2 theSun | WEDNESDAY MARCH 11 2009

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Mini Budget highlights

Najib paints grim economic picture

by Tim Leonard
newsdesk@thesundaily.com
KUALA LUMPUR: Deputy Prime Min-
ister Datuk Seri Najib Razak yesterday
painted a grim picture of the Malaysian
economy, projecting a Gross Domestic
Product (GDP) growth in the range of -1%
to 1% for this year, way below the earlier
estimate of 3.5%.
Najib, who is also finance minister, said
without the measures that are now being
taken, the economy faces the prospect of
a “deep recession” in view of the gloomy
situation in the global markets that can
only “get worse before it can get better”.
What Najib said yesterday departs
markedly from his earlier position that
the resilient Malaysian economy could
withstand the global economic impact,
and still show growth.
He said Malaysia now has to accept the
fact that, as a highly open economy, it is
likely to be impacted through four factors
– a decline in exports, a drop in commod-
ity exports, decline in foreign direct invest-
ment (FDI) and the global meltdown in
equity markets.
Already, the writing is on the wall:
» Exports will decline in line with dete-
riorating world demand. For instance, in
January 2009, exports declined 27.8%.
» Commodity exports, in particular,
crude oil and gas, as well as palm oil have
experienced a sharp decline in prices.
» Our FDI inflows are expected to be half
that in 2008, declining to RM26 billion
compared with RM51 billion.
» The global meltdown in equity markets
has led to a significant decline in Bursa
Malaysia. The poor performance of Bursa
Malaysia has also adversely impacted
investor and consumer sentiment as well
as the services sector, which is normally
a high-growth sector.
Najib said these negative developments
had already impacted the economy in the
fourth quarter of last year.
“Exports and industrial output have
deteriorated and investments declined.
Consumer sentiment has also been ad-
versely affected.
“As a result, GDP growth was sig-
nificantly lower at 0.1% compared with
an average of 6.3% in the first nine months
of the year. The decline was mainly due to
the contraction in export value of 13.4%.
The fall in exports has adversely affected
economic growth, particularly in the
manufacturing sector which contracted
8.8%,” he said.
Najib lamented that efforts to revive
the financial sector in developed coun-
tries have yet to succeed, and as such, “it
is highly likely that the global economy
would get worse before it gets better”.
Earlier, he traced the current global
economic to the sub-prime financial
turmoil in the United States in mid-2007.
After almost two years into the crisis, he
said, the country has yet to see signs of
stability in the financial sector or recovery
in the advanced economies.
“In fact, more than half of the major
world economies, in particular the US,
the Euro area and Japan are in recession
and are experiencing the worst economic
» From Front Page
2009 and December 31, 2010, expenses
incurred on plant and machinery be given
Accelerated Capital Allowance which can
be claimed within two years;
contraction since the great depression of
the 1930’s.
» To improve companies’ cashflow, current
year losses (maximum RM100,000) be
“Although developed countries have
allowed to be carried back to the im-
announced large economic stimulus
mediate preceeding year;
packages exceeding US$3 trillion, includ-
ing substantial amounts to bail out their
» The threshold for windfall profit levy for
oil palm increased to RM2,500 per tonne
financial institutions and large corpora-
for Peninsular Malaysia and RM3,000 for
tions, these measures have yet to restore
Sabah and Sarawak.
consumer and investor confidence.”
The US, the world’s largest economy
ECONOMY:
and trading nation, is expected to contract
by 1.6%, the United Kingdom 2.8% and
» RM100 million to build skybridges and cov-
ered walkways between buildings mainly
Japan 2.6%. South Korea, Taiwan and
in the Golden Triangle, Kuala Lumpur;
Singapore will also experience recession,
with growth contracting 2%, 4% and 4.9%
It is highly » RM1.6 billion fund to promote invest-
respectively in 2009. likely that ments;
“Although China and India are expected the global » Additional RM200 million for public low-
cost housing scheme for low-income
to record positive growth of 6.7% and 5.1% economy earners;
respectively, the growth is significantly would get
lower than in previous years,” Najib said,
» RM200 million to repair and maintain
To cushion the impact, Najib said the
worse roads and drains;
programmes and projects under the First before » RM150 million for renovation, mainte-
nance and repairs to welfare homes,
Economic Stimulus Package totalling RM7 it gets fire and rescue stations, firemen living
billion are being actively implemented. better.” quarters and public toilets in mosques,
“To date, RM6.5 billion has been chan-
suraus and tourist spots;
nelled to various ministries and agencies.
Najib said a total of RM1 billion was
» RM1.95 billion to build and upgrade
facilities in 752 schools, particularly in
spent on 6,267 projects undertaken by the
rural areas, Sabah and Sarawak of which
Implementation and Coordination Unit
RM300 million will be used to improve
(ICU), 2,118 projects by the Ministry of
facilities in government-aided religious
Rural and Regional Development, 1,594
schools, Chinese and Tamil schools and
projects by the Ministry of Education and
mission schools;
1,322 projects by the Health Ministry.
It is expected that by June this year,
» RM230 million to increase electricity
supply coverage and water supply in
RM5.2 billion worth of contracts would
rural areas particularly in Sabah and
be awarded and implemented to meet the
Sarawak.
target of the first stimulus package.
» RM350 million for rural road construction.
» RM200 million to upgrade infrastructure
in tourist spots;
» Khazanah Nasional’s investment fund will

