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Malaysia Unveils Plan for Handouts
Malaysia’s Twisted Past
Malaysia to Boost Spending, Help Poor in Pre-Election Budget
Najib unveils ‘feel good’ Budget

Posted: 07 Oct 2011 11:54 AM PDT

By James Hookway, Wall Street Journal

Malaysia's Prime Minister Najib Razak unveiled a government spending plan for 2012 that pledged cash handouts and more benefits for ordinary Malaysians, while also shoring up the country's finances and reining in its budget deficit at a time of global economic uncertainty.

Political analysts said Mr. Najib had at least one eye on the election that must be called within the next 18 months. Over the past month this aristocratic son of the country's second prime minister has staked out the center ground of Malaysia's politics, pledging to roll back laws that allow for detention without trial and to allow a greater degree of media freedoms in what is still a very closely controlled country.

For Mr. Najib, who took over the ruling United Malays National Organization party about a year after it lost its customary two-thirds parliamentary majority in a March 2008 election, Friday's budget speech appeared to mark the next step in a plan to secure a strong mandate in this Muslim-dominated but ethnically diverse nation.

"There was something for all of the key groups in there," said James Chin, a political-science professor at Monash University in Kuala Lumpur. The right wing of Mr. Najib's ethnic-Malay party will likely be placated by the two billion ringgit ($631.2 million) of infrastructure contracts reserved for bumiputra-owned (ethnic-Malay-owned) businesses, while ethnic-Chinese voters will likely be relieved by the absence of new taxes.

"International investors got some reassurance on the budget deficit, too," Mr. Chin said. "Mr. Najib needs to get this right and secure a strong majority whenever the elections come or else he could get kicked out by his own party."

To help finance the 2012 budget, Mr. Najib, who is also the country's finance minister, said the government plans to privatize and list state-owned plantation operator Felda Global Ventures Bhd. by the middle of the year. That could create the world's largest publicly traded palm-oil producer by planted area, as well as draw substantial foreign investment into the country's stock market.

Other major proposals in the 2012 budget would encourage foreign investment in sectors including financial services, logistics and health care and limit the budget deficit to 4.7% of gross domestic product. It is 5.4% this year.

The budget wouldn't ramp up government largess as much as many economists had feared. Mr. Najib struck a note of caution by limiting development spending—which analysts say has been used in the past to win political support—to 48.34 billion ringgit, only slightly more than this year's 48.60 billion ringgit. Mr. Najib said the government expects the economy to expand 5% to 6% next year, compared with 5% to 5.5% growth projected for this year. The bump would be partly thanks to his spending plan, he said.

"Global developments would certainly have a direct impact on the Malaysian economy," Mr. Najib told Parliament. "With these developments, the government will put in place measures to stimulate domestic economic activities, in particular public and private investments."

Targeting a relatively low deficit of 4.7% now might leave Mr. Najib better placed to pump more money into the economy later if the global environment deteriorates sharply, economists said. Governments across Asia are growing increasingly concerned that debt crisis in the euro zone may further damp the tepid recovery in key markets—not only European countries, but the U.S. and Japan as well.

In the meantime there will also be several cash handouts, including a one-off payment of 500 ringgit to all households with a monthly income of 3,000 ringgit or less. Civil servants' wages and pensions will rise, while the compulsory retirement age will increase to 60 years old.

Mr. Najib's budget also allots 50 billion ringgit for education, an area he has repeatedly singled out as a key to nurturing the long-term development of Malaysia's economy.

Malaysia’s Twisted Past

Posted: 06 Oct 2011 07:24 PM PDT

By Luke Hunt, The Diplomat

Nationalism in Malaysia is a peculiar thing. And, at the end of the day, it's more about being Malay, Muslim and from Peninsula Malaysia as opposed to any of the other religious or many ethnic groups who have called this country home for centuries. Royal connections also help.

