M'SIAN ECONOMY POISED FOR STRONGER GROWTH NEXT YEAR

KUALA LUMPUR, Oct 23 (Bernama) -- The Malaysian economy is poised to
strengthen between two and three per cent next year from a slower contraction of
-3 per cent this year, according to the Ministry of Finance Friday.

This is due largely to pragmatic measures undertaken by the government,
including a timely RM67 million (US$1=RM3.38) fiscal stimulus package, which
helped revive the economy despite sluggish global conditions.

Other factors benefitting growth next year includes the stabilising global
economic conditions and accomodative monetary policies, the Treasury said in its
2009/2010 Economic Report.

The expected growth this year itself has been revised from an earlier gloomy
projection of -4.0 to -5.0 per cent, painting a picture of an economy already on
the rebound from the aftermath of the current financial crisis.

It said domestic demand would be the main driver of the economy this year,
attributed to public sector expenditure and private consumption.

While public investment is expected to expand, following the implementation
of projects under the stimulus packages, private investment is expected to
contract, reflecting lower business sentiment.

However, the ministry said private consumption is envisaged to record
positive growth on account of firm household disposable income, as a result of a
stable job market and recovery in commodity prices.

On the supply side, the Treasury said growth is expected to come from the
services and construction sectors.

The ministry said growth in the services sector is anticipated to expand 3.6
per cent in 2010, from an estimated growth of 2.1 per cent this year, emanating
from favourable performances in the communication, finance and insurance,
wholesale and retail trade as well as real estate and business services
sub-sectors.

Recovery in trade-related activity is expected to further enhance growth in
the transport and storage as well as utilities sub-sectors.

" Prospects for the services sector is expected to remain favourable, as the
government continues to intensify its efforts in developing the sector as the
key driver of growth," it said.

Meanwhile, the manufacturing sector is forecast to rebound 1.7 per cent next
year from an estimated -12.1 per cent this year.

The recovery will be led by export-oriented industries which are expected to
benefit from the global recovery while domestic-oriented industries is expected
to expand in line with better consumer sentiment and business confidence.

The ministry said the electronic and electrical industry is anticipated to
turn around, driven by higher demand for electronic equipment and parts, as well
as semiconductors.

The Treasury added that the resource-based industry is envisaged to grow
steadily, following improved demand for etroleum, chemicals, rubber and plastic
products.

" With better job prospects and higher disposable income, the transportation
equipment sub-sector, in particular the passenger cars segment, is expected to
rebound.

" In addition, increasing construction acitivites with the recovery in the
housing sector will augur well for the iron, steel and cement segments," it
said.

As for agriculture, the ministry said the sector is anticipated to rebound
2.5 per cent in 2010 from an estimated -2.3 per cent in 2009 aided by the
recovery in the commodity sub-sector.

It added that the production of crude palm oil is envisaged to increase
4.9 per cent to 17.8 million tonnes next year, from an expected -4.1 per cent
growth this year and output of only 17 million tonnes.

The better production is due to matured areas, under oil palm cultivation,
increasing to 3.98 million hectares from an estimated 3.80 million hectares this
year.

With oil palm trees recovering from biological tree-stress, yield from fresh
fruit bunches is poised to increase to 20.9 tonnes per hectare this year while
rubber output is projected to increase due to better demand and prices.

The non-commodity sub-sector, mainly livestock and other agriculture, is
projected to expand further as implementation of various high impact projects
gather pace.

The fishing industry is projected to expand further with increasing number
of aquaculture industrial zones.

The ministry also said that the mining sector is expected to turn around 1.1
per cent next year from an estimated -2.9 per cent this year, on account of
higher production of crude oil and natural gas.

Production of crude oil is projected to increase 0.8 per cent to 668,000
barrels per day in 2010 due to higher demand, as several oil fields are expected
to start production then.

Meanwhile, production of natural gas is expected to increase 2.0 per cent to
2.126 million standard cubic feet due to higher demand from domestic and
external markets, and the expansion of MLNG DUA is expected to increase the
overall production capacity of gas in Bintulu to 23.9 million tonnes a year.

As for the construction sector, the Treasury expects it to expand 3.2
per cent next year from an estimated 3.5 per cent this year, with all
sub-sectors registering steady growth.

The sector is expected to benefit from the economic recovery and ongoing
construction activities under the second stimulus package and the exploration
activities by oil and gas industries is expected to spur the construction
sector.

It said major projects like the Light Rail Transit (LRT) extension works on
the Kelana Jaya and Ampang lines, Pahang-Selangor Raw Water Transfer, the new
Low Cost Carrier Terminal at the Kuala Lumpur International Airport and
expansion of the Penang International Airport, is expected to drive growth of
civil-engineering sub-sector.

The non-residential sub-sector is expected to pick up strongly spurred by
better demand for property and commercial buildings while the residential
sub-sector is also projected to strengthen following improved consumer sentiment
and job prospects.

-- BERNAMA