PENANG will not agree to the proposed nationwide water tariff hike scheduled for later this year in what is believed to be steps to address inflationary concerns due to the US import tariffs.
Chief Minister Chow Kon Yeow, who also chairs the Penang Water Services Holdings, said he plans to request a delay to the proposed water tariff hike currently being reviewed by the cabinet.
“If it is approved, I will ask the federal government to defer the new tariff until the middle of next year,” he said at the launch of the Penang Water Supply Corporation’s (PBAPP) RM5 billion sukuk financing programme today.
Under federal water regulations, the National Water Services Commission (SPAN) requires a periodic review of tariffs by water operators.
Any increase however needs cabinet approval and cooperation from the states, as water governance comes under the purview of the latter.
Chow also expressed concerns over the US decision to impose a 25% tariff on Malaysian exports, one percent more than the initial quantum.
He warned that the move could significantly impact the state’s expor-driven economy.
“Between January and May this year, Penang contributed 55% of Malaysia’s total exports to the US, amounting to RM52 billion. Much of this export volume came from American multinational corporations based in Penang, which ship finished goods or components back to their parent companies."
Electrical machinery and equipment, primarily driven by the semiconductor industry, made up 77% of Penang’s exports to the US.
While semiconductors are currently exempted from the tariffs, Chow said that the state remains cautious, as the broader 25% tariff poses a threat to trade stability.
“The 25% tariff is expected to impact Penang’s highly export-oriented economy, which is deeply embedded in global value chains,” Chow said.
Meanwhile, PBAPP’s RM5 billion sukuk programme – the first of its kind by a state-linked water utility – aims to fund major infrastructure projects without overreliance on tariff hikes or bank loans.
The sukuk was issued under an Islamic medium-term notes programme backed by a newly established sustainable finance framework, which has received a “gold” rating from RAM Sustainability.
The sukuk itself was awarded a top-tier AAA/Stable rating by RAM Ratings. - July 9, 2025.
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