KUALA LUMPUR:
Strengthening the domestic economy by boosting consumers’ disposable income will be the key focus of the RM7 billion stimulus package introduced by the government on Tuesday.
Finance Minister Datuk Seri Najib Razak said increased domestic consumption is needed to help weather the current global recession affecting developed nations.
He said to achieve this, the stimulus package will focus on projects that have major multiplier effects that increase the people’s income and protect their well-being.
“The right step is to provide the stimulus and not to slash expenditure,” he said during a special programme on “Pelan Rancangan Fiskal” aired on RTM 2 tonight.
In explaining the multiplier effects, Najib, who is also deputy prime minister, said the stimulus package to the construction sector, for example, will provide benefits all the way down to the consumer.
“When we give to the construction sector, we build houses. We build low and medium cost houses, including 12,000 units under the Hardcore Poor Assistance Programme.
“Surely the hardcore poor will benefit and secondly, small contractors at district level will also benefit,” he said.
Najib said that such a scenario will help boost domestic consumption that in turn, will contribute to the nation’s new 3.5 per cent growth projection next year.
“If we manage to increase domestic consumption, it means we can ensure that there is still momentum in the domestic economy and can achieve reasonable economic growth,” he said.
Najib shrugged off the projection by European banking giant UBS that Malaysia would experience zero growth next year, saying that Europe’s biggest banking group is not infallible.
“The government is still confident that the 3.5 per cent target is attainable with the fiscal stimulus package tabled yesterday, on condition that nothing extraordinary happens in the external economy,” he said.
Najib also disagreed with the Malaysian Institute of Economic Research (MIER), which projected a recession in the second or third quarter of next year.
“We must defend that Malaysia will not face a recession next year. We don’t see this happening next year except something very extraordinary happens to the external economy,” he reiterated.
Najib added that the trade liberalisation measures announced when he tabled the 2009 Budget on Tuesday is a signal to the international business community that Malaysia is still viable.
“We are giving the world a very clear signal that Malaysia is a very suitable place for them to invest, whether in the form of foreign direct investment or in the form of capital market,” he said.
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ReplyDeleteWhatever promises the government has made, we could just wait and see what will happen next. It's better to support rather than condemning those ideas aired. Let's hope all those plans will really benefit the "rakyat".