Aid for 10,000 to do Masters be increased by RM10 billion and will be

by Karen Arukesamy
newsdesk@thesundaily.com
PETALING JAYA: The government is provid-
ing financial aid for 10,000 students to pursue
their Masters and 500 others to do their PhD
programme in local universities.
Deputy Prime Minister and Finance Minister
Datuk Seri Najib Abdul Razak said the govern-
ment will provide tuition fees and research
grants up to RM20,000 for every student pursu-
ing PhDs locally and RM10,000 per student for
those pursuing the Masters programme. The
selection process will be based on merit.
The programme, to be implemented by the
Higher Education Ministry, provides 500 places
for PhD studies and 10,000 for Masters in public
institutions of higher education as well as Uni-
versiti Tenaga Nasional (Uniten), Multimedia
University (MMU) and Universiti Teknologi
Petronas (UTP).
“To develop more entrepreneurs, Perbadanan
Usahawan Nasional Bhd will expand the scope
of the Graduate Prosper Programme, to include
those with skills and technical certificates, let-
ting an additional 400 graduates benefit from the
programme,” he said.
The programme was implemented in June
2005 to help bumiputra graduates in retail or
distributive business with training, financing
and business advisory services.
Other measures:
» 163,000 training and job placements in public
and private sectors and incentives to employers
to recruit local workers.
“Of the 163,000, a total of 100,000 training
opportunities and job placements will be under-
taken as a collaboration between government
and private sector,” Najib said.
“This will be implemented through training
programmes by various government agencies,
including government-linked companies and
the private sector,” he said, adding that RM700
million was allocated for this purpose.
The balance of 63,000 will be recruited to
fill vacancies as contract officers in govern-
ment agencies which includes posts at profes-
sional and support level.
» Double tax deduction on the remunera-
tion paid by employers, who employ those
retrenched and on Voluntary Separation
Scheme (VSS) from July 1, 2008.
The amount of remuneration eligible for
this deduction shall not exceed RM10,000 per
month and is limited to 12 months’ remunera-
tion per employee. The incentive is applicable
to those employed from March 10, 2009 to
Dec 31, 2010.
» Levy on foreign workers will be doubled for
all sectors except construction, plantation and
for domestic maids. The levy will have to be
paid by employers and not workers. However,
if the services of foreign workers are prema-
turely terminated, the levy will be refunded
on a pro-rated basis to the employers and the
employers’ bank guarantees will be returned.
Housing developers
give thumbs up
PETALING JAYA: The Real Estate and Housing
Developers Association of Malaysia (Rehda)
yesterday lauded the second stimulus package,
especially the additional RM200 million for Sya-
rikat Perumahan Negara to build more low-cost
houses.
Rehda president Datuk Ng Seing Liong, in a
press statement, said that while the package was
good to ease the private sector’s burden of cross-
subsidising low-cost houses, the package lacks
high-impact measures that will help stimulate the
property sector on a wider scale immediately.
“The tax relief to buyers on interest paid on
housing loans... and deferment of housing loan
repayment for one year to those retrenched
will help ease pressure on buyers’ disposable
income,” said Ng. “However, the association is
of the opinion that the second stimulus package
lacks high-impact measures.
Rehda is hoping for a comprehensive home
ownership package, which includes stamp duty
waivers and other measures to generate demand
for houses.
“We welcome the measures announced... we
are confident that these moves will help create
demand for investment properties, especially in
the higher-end market,” he added.
invested over a two-year period, giving pri-
ority to domestic investment that has high
multiplier effects and create more jobs;
» RM2 billion to assist implementation of
projects through Private Finance Initiative
and public-private partnerships. Private
firms to be invited to bid for the funds;
» Services sector to be further liberalised
to woo more investments, bring in
more professionals and technology and
strengthen competitiveness;
» Foreign Investment Committee to adopt
more liberal approach to bring positive
changes and nurture more investor-
friendly environment
» RTM to be allocated RM20 million to
implement several projects to develop
the local music industry;
» All government procurements will be
made through open tenders or restricted
tenders except for specific cases.
SABAH AND SARAWAK:
» RM500 million to maintain public infra-
structure projects, with emphasis on
Sabah and Sarawak;
» RM1.2 billion allocated for providing
infrastructure and increasing economic
activities in Sabah and Sarawak;
AGRICULTURE:
» RM300 million for micro-credit pro-
gramme under AgroBank to assist
farmers and agro-based businesses in
rural areas and RM50 million for cottage
industries.
» RM2 million Fishermen’s Welfare Fund to
be established and managed by the Ma-
laysian Fisheries Development Authority;
AUTO INDUSTRY:
» Additional RM200 million for the Automo-
tive Development Fund;
» RM5,000 discount to car owners who trade
in their cars which are at least 10 years old
to buy new Proton or Perodua cars;
AIRPORT
» Malaysia Airports Holdings Bhd to build
and operate a new low-cost airport at
the KL International Airport estimated to
cost RM2 billion;
» RM250 million to expand Penang Interna-
tional Airport;
» A 50% rebate on landing charges will be
given for two years effective April 1 to all
airlines that operate from Malaysia.