The West Malay Islamic influence permeates across the country, often reinventing history with its own spin. Anybody who questions this is to be cast aside with the Christians, Shiites, Buddhist and Hindus who struggle to believe Malaysia is a secular country.

In recent weeks, two people have emerged from the back rows of history to help recount that past. The first was pushed to the fore by PAS Deputy President Mohamad Sabu, or Mat Sabu as he's better known, who stirred up a hornet's nest by portraying Mat Indera as some type of original freedom fighter.

It is, of course, nonsense. But PAS remains the voice of hard-line Muslim politics and many of them just don't like the idea that Indera was indeed a Communist who in 1950 led an attack on a police station at Bukit Kepong, killing 25 colonial-era policemen and their families. He was loathed by the British and locals of all stripes. As such, the attack would be far more acceptable if Indera's Communist bent could be replaced with something a little more worthy – like independence. This would make all those killings acceptable. But this would also be nonsense.

No one knew this better than 86-year-old Chin Peng, Malaysia's best known Communist, who has lived in Thailand for half a century, where he is currently in a coma and is unlikely to recover.

The family knows Chin Peng, who led the bloody 1948-1957 insurgency, is on his deathbed and would like the Malaysian authorities to overturn a previous ruling and allow him to return home. Should he die, they want him buried in his hometown alongside his parents.

Malaysians don't like this idea because they fear his return will upset many. The truth is Malay leaders, particularly the Sultans, were happy to maintain the colonial status quo until Commonwealth troops had succeeded in quashing the Communist insurgency and the pre-ordained Malay leaders could take control of a fledgling independent country.

Independence was gifted in 1957, and a vote of thanks for the 70,000 British, Australian, New Zealand, Gurkhas and Fijian soldiers who fought here and subdued the Malay enemy is unlikely. However, several attempts have been made to venerate Malaysia's first leaders as those who fought and won independence for a grateful nation.

The reality is the likes of Chin Peng and Mat Indera were the only ones who fought, but they did this as Communists who wanted Malaysia transferred from the British Empire and brought under Beijing's broader sphere of influence.Malaysia, like Vietnam and Cambodia, was a battlefield in the Cold War between East and West.

This wasn't what the sultans had in mind. To twist this conflict into a battle for independence is also to pre-suppose the British were desperately clinging on to a Malaysia they cherished and couldn't tolerate to see go.

Far from it, fearing the insurgency was not yet over, many Malays were initially reluctant to accept the days of colonialism were at an end in 1957. To pretend any different is to insult the memory of 10,000 people who died during the conflict, which had one act still to play.

Fearing the insurgency might reignite, and doubting their own ability to cope, the new government passed the Internal Security Act. This draconian law allowed for the detention – without much reason – of anyone the authorities didn't like for the next 54 years.

This was one lasting legacy that can be traced back to Chin Peng, Mat Indera and the Communists who supported them. The repeal of that odious law has, thankfully, just been announced by current Prime Minister Najib Razak.

Malaysia to Boost Spending, Help Poor in Pre-Election Budget

Posted: 06 Oct 2011 07:22 PM PDT

By Shamim Adam, Bloomberg

Malaysian Prime Minister Najib Razak pledged to boost help for the poor to cushion the impact of inflation and said the government will proceed with rail and housing projects to spur growth as the global economy slows.

Najib, also finance minister, may table a 2012 budget plan for government spending of 230.8 billion ringgit ($73 billion), 0.5 percent larger than this year's outlay, according to the Ministry of Finance's 2011/2012 economic report today. Gross domestic product may expand 5 percent to 6 percent next year after growing as much as 5.5 percent in 2011. The budget deficit is forecast to narrow to 4.7 percent of GDP from 5.4 percent.

The prime minister plans to transform the Southeast Asian nation's economy by improving efficiency, spurring investment and cutting a budget deficit that counts as one of the largest in Asia as a proportion of GDP. Najib has also promised to roll back laws that allow the government to detain citizens without trial, described by critics as draconian, as he seeks to bolster support before elections that must be called by early 2013.

