Malaysia's government yesterday announced a RM7 billion stimulus package, as it scrambles to deal with the fallout from the global economic meltdown.
Deputy Prime Minister and Finance Minister Najib Razak told Parliament the 2009 growth forecast had been slashed to 3.5 per cent from 5.4 per cent, while the projected budget deficit was now 4.8 per cent of gross domestic product (GDP), up from 3.6 per cent - and that 'extraordinary times require extraordinary measures'.
To that end, he said that RM7 billion reaped from savings on sharply reduced oil subsidies would be spent on 'high-impact' projects such as low-cost housing, public transport, public facilities, and housing for the police force and military.
To boost domestic consumption, workers will have the option to reduce their contribution to the Employees Provident Fund (EPF) by three percentage points, from 11 per cent to 8 per cent, for two years beginning in January.
As part of moves to boost foreign investment, Datuk Seri Najib said foreigners who want to buy commercial real estate worth RM500,000 or more would no longer need the approval of the Foreign Investment Committee.
At the same time, regulation of all service sector businesses will be liberalised, to allow foreigners to hold up to 70 per cent equity in 2015, rather than being restricted to a minority stake as they now are.
Mr Najib - who is all but assured of becoming prime minister in March - was continuously interrupted in another rowdy session of Parliament, with the opposition staging a walkout midway through his speech.
He had already rejected opposition leader Anwar Ibrahim's call for the government to present a new budget, saying that would lead to economic instability.
And when he then refused to entertain opposition lawmakers who interrupted his speech, telling them they would have the opportunity to speak after he finished, they staged a walkout.
Datuk Seri Anwar later slammed him for his 'sheer display of arrogance' as Finance Minister, but Mr Najib was clearly unfazed by the walkout, telling Parliament: 'It is more peaceful without the opposition here.'
Malaysia's economy has largely been shielded from the global turmoil, thanks to capital controls and reforms following the 1998 Asian crisis.
But economists note that it remains heavily dependent on exports and commodities.
Kenanga Investment Bank economist Wan Suhaimi Saidi told The Straits Times that the success of the measures outlined yesterday would depend on their speedy and transparent implementation.
'The government can say what they want but it all depends on the execution. At best we will start to see the effects only in the second half of 2009.'
Mr Abdul Jalil Rashid, head of equities at Aberdeen Asset Management's Malaysia unit, told Reuters: 'I am quite surprised that it's quite straight rather than more detailed. The market would have been happier if there had been more details on what's being done.'
Meanwhile, Mr Alvin Liew, economist at Standard Chartered, said the RM7 billion seemed 'affordable for the government' but added that the increase in the 2009 fiscal deficit was 'a bit of a concern'
Source : Strait Times Singapore
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