements |
| --- | --- | --- |
| **MBPP** (island) | Undang-Undang Kecil **Tred, Perniagaan dan Perindustrian (MPPP) 1991**, as amended | Undang-Undang Kecil **Iklan (MPPP) 2000** |
| **MBSP** (mainland) | Undang-Undang Kecil **Perniagaan Yang Merbahaya, Tidak Sihat atau Yang Mengganggu dan Setal-Setal 1974** and Undang-Undang Kecil **Bayaran Lesen MPSP 1980** | Undang-Undang Kecil **(Iklan) MPSP 2001** |

Citing "MBPP By-Laws" or "MBSP By-Laws" is wrong even though the current councils apply
them. Penang also legislates at state level in areas Kuala Lumpur handles federally —
MBPP's own legislation register lists the **Penang State Heritage Enactment 2011**, the
**Entertainment Enactment 1998** and the Penang Freedom of Information Enactment 2010
alongside the federal Acts.

One more contrast: MBPP lists the **Town and Country Planning Act 1976 (Act 172)** among
its governing statutes. Kuala Lumpur runs on Act 267 instead. Planning permission in
Penang follows the ordinary state route.

## The signboard rule is the reverse of Kuala Lumpur's

This is the sharpest single difference, and it is published in plain terms.

**By-law 3(2) of the Seberang Perai advertisement by-law** provides that where Bahasa
Malaysia is used together with another language, the Bahasa Malaysia words must be
**larger in size** and shown more clearly in priority and visual position than the words
in the other language.

The Kuala Lumpur by-law says the opposite thing: the other language must not *exceed* the
Bahasa Malaysia size, which permits equal size. The same artwork can pass in KL and fail
in Butterworth.

Three exemptions in the same by-law are worth knowing before you redesign anything:

- **3(4)** — a firm, company or society name registered under the Registration of
  Businesses Act 1956, the Companies Act 1965 or the Societies Act 1966 need not comply
  where it includes non-Malay words
- **3(5)** — goods registered under the Trade Marks Act 1976 need not be translated where
  the Council finds it impractical or unnecessary
- **3(6)** — businesses consisting solely of a regulated profession are outside the rule

The mechanics of the by-law reward reading:

| Provision | Effect |
| --- | --- |
| By-law 5 | No advertisement may be displayed except under a licence |
| **By-law 6** | Where the Council approves retention of a sign already displayed **without** a licence, the fee is **three times the annual licence fee** |
| By-law 7(3) | Deposit of **not more than RM3,000** — against DBKL's RM50,000 ceiling |
| By-law 8(4) | Licence valid for **not exceeding 36 months** — the full s.107(4) ceiling |
| By-law 8(5), 9(3) | Council may refuse to issue or renew **without giving any reason** |
| By-law 11 | Cancellation on one month's written notice; the sign comes down within 14 days; **no compensation** |
| By-law 17 | Fine up to **RM2,000**, imprisonment up to one year, or both |
| By-law 18 | No licence needed for a for-sale or for-rent sign under 2 m², a building contractor board up to 4 m², a small contractor board up to 2 m², or a 0.3 m² direction sign |

We have not published a ringgit figure from the 2001 fee schedule. The gazette is a scan
and the columns interleave on extraction, inverting the lit and unlit rates — the same
defect flagged for other councils in the [signboard licence](/en/business/signboard-licence-malaysia)
guide. Get the rate from the council, not from a table.

MBPP is worse served: its licensing and advertisement by-laws are published as **image
scans with no text layer**, so no MBPP rate can be verified from a primary source at all.
The council's published service standard is that trade, business, industrial, food
establishment, advertisement, garage and public entertainment licence applications are
decided **within four weeks**.

## Industrial land: the island costs exactly double

Penang's industrial estate is largely developed and administered by the **Penang
Development Corporation (PDC)**, the state development corporation, which acts as
landlord as well as developer. PDC was formed in 1969 and constituted under the **Penang
Development Corporation Enactment 1971** — a state enactment, not a federal Act — and
administers **11 industrial parks** across the state as of 2024, including the Bayan
Lepas and Perai areas. That gives Penang something most states do not have — a published,
gazetted price on the island-mainland gap.

Where PDC industrial land changes hands, consent is required first, and the approval fee
is gazetted under the **Penang Land Rules effective 21 June 2018**:

| | Island | Mainland |
| --- | --- | --- |
| Sub-sale, **operating owner** (built and operated on the land for at least 12 months) | **RM10.00 psf** | **RM5.00 psf** |
| Sub-sale, **non-operating owner** (sells without operating) | **RM20.00 psf** | **RM10.00 psf** |
| Sub-let, operating owner | 5% of total rental for the whole tenancy period | 5% |
| Sub-let, non-operating owner | 10% of total rental for the whole tenancy period | 10% |

Two things fall out of that table. The island is priced at **exactly twice** the mainland
for the same transaction. And the state charges **double again** to anyone who bought
industrial land and never built on it — an explicit anti-speculation fee, not a market
observation.

Layered on top, **Bayan Lepas and Perai are free industrial zones** under the **Free
Zones Act 1990 (Act 438)**. A free zone is declared by the **Minister of Finance** and is
treated as a place outside Malaysia for the purposes of the Customs Act 1967, the Excise
Act 1976, the Sales Tax Act 2018 and the Service Tax Act 2018 — which is the actual legal
mechanism behind the duty position export manufacturers come to Penang for. It is federal
law, not a state incentive.

