After Langkasuka Project Failure, Sanusi Takes Another Punt at Penang

Editor’s Note: This article is the 3rd most-viewed commentary on Fulcrum in 2025. It was first published on 14 January 2025.

Kedah’s Chief Minister Sanusi Nor has claimed several times in recent years that Kedah should re-incorporate Penang Island, which became a base for Britain’s East India Company in 1786. These claims are aimed at contesting Kedah’s relationship with Penang and the wider Malaysian federation, especially in relation to state revenues.

They have the potential to upset much more than revenue flows, however, which is why Sanusi repeated them even as torrential monsoon rains battered Alor Setar in December last year, forcing him to move from his flooded official residence.

A few days earlier, Bin Zayed International, a Dubai investment firm, had confirmed its withdrawal from the RM40 billion (US$8.9 billion) Widad Langkasuka mixed development project, recently touted as a significant win for Sanusi and Kedah.

First announced in 2021, the project aims to build a 1,000-acre, eagle-shaped floating city next to Langkawi Island in collaboration with the Kedah-based Widad Business Group. Yet the project has faced challenges — its first phase should have been completed last year. Widad, Langkasuka’s remaining backer, is reportedly proceeding on its own, but it is not in a strong financial position, recording a net loss of RM113 million in 2022.

Sensing a potential project collapse, Sanusi’s opponents sought to pin the blame on his Perikatan Nasional (PN) administration, dominated by Parti Islam SeMalaysia (PAS). Sanusi had initially welcomed the project with some fanfare, touting its strong fit with his Kedah Development Plan 2035. The plan aims to increase Kedah’s annual growth and GDP, including attracting investments to high-tech and value-added sectors and projects, and creating high-skilled jobs to raise the state’s average household income.

Sanusi’s response highlighted Kedah’s lack of access to revenue while also re-narrating its place in Malaysian history — creating narratives that place his current financial problems within historical wrongs that must now be righted. His rhetoric echoes PAS’ long-running narratives about successive federal governments’ “unfairness” in sharing oil and gas revenues with Kelantan and Terengganu by framing their redistribution not as obligatory royalties but as wang ehsan (courtesy payments).

The Kedah narratives go much further. They are major historiographical interventions and could also potentially rewrite the history of Kedah’s relationship with Penang.

First, Sanusi argued that his only involvement in the Langkasuka project was approving the use of the land, for which Kedah had already banked the premium and other taxes, resulting in no loss to the state government’s coffers.

Having absolved himself, Sanusi alleged that companies planning to invest in Kedah face federal government pressure to withdraw. While Sanusi has not substantiated this allegation, he has previously discussed political constraints over his attempts to deliver development. He was referring to the expansion of Kulim, the state’s high-tech manufacturing hub, along with its air and sea freight options.

One obvious problem is that Sanusi’s Kulim plans could cannibalise freight and passenger volumes travelling through neighbouring Penang’s international airport and seaport. Penang is a fully-fledged national asset for trade, tourism, and manufacturing. The state is controlled by Pakatan Harapan (PH), Anwar’s own coalition and the linchpin in his federal government. It also delivers economic cluster benefits to Kulim.

Another is the federal requirement that Kedah preserve 109 million hectares of paddy land as a national food security measure. Sanusi has argued this measure “forces” Kedah to remain poor by foregoing revenue in order to safeguard the nation’s rice supply instead of developing land and taxing it at a higher rate. Sanusi is seeking federal compensation of RM200 million per year from the Federal Government for revenues foregone.

Pakatan Harapan representatives have told Sanusi that he should cease digging up historical documents, arguing that whatever injustices he finds in how the East India Company (EIC) acquired Penang, it is ultimately now a separate state as set out in the Constitution.

Second, he demanded again that Penang be returned to Kedah, repeating claims he made in July that the historical research team he has appointed would soon present its findings. He claims this team has read more than 20,000 documents from archives in the UK and elsewhere. According to Sanusi, his team’s findings will support his claim that Penang is still a part of Kedah, and therefore Penang’s lease payments to Kedah should rise from RM10 million per annum (renegotiated from RM10,000 in 2018) to RM100 million.

Sanusi also wants Penang to pay for water it draws from the Muda River, although Penang is refusing to pay on the basis that the water it draws lies within its boundary. Unsurprisingly, Sanusi’s response is that there is no boundary between Penang and Kedah, as Penang is part of Kedah.

PH representatives have told Sanusi that he should cease digging up historical documents, arguing that whatever injustices he finds in how the EIC acquired Penang, it is ultimately now a separate state as set out in the Constitution. These representatives, however, have not invested the same resources in studying the archival sources, mistakenly asserting that the issues are all “settled.” Sanusi, however, plainly aims to unsettle them again and will draw authority and legitimacy from the sources his team has consulted, regardless of whether his arguments have merit. Rebutting him will be difficult, as across the board, Malaysian institutions are responding passively. Public universities are either silent or doing Sanusi’s intellectual work for him, with some of their arguments dovetailing with those likely to come from his history team. Penang PH argues it will simply deal with the issue in court.

This legalistic approach, however, suggests that PH is relying on administrative techniques to shut Sanusi down. The federal government has previously encouraged Penangites to file police reports against him, accusing him of incitement. Indeed, these responses suggest that his opponents have not prepared any intellectual rebuttal, even though Sanusi has revealed his arguments well in advance. After the history team presents its report, any moves the government makes against Sanusi will likely be met by a strong PAS response alleging it is suppressing Penang’s “true” history, and that nobody else has done any fresh archival work from a Malay perspective.

Sanusi’s historical intervention has its impetus in contemporary politics. It is a bid for revenue. But with Sanusi in a position to claim legitimacy from sources that precede the Constitution, he could disrupt national history in a way that blindsides PH.