Malaysian Prime Minister Najib Razak on Friday unveiled a 2011 budget aimed at drawing in foreign investors who have shunned the country in favour of more dynamic neighbours. Najib promised major infrastructure projects, financial market liberalisation and pre-election sweeteners on housing and transport in what is likely to be his last budget before polls tipped for next year.
"We are not dreamers. We are realists," Najib told parliament. "We want to build a nation where every person will be able to enjoy the benefits of development." The Southeast Asian nation is moving to reverse a sharp decline in foreign direct investment, which fell 81 percent to 1.4 billion dollars in 2009 from 7.3 billion in 2008. Neighbouring Southeast Asian economies including Singapore, Thailand and Indonesia have outshone Malaysia with much higher inflows.
The premier, who is also finance minister, is attempting to spur employment and economic growth before going to the polls, after being humbled in 2008 elections in which the opposition scored unprecedented gains. The government had already announced it was again delaying implementation of a controversial goods and services tax which had been due next year in the face of strong public protest.
The budget also includes a scheme for first-home buyers to have their 10 percent deposit guaranteed by the government, and a 50 percent rebate on stamp duty. A massively unpopular scheduled hike in toll charges for a major highway will also be frozen for five years.
Opposition leader Anwar Ibrahim criticised the budget as a naked appeal for votes that failed to deal with the deficit, which will shrink only slightly to 5.4 percent of gross domestic product. "It is clearly not a responsible budget," Anwar told AFP. "The focus on mega-projects will only benefit his cronies," he said of the premier. Malaysia recently announced ambitious plans to double private investment over the next 10 years, and to propel annual growth to an average of 6.0 percent to meet its goal of achieving developed-nation status by 2020. Najib said that the growth forecast for 2010 had been raised to 7.0 percent from 6.0 percent, well up on the 1.7 percent contraction of 2009. The economy is expected to grow by five to six percent in 2011.
He said that to attract foreign funds, government-linked companies - who have been blamed for suppressing competition - would divest their holdings in listed companies, increasing "liquidity and trading velocity in the market". There will be some major share offerings, including a sale of state energy firm Petronas' chemicals arm, which is estimated to be worth 4.0 billion dollars.
Among the infrastructure projects, a government investment arm is to develop a 100-storey tower to be completed by 2015 at a cost of 1.6 billion dollars. It will be the tallest in Malaysia, exceeding the landmark Petronas Twin Towers. Najib's ruling Barisan Nasional lost its two-thirds majority in parliament and control of five states in a 2008 election. It is now battling to win back the support of minority Chinese and Indian voters who deserted it. It is also concerned at the prospect of losing its traditional voter base, ethnic Malays who dominate the multicultural population, to the conservative Islamic party PAS, which is part of the opposition alliance.
Comments
Comments are closed.