RM60bil for stimulus package

KUALA LUMPUR: Deputy Prime Minister Datuk Seri Najib Tun Razak tabled an RM60bil “mini budget” (see below) as part of the second economic stimulus package to help Malaysia weather the global economic crisis.

Najib, also the Finance Minister, pulled no punches as he unveiled the Supplementary Supply Bill 2009 in Parliament, noting that more than half of the major world economies -- in particular the United States, Europe and Japan -- are in recession and experiencing the worst economic contraction since the Great Depression of the 1930s.

The RM60bil package, to be implemented over 2009 and 2010, includes RM15bil as fiscal injection, RM25bil in Guarantee Funds, RM10bil for equity investments, RM7bil for private finance initiatives and off-budget projects, as well as RM3bil in tax incentives.

“This RM60bil accounts for almost 9% of (Malaysia’s) GDP (Gross Domestic Product),” he said, describing it as “unprecedented in the nation’s economic history.”

Najib said that Malaysia’s highly open economy is likely to be affected by four factors:

* First, exports will decline in line with deteriorating world demand (for instance, in January 2009, exports declined 27.8%);

* Second, commodity exports, in particular, crude oil and gas as well as palm oil, have experienced sharp decline in prices;

* Third, decline in FDI (foreign direct investment), in line with the global recession, is expected to be half of that in 2008, declining to RM26bil compared with RM51bi; and

* Fourth, the global meltdown in equity markets has led to a significant decline in Bursa Malaysia, which has also adversely impacted investor and consumer sentiment as well as the services sector, which normally is a high-growth sector.

“Given these factors and in the context of the sharp deterioration in the global economy, Malaysia now faces an extremely challenging economic environment. This necessitated a review of the GDP growth forecast for 2009.

“However, the Government is confident that the original 2009 Budget with an allocation of RM206bil, as well as the First Stimulus Package of RM7bil and the Second Stimulus Package, will contribute towards mitigating the impact of the global contraction on the domestic economy.

“Taking into account these measures, GDP growth is expected to be in the range of –1% to 1% for 2009. Without these efforts, the economy faces the prospect of a deep recession,” Najib said.

MINI BUDGET SPEECH BY DATUK SERI NAJIB TUN RAZAK

(Click tilte to read more..)

News by TheStar Online..