## The economic case

From DOSM's *GDP by State, 2025*, released 1 July 2026:

- **RM130.3 billion** of GDP, growing **7.3 per cent** — the **second-fastest growing
  state** in Malaysia, after Johor, and well above the national 5.2 per cent
- **Manufacturing is 47.3 per cent** of the state economy against services at
  **46.7 per cent** — Penang is the large state where manufacturing outweighs services
- Manufacturing grew **10.0 per cent**, led by electrical, electronic and optical
  products at **12.7 per cent**
- **E&E exports accelerated to 28.2 per cent** growth, from 5.0 per cent in 2024
- **GDP per capita RM80,584**, fourth in Malaysia and well above the national RM59,167

On investment, InvestPenang's own published release records **RM12.5 billion** of
approved manufacturing investment in the first half of 2025, up 150 per cent, across 86
projects and an expected 11,116 jobs, with FDI at RM10.5 billion or 84 per cent of the
total and the E&E, machinery and equipment and chemicals sectors accounting for 92 per
cent of inflows. For the full year, Penang went on to record **RM22.4 billion** in
approved manufacturing investment in 2025 — up 29 per cent on 2024 and third nationally
at around 17 per cent of Malaysia's total — across 232 projects and an expected 24,633
jobs, with approved manufacturing FDI of RM15.2 billion (68 per cent) and domestic
investment of RM7.2 billion (32 per cent). The figure was announced by Chief Minister
Chow Kon Yeow in March 2026 and carried by Bernama, The Star and the New Straits Times.

Penang also sits inside the **Northern Corridor Economic Region**, so NCIA incentives and
facilitation are available in a way they are not in Kuala Lumpur.

## What is not different here

Company registration, directors, secretaries, annual returns, corporate tax, SST,
e-Invoice, EPF, SOCSO and EIS are federal and identical across Malaysia. Nothing about
Penang changes them. What changes is the council, the by-law, the land, and the zone.

## Common mistakes

- **Treating Penang as one licensing jurisdiction.** MBPP and MBSP are separate
  authorities with separate by-laws and separate portals.
- **Citing "MBPP By-Laws 1991" or "MBSP By-Laws 2001".** Both instruments carry the
  predecessor councils' initials, MPPP and MPSP.
- **Carrying a Kuala Lumpur signboard design across the channel.** Seberang Perai
  requires Bahasa Malaysia to be larger; the KL by-law only caps the other language.
- **Putting up the sign first.** Under by-law 6 a retrospective approval in Seberang Perai
  costs three times the annual fee.
- **Assuming heritage constraints stop at the island.** MBSP publishes a distinct signage
  specification for business premises of heritage value in Seberang Perai.
- **Ignoring the PDC consent fee when modelling an exit.** Selling island industrial land
  you never operated on attracts RM20.00 per square foot.
- **Assuming free industrial zone status is a Penang state incentive.** It is a federal
  declaration by the Minister of Finance under Act 438.

## What's next

Fix the address first, because it determines the council, the by-law and the land regime
in one step. Then ask the council in writing for the fee schedule and document checklist
that applies to your activity — in Penang more than most states, neither is reliably
published, and a quoted rate from a third-party guide is not a rate you can budget on.

## Sources

- Undang-Undang Kecil (Iklan) Majlis Perbandaran Seberang Perai 2001, Pg. P.U. 1 — https://www.mbsp.gov.my/Akta/uuk/iklan.pdf (Penang Government Gazette)
- Perundangan — Akta, Enakmen dan Undang-Undang Kecil — https://www.mbpp.gov.my/ms/korporat/sumber/perundangan (MBPP)
- Undang-Undang Kecil MBSP — https://www.mbsp.gov.my/index.php/ms/mengenai-mpsp/undang-undang-kecil-mpsp (MBSP)
- Garis Panduan Pemasangan Papan Iklan Premis Perniagaan di Seberang Perai — https://www.mbsp.gov.my/brgonline/garispanduan/pelesenan/papan-iklan.pdf (MBSP)
- Jabatan Pelesenan — https://www.mbpp.gov.my/ms/perkhidmatan/jabatan/jabatan-pelesenan (MBPP)
- Industrial Land Administration — https://www.pdc.gov.my/index.php/en/industrial-land-administration (Penang Development Corporation)
- Gross Domestic Product (GDP) by State, 2025 — https://www.dosm.gov.my/portal-main/release-content/gross-domestic-product-gdp-by-state-2025 (Department of Statistics Malaysia)
- Penang Sustains Resilient Investment Momentum with RM12.5 Billion in Approved Manufacturing Investments in 1H2025 — https://investpenang.gov.my/press-release-penang-sustains-resilient-investment-momentum-with-rm12-5-billion-in-approved-manufacturing-investments-in-1h2025-despite-global-uncertainties-from-tariffs-and-evolving-trade-policies/ (InvestPenang)
- Penang Records RM22.4 Bln Approved Manufacturing Investments In 2025 - Chow — https://www.bernama.com/en/region/news.php?id=2532715 (Bernama)
- Penang records RM22.4bil approved manufacturing investments in 2025 — https://www.thestar.com.my/business/business-news/2026/03/10/penang-records-rm224bil-approved-manufacturing-investments-in-2025 (The Star)
- Penang records RM22.4 billion approved manufacturing investments last year — https://www.nst.com.my/news/nation/2026/03/1394112/penang-records-rm224-billion-approved-manufacturing-investments-last (New Straits Times)
- Penang Development Corporation — https://en.wikipedia.org/wiki/Penang_Development_Corporation (Wikipedia)
- Laws of Malaysia Act 438 Free Zones Act 1990 — https://www.customs.gov.my/en/pg/Free%20Zones%20Act/FREE%20ZONES%20ACT%201990.pdf (Royal Malaysian Customs Department)

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