The Penang state government is keen to attract Singapore investments but Mr Lee offered his view that the state first needed better roads, bridges, airports and other communications links.

Mr Lee also urged the state government to work with the federal government to secure the revenue needed to build such infrastructure, his press secretary Yeong Yoon Ying said.

The Minister Mentor met Mr Lim for close to an hour, followed by another 15-minute discussion with members of Mr Lim's executive committee.

Mr Lim told reporters that he proposed certain broad areas of economic cooperation with Singapore, including tourism, health tourism, education, manufacturing and air services.

The number of flights between Singapore and Penang has been climbing and will reach 84 a week by next year.

Mr Lim also proposed that as Singapore pushed on with upgrading its economy, it consider relocating those industries it had outgrown to Penang.