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Govt announces RM7 billion stimulus package

KUALA LUMPUR, 4 NOV 2008: The government today announced RM7 billion worth of measures to stimulate economic activity as a crisis response to the global credit crunch.

Deputy Prime Minister Datuk Seri Najib Razak, who is also Finance Minister I, said the funds were drawn from the government’s fuel subsidy savings and not from Budget 2009.

Winding up debate on Budget 2009 in the Dewan Rakyat today, Najib said the government was taking an expansionary approach instead of measures proposed by Pakatan Rakyat which he said would contract the economy.

Najib said the government would not revise Budget 2009 as demanded by the opposition in view of falling commodity prices. The expenditure allocation is RM207.9 billion while revenue is projected at RM176.2 billion.

Economic growth, however, has been revised to 3.5% for 2009, instead of 5.4% projected under Budget 2009. The national deficit for 2009 will be 4.8% on the other hand, the same as this year’s, instead of the 3.6% projected earlier.

Inflation next year is projected to be between 3% and 4%, provided the world price of crude oil continues its downward trend, Najib added.

On the RM7 billion package, RM1.5 billion will be used to set up an investment fund to attract private sector projects which are technology-driven and knowledge-based.

The package will also be divided for various projects including building more low and medium cost houses, reviving certain abandoned housing projects, upgrading police and army quarters, and the repairing and maintenance of public facilities and rural infrastructure. These projects are aimed at helping small contractors.

Bank Negara is also to lend out RM200 million in micro-credit schemes for small businesses.

The package will also be used to implement skills training programmes, with a special focus on employment in the five economic corridors in the north, south and east of peninsula, and Sabah and Sarawak.

RM500 million will also go to improve the Light Rail Transit (LRT), Komuter, bus services in major cities.

On new sources of revenue, Najib said the government would monetise assets by opening tenders for the development of idle federal land. Such land is available in Sungai Buloh under the Malaysian Rubber Board, and along Jalan Cochrane and Jalan Ampang Hilir in Kuala Lumpur.

“We expect to get several billion, it all depends on the development concept. More importantly, we will tender out the development. Government-linked companies (GLCs) are welcome to put forward their proposals,” Najib said at a press conference later.

Government procurement will also be done through open and limited tender between bumiputera companies, Najib added.

On liberalising the economy, he said the services sector would be opened to allow 70% foreign investment by 2015, in line with the Asean Free Trade Arrangement. The sectors will include logistics, telecommunications, tourism, private medical care and private higher education.

Foreigners no longer need Foreign Investment Committee (FIC) approval to buy commercial property worth RM500,000 or more, on the condition that the property is for personal use.

Import duty for cement and long iron and steel products used in the building and manufacturing sectors will be abolished, as will Approved Permits for these items.

Najib’s speech was frequently interrupted by Pakatan Rakyat members of parliament (MPs) who were unhappy that they were not allowed to ask questions. Najib had said that he would only take questions after delivering his entire speech.

Parti Keadilan Rakyat MP for Batu, Tian Chua, was thrown out of the Dewan Rakyat by Speaker Tan Sri Pandikar Amin Mulia after he argued that the RM7 billion measures should be presented separately from the winding up of the Budget 2009 debate.

Opposition leader Datuk Seri Anwar Ibrahim stood up to defend Tian and asked whether the Finance Minister would answer any of their questions. When Najib replied “No”, the entire Opposition bloc stood up and staged a walk out. Later, Najib described this as “irresponsible”.

Anwar, met outside the Dewan later, said the new deficit figure of 4.8% was “unrealistic”.

“If we keep the expenditure the same at the new growth rate of 3.5% for 2009, the deficit should be a double-digit,” he said.


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