GOVT MAY ADOPT LOCAL CONSUMPTION STRATEGY IN BUDGET 2010, SAYS MIA

By Tengku Noor Shamsiah Tengku Abdullah

KUALA LUMPUR, Oct 15 (Bernama) -- The Malaysian Investors Association (MIA)
expects the government to adopt, among others, a strategy to bolster local
consumption in next year's budget.

President Dr P.H.S. Lim said the country's Industrial Production Index was
still on the decline while the major economies especially United States and
European Union remained weak with unemployment reaching 10 per cent.

"Under such economic climate, the Malaysian government's budget for the year
2010 may adopt a local consumption strategy to boost its economy," he told
Bernama.

Prime Minister Najib Razak who is also Finance Minister, is scheduled to
unveil his first budget since taking over the premiership from Abdullah Ahmad
Badawi in March this year, on Oct 23.

Lim said that since exports had declined, Malaysia needed to sustain its
domestic consumption to achieve a reasonable growth for 2010.

The country's gross domestic product could grow by two per cent in 2010
against an estimated contraction of four to five per cent this year, he said.

"To increase consumer spending, the government may resort to a tax cut of
around one per cent on individual income or reduce import duties.

"Promoting local consumption is very important as Malaysia itself has a
population of around 25 million people," he said.

Lim said Malaysia was an export-oriented economy, ranking 17th in the
world, and kept its ringgit undervalued by as much as 30 per cent.

"If Malaysia has a strong currency base, its citizens could be very
rich.

"Eleven years ago before the Asian financial crisis, the value of our
currency was RM2.40 for one US dollar. Today, it is RM3.39 for one US dollar in
spite of the greenback's global weakness," he said.

Lim did not expect too many goodies in the upcoming budget after the
government launched stimulus packages worth RM7 billion in February and
RM67 billion in March.

He also did not expect the government to introduce goods and service tax
(GST) that was anticipated by some tax consultants.

"GST means consumers will have to pay tax each time they purchase goods
or services.

"In view of the poor outcome of the last general election on March 8, 2007,
the government is most likely to defer or delay this form of taxation," he
said.

He said that in the budget, the government might scrap the need for approved
permits (AP) to import vehicles to create a level playing field for all
importers.

MIA was the first institution to call on the government to abolish the AP
system, he said.

Lim said the government might use Budget 2010 to further liberalise
investment policies and other terms and conditions to make Malaysia a more
competitive nation.

On the capital market, he said the country was fortunate that Bursa Malaysia
had made a remarkable recovery since January with today's market capitalisation
at RM940.232 billion against an all time high of RM1.1 trillion in early 2007.

"A financial market recovery boosts consumer spending and consumer
confidence, and this in turn generates a better economic environment," he said.
(US$1=RM3.39)
-- BERNAMA