Following are the essence of the economic modifications and interventions special announcement by Prime Minister Datuk Seri Najib Razak who is also Finance Minister at the Putrajaya International Convention Centre (PICC) today.
- The current environment / world economic scenario has changed. This impacts the country which is among the countries with the world's largest trading.
- Some basic things that the government forecast for the country's economic and financial plan, to be reviewed and clarified its current position.
- Government to continue seeking ways to ensure country continues to grow, safeguard people's well-being
- Prime Minister stressed that Malaysia is not in economic crisis
- Slumping oil prices leads to reduced revenues meant for development
- With the reduction in the retail price of petrol and diesel by 35 sen and 30 sen, respectively, the rakyat's gross disposal income now stands at around RM7.5 billion
- Malaysia’s fiscal deficit target would be revised to 3.2% of GDP in 2015 – higher than the 3% set out in the Budget, but lower than the 3.5% in 2014, and in line with the Government’s continuing commitment to fiscal consolidation
Firstly, to boost exports of goods and services, the Government will:
- Development Expenditure for 2015 would be fully maintained, but Operating Expenditure is expected to be reduced by RM5.5 billion.
- Actively promote import-substitution services, such as shipping, port, education and professional services
- Improve logistics and trade infrastructure
- Accelerate implementation of the National Export Council’s recommendations
- Intensify the tourism industry
- Review the levy on foreign workers; and
Second, to enhance private consumption, the Government will:
- Waive visa fees for tourists from, among others, China.
- Give priority to local contractors to undertake reconstruction works in their respective flood affected areas
- Intensify promotion of “Buy Malaysia” products
- Increase the frequency and extend the shopping hours of nationwide mega sales
- Accelerate promotion of domestic tourism through competitive domestic air fares
Third, to accelerate private investment, the Government will:
- Encourage the private sector to leverage benefits from the establishment of the ASEAN Economic Community.
- Set up a Services Sector Guarantee Scheme amounting to RM5 billion for SMEs in the services sector, with maximum financing of RM5 million and a 70% Government guarantee
- Encourage GLCs and GLICs to invest domestically
- Further reduce the cost of doing business
- Allocate 30% of the annual procurement budget of Government agencies and GLCs for goods and services to local SME producers
Following recent severe flooding in several states, the Prime Minister also announced measures to assist flood-affected people and businesses, and to rebuild damaged infrastructure.It has provided an initial allocation of RM500 million for rehabilitation works and welfare programmes for flood victims, bringing the total to RM787 million, and will:
- Increase local goods and services in Government procurement.
- Provide an initial allocation of RM800 million for repair and reconstruction of basic infrastructure such as schools, hospitals, roads and bridges
- Provide RM893 million under the 2015 Budget for flood mitigation projects
- Build 8-ft stilt houses for those who have land and whose homes were damaged by the floods
- Hand over 1,000 units of completed low-cost houses in Gua Musang
- Provide RM500 per flood affected household; and
For businesses affected by floods, the Government will:
- Provide RM5,000 for the next-of-kin who have lost family members.
- Provide an additional RM100 million to TEKUN and RM100 million to AIM to provide soft loans to support SMEs and microenterprises;
- BSN, Agrobank, SME Bank, TEKUN and AIM will defer existing loan repayments of up to six months;
- Bank Negara Malaysia will establish a RM500 million Special Relief Facility for SME loan financing at a concessionary rate of 2.25% with a grace period of up to six months through banking and development financial institutions
- Bank Rakyat will offer a personal loan scheme of up to RM50,000 at a financing rate as low as 3.9%, while loan repayments will start after six months from loan disbursement
- A sum of RM500 million will be provided by financial institutions with a 70% guarantee under a Flood Relief Loan Guarantee Scheme
- SMEs in the flood affected areas will be exempted from levy payment to the Human Resources Development Fund (HRDF) for a period of six months with effect from 1 February 2015.
for the full speech