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On 12 August 1786, Light renamed the island the Prince of Wales Island in honour of the heir to the British throne, and named the new settlement George Town in honour of King George III.
Sultan Abdullah Mukarram Shah of Kedah leased the island to him in exchange for military protection from Siamese and Burmese armies who were threatening Kedah.
George Town, which was founded by the British in 1786, is a UNESCO World Heritage Site and a thriving tourist destination.
A resident of Penang is colloquially known as a Penangite (in English), Penang Lang (in Penang Hokkien) or Penangkaran (in Tamil).
Archaeological evidence shows that Penang was inhabited by the Semang-Pangan of the Juru and Yen lineage. They were hunter-gatherers of the Negrito stock having short stature and dark complexion, and were dispersed by the Malays as far back as 900 years ago.
The last recorded aboriginal settlement in Penang was in the 1920s in Kubang Semang.
In 1800, Lieutenant-Governor Sir George Leith secured a strip of land across the channel as a buffer against attacks and named it Province Wellesley (today Seberang Perai).
The annual payment to Sultan of Kedah was increased to 10,000 Spanish dollars per annum after the acquisition.
One of the first Englishmen to reach Penang was the navigator and privateer Sir James Lancaster who on 10 April 1591, commanding the Edward Bonadventure, set sail from Plymouth for the East Indies, reaching Penang in June 1592, remaining on the island until September of the same year and pillaging every vessel he encountered, only to return to England in May 1594.