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 secessionist movement within Penang, the merger with Malaya went ahead and the federation attained independence from the British Empire in 1957.[9][10][11][12] 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.[11][13][14] 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.[11] Growing recognition of George Town as a bustling tourist destination, particularly since the city's inscription as a UNESCOWorld 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.[15][16][17] 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.[18][19][20]