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Wednesday, November 5, 2008

Malaysia unveils RM7b stimulus plan

The government has unveiled a RM7 billion stimulus package to reinforce and stimulate the economy, and at the same time, bring relief to the public at an economically challenging time.

Announcing the stimulus package in Parliament, Deputy Prime Minister Datuk Seri Najib Razak, who is also finance minister, said the measures were proof of the governments concern for the people's well-being and to stimulate private sector confidence.

Najib said the RM7 billion was from the savings derived from cuts in the fuel subsidy.

The government will adopt an expansionary policy as is the current practice in other countries.

He said the government had the flexibility to implement value added high impact projects.

Najib said the gross domestic product would be revised downwards to 3.5 per cent for 2009, but the fiscal deficit would remain at 4.8 per cent.

The reason for the deficit is that the government chooses to continue with Budget 2009, as announced, to maintain the growth momentum.

Najib told the Dewan Rakyat that to ensure more people could own houses, RM1.2 billion has been allocated to build 25,000 units of low- and medium-cost houses.

He said RM500 million has been set aside to upgrade, repair and maintain police stations, living quarters, army camps and quarters.

Najib also said RM600 million would be channelled to minor projects, including village roads, community halls and small bridges.

The deputy prime minister said the jobs would go to small-time contractors.

Public amenities such as roads, schools and hospitals will be allocated RM500 million, while a similar amount will be used to build and upgrade roads in rural areas, villages and agriculture roads, including in Sabah and Sarawak.

Najib said RM200 million had been set aside to improve school facilities, with the funds given evenly to religious, mission, Chinese and Tamil schools.

He said RM300 million would be allocated for a fund to implement a skills programme catering to the needs of employers and industry, particularly in the development corridors.

He said RM1.5 billion would be used to set up a special fund to attract private sector investment and would be disbursed as grants, cheap loans or as equity.

Another RM100 million has been allocated to set up new business premises to increase the number of small- and medium-scale entrepreneurs.

Youth programmes will receive RM100 million.

Najib said the packages were aimed at alleviating hardship and encourage spending.

Civil servants also received some good news with the extension of all housing loans from 25 years to 30 years, while the quantum of loan to buy cars has been increased.

Najib said Bank Negara would encourage local banks to introduce a similar measure for its housing loan customers.

To encourage the development of retail business and domestic tourism industry, hyper markets can open till 11pm on weekdays and 1am on weekends. Those in shopping complexes could seek to operate round the clock.

To stimulate activity in the private sector, import duties for cement, long iron and steel products for the construction and manufacturing sectors have been abolished.

The government will also allow individuals or foreign entities to buy commercial real estate worth RM500,000 and above without any Foreign Investment Committee approval, for their own use.

By Business Times

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