"Amid a challenging external environment, coupled with inflationary pressures, there is added pressure on fiscal resources to ensure that the domestic economy remains resilient and generates higher growth," the government said. "The 2012 budget will reinforce efforts to boost the competitiveness of the economy through the timely realization of reform initiatives while promoting inclusive and sustainable growth."

'Transformation Agenda'

Malaysia has eased barriers to foreign investment since 2009, when the global recession hurt exports of the country's semiconductors and palm oil. Foreign direct investment rose 75.4 percent in the first six months of 2011 after growing six-fold to 29 billion ringgit last year, the fastest in Asia, the government said in the report.

"The transformation agenda that we have embarked on will energize and return the private sector to its role as the engine of economic growth," Najib, 58, said in the report. "The private sector must commit to their investment and spearhead growth."

Europe's sovereign-debt crisis and the threat of a U.S. recession have roiled global stock markets, erasing almost $10 trillion from equities last quarter. The benchmark FTSE Bursa Malaysia KLCI Index has dropped more than 7 percent this year, while the ringgit has declined 3 percent. The currency traded at 3.156 per dollar as of 3:46 p.m. today.

"The challenges to the Malaysian economy have increased since the second quarter of 2011," Najib said. "These include slower global growth due to the fiscal problems of the U.S. and European countries, volatile international financial markets and elevated commodity prices."

Economic Growth

Malaysia's economic expansion will be 5 percent to 5.5 percent this year, the government said today, lower than an earlier target of as much as 6 percent growth in 2011. The economy grew at the slowest pace since 2009 in the second quarter, climbing 4 percent from a year earlier.

"The growth momentum is expected to pick up in the second half of the year on the back of resilient private consumption and strong private investment," the government said. "For 2012, GDP growth in Malaysia will remain largely domestic driven, due to heightened uncertainties in the global economy."

Construction on the first phase of Malaysia's biggest infrastructure project, a mass rail network, will begin next month, the government said today. The building of a 100-storey tower, a new financial district and a township covering an area of 1,060 hectares will commence in 2012.

Government Expenditure

Total government expenditure in 2011 may reach 229.6 billion ringgit, according to the ministry. State revenue may rise 1.9 percent in 2012 to 186.9 billion ringgit amid higher contributions from corporate and personal taxes and income from petroleum, the report showed.

The spending and revenue estimates in the economic report may change after Najib delivers his budget speech, which may include additional tax and other measures.

Najib has tried to cut operational expenses, including trimming subsidies for sugar, gasoline, diesel and liquefied petroleum gas. The government will maintain the subsidy program to ease the impact of rising prices on its citizens and implement it in a more targeted way, it said today.

Subsidies paid by the state to keep prices of fuel and other essential goods and services low will "remain stable" at 33.2 billion ringgit in 2012 from 32.8 billion in 2011, the ministry said.

"The government recognizes the burden of subsidy outlay on the country's fiscal position and the need to strengthen it," it said in the report. "However, any subsidy rationalization will be gradual and the government will ensure that the poor and low-income group will continue to receive government support."

Accommodative Policy

Malaysia's monetary policy remains accommodative and supportive of growth, the finance ministry said today.

Inflation has probably peaked and price pressures may ease as the global economy deteriorates, central bank Governor Zeti Akhtar Aziz said Sept. 25.

Bank Negara Malaysia kept borrowing costs unchanged at 3 percent for a second straight meeting in September after four increases from early March 2010 to May this year.

"Domestic inflation is increasingly affected by external factors, including supply constraints," the government said. "Under such circumstances, sustaining a low inflation environment domestically is more challenging than in the past."

Najib unveils ‘feel good’ Budget

Posted: 06 Oct 2011 07:06 PM PDT

(FMT) - KUALA LUMPUR: Prime Minister Najib Tun Razak is unveiling the Budget 2012 in the Dewan Rakyat, which is expected to be loaded with goodies since the general election is around the corner.

