PACKAGE TO BOOST PRIVATE SECTOR ACTIVITIES

KUALA LUMPUR, March 10 (Bernama) -- The government's second economic
stimulus package worth RM60 billion (US$16.25 billion) includes a wide array of
measures to assist the private sector face the economic crisis such as working
capital for small and medium scale enterprises, facilitating access to the
capital market, and reducing the cost of doing business in the country.

It also include perks to stimulate the sales of Malaysian-made Proton and
Perodua cars.

Announcing the measures when introducing the Supplementary Supply (2009)
Bill 2009 at the Lower House of Parliament Tuesday, Deputy Prime Minister Najib
Razak said SMES could apply for loans under a RM5 billion working capital
guarantee scheme to be established by the government, a move which will make it
easier for them to undertake viable projects during the current difficult time.

Najib, who is also Finance Minister, said during his 77-minute presentation
that the government would set up an industry restructuring guarantee fund
totalling RM5 billion for loans to raise productivity and value-added activities
as well as green technology.

The government would set up a financial guarantee institution to provide
credit enhancement to companies that intend to raise funds from the bond market,
a move which would develop the domestic bond market.

Bank Negara will assist in setting up this institution.

Given the deteriorating global economy and the adverse effects of the
domestic economy, he forecast the economy to grow between negative one percent
and one percent this year.

The higher expenditure would also increase the government's budget deficit
from 4.8 percent to 7.6 percent, he said.

Najib said the package aimed to reduce unemployment and increase employment,
ease the rakyat's burden and in particular the vulnerable groups, assist the
private sector in facing the crisis and build capacity for the future.

He also announced that listed companies will no longer need approval from
the Securities Commission to undertake rights issues while convertible and
exchangeable bonds will be exempted from mandatory rating requirements.

Permanent resident status would be considered for high-net worth individuals
bringing more than US$2 million for investments or savings in Malaysia.

To assist businesses, he said the government will exempt levy payments to
the Human Resource Development Fund for six months for employers in the textile
as well as electrical and electronics industries effective Feb 1, 2009.

The government would reduce the levy payment rate from one percent to 0.5
percent for all employers for two years effective April 1, 2009, which will save
employers RM390 million in business costs.

Some RM200 million would be additionally made available for the Automotive
Development Fund to support the country's automotive industry.

A discount of RM5,000 will be given to car owners who trade in their cars
which are older than 10 years to buy new Proton and Perodua cars.

To boost tourist arrivals, a rebate of 50 percent on landing charges will be
given for a period of two years effective April 1, 2009 to all airlines that
operate from Malaysia.

To encourage businesses to invest, the government has proposed that expenses
incurred on plant and machinery be given accelerated capital allowance which can
be claimed within two years and is applicable to investments incurred between
March 10, 2009 and Dec 31, 2010.

The government has also proposed that a company's current year losses be
allowed to be carried back to the immediate preceding year in efforts to assist
firms incurring losses due to the global economic crisis.

Najib also announced that house buyers be given tax relief on interest paid
on housing loans up to RM10,000 a year for three years.

To further increase the income of the rakyat, the government would issue
syariah-compliant savings bonds amounting to RM5 billion this year with an
annual return of 5.0 percent to be paid quarterly to bond holders.

Available for citizens 21 years and above, the bonds would entail a minimum
investment of RM1,000 and a maximum of RM50,000.

The windfall profit levy threshold would be increased to RM2,500 per tonne
for Peninsular Malaysia and RM3,000 for Sabah and Sarawak.

The government would also strengthen the Malaysia MySecond Home Programme
and consider issuing work permits to skilled spouses of the programme
participants.

He also said measures would be taken to accelerate implementation of
projects under the Ninth Malaysia Plan, which have high local content and
multiplier effects, people-centric and can be implemented immediately.

"These projects amount to RM8.4 billion. In addition, RM1.6 billion is
allocated for funds to promote investments," he said.

To further boost private investment activities, the government would assist
the implementation of projects through private finance initiative (PFI) and
public-private partnerships by providing funds amounting to RM2 billion.

"Private companies will be invited to bid for the funds," he said.

To promote domestic investments, the investment funds of Khazanah Nasional
would be increased by RM10 billion which would be invested over a two-year
period in priority domestic investments that have high multiplier effects and
which create more job opportunities.

Najib said Khazanah would also invest RM3 billion in the telecommunications
sector which would facilitate the improvement of the broadband infrastructure in
Malaysia while intensifying the development of Iskandar Malaysia with a RM1.7
billion investment this year for building infrastucture, hotels, theme parks as
well as universities.

Agriculture projects include a 1,000-hectare prawn aquaculture project in
Setiu, Terengganu, as well as 200-hectare modern vegetable farming project in
Cameron Highlands.

"Overall, investments by Khazanah and its subsidiaries are expected to
create 70,000 job opportunites by 2011," said Najib.

The deputy prime minister also identified investment projects worth RM5
billion to be implemented on an off-budget basis, among which, include the
low-cost carrier terminal at KLIA and the expansion of the Penang International
Airport at RM2 billion and RM250 million respectively.

He said other projects include construction of sky bridges and covered
walkways between buildings, especially in the Golden Triangle in Kuala Lumpur at
a cost of RM100 million.

Najib said the Foreign Investment Committee would be more liberal in efforts
to further enhance Malaysia's competitiveness and attract more foreign direct
investments.

He also said that all government procurements would be made through open
tenders or restricted tenders, except for specific cases.

To manage costs, the implementation of design and build projects would not
be allowed except in cases requiring high techical expertise while the private
sector should give priority to local products in their procurement, he said.
(US$1=RM3.72)
-- BERNAMA