MALAYSIA: BUDGET 2010 TO LAY FOUNDATION FOR NEW ECONOMIC MODEL

KUALA LUMPUR, Oct 23 (Bernama) -- The 2010 Budget will see Malaysia setting
the stage to take advantage of opportunities arising from the stabilising
global economy while laying the foundation for the new economic model and
formulation of the Tenth Malaysia Plan.

The 2010 Budget, themed "1Malaysia: Together We Prosper,", is supported by
three strategies namely, propelling the nation towards a high-income economy,
ensuring holistic and sustainable development as well as focusing on the welfare
of the people.

" It also focuses on moving the nation to a high-income economy by
strengthening the private sector as an engine of growth, creating a skilful and
talented workforce, intensifying research and development (R&D) activities as
well as promoting innovative and creativity," said the Ministry of Finance
in its 2009/2010 Economic report released Friday.

It said towards this end, the emphasis would be on creating a conducive
environment for businesses and entrepreneurship to thrive in a more liberalised
environment supported by market driven policies.

" On the domestic front, the challenge is to revitalise investments,
safeguard the welfare of the people as well as manage rising expenditure in the
context of declining revenue, without compromising government efficiency and
delivery of services," said the MOF.

It also highlighted the fact that the government is committed to
consolidating its financial position to create fiscal flexibility.

According to the ministry, the country would also leverage on Asia’s growth
prospects as over time, consumption is expected to shift to this part of the
world.

" While the United States and Europe will remain the main source of
consumption demand, Asean, China, India and the Middle East would gain
prominence. This is given their prospects for rapid Gross Domestic Product
growth," it explained.

The Treasury said that Malaysia, which was well positioned to bridge trade
flows between the east and west, needed to develop a unique value proposition to
attract foreign direct investment.

" Trade engagement will be more focused to the Asian region and companies
encouraged to expand market and product mix.

" Malaysia is also committed to progressively liberalise several sectors in
the economy in line with the Asean Economic Community Blueprint, for freer flow
of goods, services and capital by 2015.

" In order to facilitate the move into high-income economy, the government
has identified areas that the country has a competitive advantage, namely
Islamic Finance, the Halal industry, resource-based industries and tourism," the
ministry added.

The report said as access to knowledge and information is very important in
moving forward, a total of RM2.4 billion (US$709 million) would be spent to
improve telecommunication infrastructure in rural areas.

" Meanwhile, RM400 million (US$118.16 million) has been allocated to further
expedite the High Speed Broadband project under the stimulus packages," it said.

It also said that in order to ensure continued development of the domestic
automotive sector, a RM200 million (US$59.08 million) Automotive Development
Fund has also been allocated.

" Malaysian companies have an edge in oil and gas, plantation and
construction activity, which can be further strengthened and promoted for global
expansion.

" The government also recognises several issues including human capital,
fiscal management, liberalisation and private investment that must be addressed
to expedite the recovery process and set the stage for the transition into
a high-income economy," the report disclosed.

As for external factors, the Treasury said Malaysia would continuously
engage the international community through multilateral and regional forums
while reiterating the need to have a more stable and resilient international
financial system.

" This is to enable it to withstand future systematic shocks and ensure
macroeconomic stability," it added.

-– BERNAMA