The government today announced a RM7 billion stimulus package to reinforce the economy, strengthen national resilience and to maintain economic growth momentum to face the increasingly challenging global economic climate.
Deputy Prime Minister Najib Abdul Razak tabled the package when winding up the debate on the 2009 Budget for the Finance Ministry at the Dewan Rakyat.
For starters, Najib, also the finance minister, said that in view of giving extra cash in hand for employees, the government will give workers the option to reduce their contribution to the Employees Provident Fund (EPF) by three percent for two years beginning next January.
Currently, employers contribute 12 percent to EPF while the employees contribute 11 percent of their salary to the national savings fund.
"With the reduction, the level of contribution is still at a very reasonable 20 percent, with employers contributing 12 percent and employees eight percent.
"A person with a salary of RM2,000 a month will get RM60 extra in disposable income, while someone earning RM6,000 will get an additional disposable income of RM180 a month," said Najib, as reported by Bernama.
Should all the contributors volunteer to reduce their EPF contribution, the amount involved will come up to RM4.8 billion a year, he said.
Assuming that only 50 percent of the contributors take up this option, the level of private consumption spending will increase to RM2.4 billion, he added.
More affordable houses
The additional measures proposed by Najib also included the construction of more low-cost and medium-cost houses, repairing dilapidated houses belonging to the hardcore poor and providing basic infrastructure.
Najib said RM1.2 billion was allocated for the construction of more low-cost and medium-cost houses involving the building of 6,500 housing units by Syarikat Perumahan Negara Berhad, and 4,000 housing units under the Public Housing Programme of the Housing and Local Government Ministry.
Najib added that 15,000 housing units valued between RM30,000 and RM35,000 each would be built in the peninsula while housing units valued between RM35,000 and RM40,000 each would be built in Sabah and Sarawak.
It was estimated that an average of 100 housing units under the Public Housing Programme for the Hardcore Poor (PPRT) would be built in each district in the country, Najib said.
RM600 million for minor projects
Najib said that the measures proposed in the package were proof of the government's serious concern for the people's well-being and to stimulate private sector confidence.
The RM7 billion saved from the fuel subsidy will be channelled to enable more people to own houses, he added.
Najib also said that RM500 million has been set aside to upgrade, repair and maintain police stations, living quarters, army camps and quarters, he said.
Najib also said RM600 million would be channelled to minor projects under the public and basic infrastructure project maintenance programme.
These include maintaining village roads, building community halls and small bridges, he said.
Najib said the allocation would help small-time contractors to address the problem of shortage of construction projects.
He said RM500 million has been apportioned to repair and maintain public amenities such as roads, schools and hospitals and another RM500 million has been sanctioned to build and upgrade roads in rural areas, villages and agriculture roads including in Sabah and Sarawak.
GDP revised to 3.5 percent
Najib also said the Gross Domestic Product (GDP) would be revised downwards to 3.5 percent for 2009 from five percent this year.
Najib also said the inflation rate in 2009 is expected to be at between three and four percent if fuel prices remain at the current downward trend.
He said the government's fiscal deficit for next year was still under control, at 4.8 percent as the government had chosen to draw up a budget that maintains economic growth momentum.
He said the deficit level was the same with the 2009 projected deficit.
"The 4.8 percent deficit is temporary, within the reasonable range, as the country had sufficient liquidity to borrow from internal sources," he said.
He said the government would adopt the "expansion" policy as being practised by other countries currently.
Najib also said that Bank Negara Malaysia will be setting aside RM200 million to provide micro credit facilities to help entrepreneurs operating small businesses.
The additional funding will be coordinated and distributed through existing channels.
The government will also set aside a revolving capital fund of RM100 million for the Urban Micro Financial Programme run by Amanah Ikhtiar Malaysia (AIM).
Najib also said that the government will ensure that a major portion of its procurements are made through open tenders and closed tenders to further enhance its procurement process and make it more transparent and get value for money.
Government procurements for bumiputera contractors will be also tendered via competitive bidding among bumiputera companies, he said.
"The government's aim is to ensure that the bumiputera contractors compete in a healthy way and increase their level of sustainability," he added - malaysiakini
The government has to thread a very fine line here. Unload too much money into the economy and inflation will shoot up.
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