Big RM60b Boost
Malaysia has unveiled big RM60 billion boost to pump prime economy and counter the adverse impact of the global financial crisis.
The bold stimulus plan was tabled in Malaysian Parliament by Finance Minister Datuk Seri Najib Razak Tuesday(March 10,2009) amid signs of worsening economic outlook.
The stimulus comprises four main thrusts, viz:-
*Reduce unemployment and increase job creation with RM2 billion allocation;
*Ease the people's burden, especially the most vulnerable ones with RM10 billion;
*Help the private sector to face crisis with RM29 billion
*Build future capacity with RM19 billion.
This is the first time Malaysia has taken such massive unprecedented preventive measures as the gobal credit crunch hit her hard.
The stimulus sum is far bigger than expected - equivalent to nine percent of Gross Domestic Product(GDP).
It will be spent over two years - 2009 to 2010.
The breakdown on the spending is as follows:-
*RM15 billion fiscal injection;
*RM25 billion guarantee fund;
*RM10 billion equity investment;
*RM7 billion private funding initiative (pfi) and off-budget fund
*RM3 billion tax incentives.
This big and more comprehensive stimulus is expected to boost prospects of Malaysians like workers,consumers, investors,small and medium entrepreneurs,exporters and unemployed graduates.
Najib, who is gearing up to take over the helm from premier Datuk Seri Abdullah Ahmad Badawi, urges Malaysian to brace themselves for tough times ahead.
He proposes that all put aside political differences and unite to face and surmount the tempest of severe recession.
Malaysia's economy this year is projected to shrink to negative territory - minus 1 percent GDP or positve 1 percent at best - below the 3,5 per cent earlier GDP growth forecast.
Already,GDP growth tumbled to 0.1 percent figure for the last quarter 2008 against 6.3 percent for the first nine months of 2008.
Exports were hit hardest plunging 13.4 percent in value as market demand declined and evaporated.
In January 2009,the export earnings fell even more sharply by a huge 27.8 percent.
Oil and gas and palm oil prices also dropped to new lows.
Foreign direct investment (fdi) flows are expected to slow to RM26 billion this year against
RM51 billion in 2008.
The Malaysian stock market is also languishing at weak price levels.
Indeed,Malaysians are facing very challenging times.Its first stimulus package of RM7 billion is still under implemention with RM1 billion already spent.
The Finance Ministry has set up a special project management unit to monitor the implementation of both the first and now the newly announced second stimulus plan.
The simultaneous pump priming boosts will raise federal government budget deficit from 4.8 per cent to 7.6 percent.
Hence,Malaysia will be spending its way out of recession!
The Malaysian government will issue government syariah bonds valued at RM5 billion this year.
It will tap the funds from domestic sources.
Among the stimulus measures are:-
*Establishment of new Financial Guarantee Institution(FGI) to help to prepare and enhance credit lines to private companies via funding in the bond market;
*RM5 billion allocation for Industrial Restructuring Guarantee Fund Scheme;
*RM10 billion for Khazanah Nasional,the national investment arm,to mop up cheap shares;
*RM1.95 billion to construct and renovate 752 schools, including RM300 million to improve facilites at religious, vernacular and mission schools;
*RM1.5 billion to provide micro-credit to small and medium enterprises(SMEs);
*RM1.2 billion for Sabah and Sarawak infrastructure development;
*Double tax deduction for employers recruiting retrenched workers with pay of up to RM10,000 per month from March 10,2009 to December 31,2010;
*RM674 million in subsidies to maintain stable food prices like sugar,bread and wheat flour;
*RM480 million to keep toll rates unchanged by compensating toll road concessionaires who must defer any toll hikes;
*RM200 million for automotive industry development with car owners enjoying $5,000 discount when they trade in old cars of 10 years and above for new cars;
*Provision of 500 PhD and 10,000 MBA places in Unversiti Tenaga Nasional,Universiti Mulltimedia and Universiti Technologi Petronas for graduates wishing to further their postgraduate studies with RM20,000 allocation to offset PhD fee per student and RM10,000 for master degree student.This means those able to get the places will study for free.
The plan will allocate RM700 million to create 163,000 employment and training opportunities, including 100,000 via public-private sector co-operation.
The government will also recruit 63,000 contract officers to fill various posts in its numerous agencies.
Meanwhile,Home Minister Datuk Seri Syed Hamid Syed Albar revokes the visas of 55,000 Bangladeshi workers amid protests in the bleak economic scenario.
He says the immigration department will refund the levies.
On Monday, Malaysian Trade Union Congress(MTUC) president Syed Shahrir Syed Mohamed slammed the government for being insensitive to what was happening.
"Workers are facing retrenchment and layoffs," the workers' union chief stressed.
"Some are already being asked to work fewer days."
Syed Shahrir suggested Malaysian employers in the construction and plantation sectors improve working conditions in the two sectors to attract Malaysian workers and reduce dependence on foreign workers.
Wanita MCA Chief Chew Mei Fun also urged the Human Resources Ministry to look out for employers who discriminate and lay off women first as she had complaints of them retrenching more women than men.
She pointed out that steps must be taken to ensure gender equality in the work place.
More women are affected by the economic crisis as more of them than men are employed as factory workers and married and pregnant women top the list of those being retrenched.
Since October 2008, 25,000 workers have been retrenched. Another 30,900 workers were temporarily laid off and 23,900 more workers took pay cuts to keep their jobs.Overtime are also being cut nationwide.
More workers are expected to lose jobs as the global economic crisis will get worse before it can recover and get better.
Malaysia's open economy makes her vulnerable to more pain ahead.