As early as the first decade of the fifteenth century, the island of Penang had been charted as Ping Lang Yu in the navigational drawings used by Admiral Cheng Ho in his expedition to the South Seas.
Isolated Malay hamlets were believed to have existed on the island in the 1760s although the one at Datuk Keramat may have been in existence at the turn of the eighteenth century. The oldest mosque was built in 1734 at Batu Uban. While some villages were pioneered by Malays who had fled from Kedah on the mainland, others grew as a result of early trade activities on the island.
It was an Englishman, James Lancaster, who forecast the promise of Penang to the British. Lancaster visited Penang in 1591 as second-in-command of three small ships. He returned to England with a Portuguese booty. The voyage "marked an epoch in English commercial history" (Arnold Wright, Twentieth Century Impressions of British Malaya, Its History, People, Commerce, and Resources, Singapore 1989). It led directly to the formation of the East India Company in 1600.
Eventually, the China trade became monopolised by the East India Company. This trade had developed out of the European desire for luxury articles from China, such as tea, silk and porcelain. The East India Company desired protection and further expansion of this trade which was both valuable in itself as well as the means to defray administrative expenditure of British rule of India.
In order to protect this trade, there was a need to establish a British port of call between China and India, somewhere in the Malay Archipelago. There their ships could harbour, refit and refill during the change of monsoons.
This base was also essential for the collection of Straits products. The British also hoped that with this base, Chinese traders could be attracted from Canton where there were many restrictions. Thus the stage was set for the founding of Penang by Francis Light.
Francis Light, an English “country” trader, arrived in India in the mid-1760s. Eventually, he chose Junk Ceylon (Phuket), an island off southern Siam (Thailand), as his base of operations for trade between India, southern Siam and the northern Malay Peninsula.
Light used his influence to persuade the Sultan of Kedah to cede Penang to the British. The Sultan agreed to do so in return for monetary compensation and a promise of assistance against his enemies.