The Government has unveiled a second stimulus package worth RM60 billion to spur economic activity, Deputy Prime Minister Datuk Seri Najib Tun Razak announced here today. The amount is almost nine per cent of the GDP, and will be implemented over two years.
Najib, who is also the Finance Minister, said that the package will run through 2009 and 2010. Of this amount, RM15 billion is fiscal injection, RM25 billion guarantee funds, RM10 billion equity interests, RM7 billion private finance initiative and off-budget projects as well as RM3 billion in tax incentives.
“This RM60 billion accounts for almost 9 per cent of the GDP. The implementation of such a large stimulus package is unprecedented in the nation’s economic history,” he said while tabling the Supplementary Supply (2009) Bill 2009.
He said of the RM15 billion fiscal injection, RM10 billion is allocated for this year and RM5 billion for 2010.
The RM10 billion for 2009 consists of RM5 billion for operating expenditure and RM5 billion for development expenditure.
“The higher expenditure will increase the federal government budget deficit from 4.8 per cent to 7.6 per cent this year,” he said.
However, Najib said the government is confident that the nation’s fiscal policy continues to have the flexibility and capacity to accommodate the higher deficit, as this increase is temporary.
He said the government’s ability to ensure fiscal sustainability is clearly reflected in the nation’s success in reducing the deficit from 5.3 per cent in 2002 to 3.2 per cent in 2007.
He assured the government will ensure its fiscal position returns to sustainable level in the coming years.
Second Stimulus Package Highlights
Following are highlights of the second stimulus package tabled by Deputy Prime Minister and Finance Minister Datuk Seri Najib Tun Razak in the Dewan Rakyat today:
* Government unveils RM60 billion second stimulus package to insulate the economy from slipping into recession;
* Housebuyers given tax relief on interest paid on housing loans up to RM10,000 a year for three years;
* Additional RM200 million for pulic low-cost housing scheme for low-income earners;
* RM1.6 billion fund to promote investments;
* RM200 million to repair and maintain roads and drains;
* RM150 million for renovation, maintenance and repairs to welfare homes, fire and rescue stations, firemen living quarters and public toilets in mosques, suraus and tourist spots;
* Government to issue syariah-compliant Savings Bonds amounting to RM5 billion this year;
* RM1.95 billion to build and upgrade facilities in 752 schools, particularly in rural areas, Sabah and Sarawak of which RM300 million will be used to improve facilities in government-aided religious schools, Chinese and Tamil schools and mission schools;
* RM230 million allocated to increase electricity supply coverage and water supply in rural areas particularly in Sabah and Sarawak.
* RM350 million allocated for rural road construction.
* Government will provide RM500 million for maintenance of public infrastructure projects, with emphasis to Sabah and Sarawak;
* RM1.2 billion allocated for providing infrastructures and increasing economic activities in Sabah and Sarawak;
* RM300 million for micro-credit programme 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 Malaysian Fisheries Development Authority;
* RM20 million will be provided to improve facilities of day-care centres for the elderly, improve management of women shelter homes and increase facilities for child care centres;
* Existing tax exemption under the retrenchment benefit will be increased to RM10,000 from RM6,000 for each completed year of service;
* Government to establish a Working Capital Guarantee Scheme totalling RM5 billion to provide working capital to companies with shareholder equity below RM20 million;
* Government to establish a Financial Guarantee Institution with an initial RM1 billion in paid-up capital to provide credit to companies intending to raise funds from the bond market. Bonds totalling RM15 billion will be raised under this facility;
* Rights issues by listed companies will no longer need approval from the Securities Commission;
* To encourage takeovers and mergers, the Code on it will no longer be applied to private limited companies;
* Only the Securities Commission has to be informed of any amendments to the terms and conditions of bonds and sukuk issuance;
* Convertible and exchangeable bonds will be exempted from mandatory rating requirements;
* Permanent resident status will be considered for high networth individuals bringing more than US$2 million for investment or savings in Malaysia as an effort to bring high networth and skilled individuals;
* High-skilled foreign professionals may also be considered for Permanent Resident status;
* Government to provide 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;
* Government proposes to increase the number of scholarships for entry into local private universities;
* Government-linked Companies to set up 10 not-for-profit private schools;
* The services sector will be further liberalised to woo more investments, bring in more professionals and technology and strengthen competitiveness;
* Foreign Investment Committee to adopt a more liberal approach to bring positive changes and nurture a more investor-friendly environment to attract more investments including foreign direct investment;
* 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.