In his televised speech, the premier said the total revenue for 2012 is forecast to increase 1.9% to RM186.9 billion and the deficit to decrease to 4.7% of GDP from 5.4%.

Last year, Najib said the FDI growth was the strongest in Asia and in the first six months of this year, it had already reached RM21.2 billion.

Below are some of the salient points from the Budget, themed: "National Transformation Policy: Welfare for the Rakyat, Well-Being of the Nation."

Senior citizens aged 60 years and above will be exempted from outpatient registration fees at government hospitals and health clinics.

RM15 million will be allocated to build 150 futsal courts to achieve the "One Court for One Mukim" target.

RM200 million will be allocated to train youths who have left school through the SAY 1Malaysia programme.

The government will establish MyCreative Venture Capital with an initial fund of RM200 million.

To prevent cervical cancer, the government will provide free Human Papilloma Virus immunisation nationwide.

A training allocation of RM10 million will be provided for women to develop leadership and managerial skills.

To assist the homeless, the government established a social assistance centre known as Anjung Singgah.

The National Legal Aid Foundation will ensure that every individual who is charged in court will be given free legal aid.

To assist taxi owners facing increased operating costs, measures will be introduced including tax exemptions on taxis.

TERAJU will coordinate and drive the transformation and strengthen Bumiputera's participation in business.

Hospital Kuala Lumpur – the oldest in Malaysia – will be upgraded to be the country's premier hospital.

Hospitals will be upgraded and constructed as well as 81 rural health clinics upgraded and 50 new 1Malaysia clinics will be launched.

Healthcare will be allocated RM15 billion operating expenditure and RM1.8 billion development expenditure.

The government will establish the Special Housing Fund for fishermen to build and refurbish houses.

The Rumah Mesra Rakyat (SPNB) programme will be continued. SPNB will be asked to build 10,000 units next year.

The government will continue to implement the Program Perumahan Rakyat by building 75,000 units of affordable houses.

The government will identify areas in the vicinity of MRT, LRT and other public transport to be developed by PR1MA.

The My First Home Scheme will be expanded to increase the limit of house prices from a maximum of RM220,000 to RM400,000.

500,000 will benefit from KAR1SMA, which provides assistance to poor senior citizens and children and disabled people.

In the spirit of "People First," all subsidies, incentives and assistance totalling RM33.2 billion will be continued.

The government is mindful of the plight of the rakyat due to rising food prices and will take measures to address this.

RM3,000 will be given to ex-members of the special constable and auxiliary police as well as widows and widowers.

A special programme will be introduced for 175,000 army personnel who are not eligible for pensions.

Civil servants will be offered tuition fee assistance for part-time studies, including 5,000 masters and 500 doctoral scholarships.

Starting next year, the annual increment for civil servants will be increased between RM80 and RM320 according to grade.

Budget 2012 will transform the civil service to be dynamic and responsive, introducing changes to remuneration and recruitment.

600,000 government pensioners will benefit from an additional annual pension increment of 2%.

The government will extend the compulsory retirement age from 58 to 60 to optimise civil servants' contribution.

Private schools registered with the Education Ministry will be given incentives including an Investment Tax Allowance.

The government will expedite tax exemption approvals for educational institutions and all places of worship.

To encourage private sector human capital development incentives including a double deduction on scholarships will be offered.

A Rural Transformation Programme will be introduced so that rural areas can attract private investment and create employment.

The government will expand the programme to supply clean water to the rural community in Sabah by RM50 million.

RM400 million will be provided to upgrade the water supply infrastructure in selected FELDA areas.

To provide greater access to bank services for the rural population, Bank Simpanan Nasional will appoint agents in rural areas.

Felda GVH will be listed on Bursa Malaysia by mid-2012 to raise funds for the company to become a global conglomerate.

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Kredit: www.malaysia-today.net

Sabtu, 8 Oktober 2011