Taxation in British Penang: Transnational Migrants and Revenues in a Colonial Entrepôt in the Straits of Melaka, 1780–1840

In 1786, Captain Francis Light established an English East India Company (EIC) settlement in Penang, a largely uninhabited island that belonged to the Sultan of Aceh and located in the northern passage of the Straits of Melaka. Within a few years of its establishment, Penang became a bustling entrepôt and attracted migrants from neighboring Malay states, India, China, Arabian Peninsula, and Europe. Existing scholarship has largely explained Penang’s phenomenal growth as a consequence of its status as a free-trade port. In this paper, I argue that Penang’s taxation policy, in addition to its free-trade status, played an important role in attracting migrants and fostering its growth as a prominent trading center. An analysis of Penang’s taxation policies is particularly important due to the complex relationship between the issues of migration, free-trade status, and taxation. While a free-trade status might attract merchants, traders, and laborers to an entrepôt, the imposition of heavy taxes to make the place sustainable might lead to an exodus. In the case of Penang, the port relied on a constant flow of merchants for the supply of goods and laborers to clear land and provide a host of services. In my paper, I utilize the Straits Settlements Factory Records (SSFR) to examine the discussions and debates among EIC authorities over the lists of taxable items, rates of taxation for various categories of migrants, and the possible effects of such measures on Penang’s status as an entrepôt. At a broader level, an examination of Penang’s taxation policy will expand our understanding of the effects of imperial policies to encourage migration and the response of traders, merchants, and laborers to such policies.