MALAYSIAN GOVERNMENT REFUTES ALLEGATION OVER WRONG PRESCRIPTION FOR ECONOMY

KUALA LUMPUR, Dec 7 (Bernama) -- The allegation that the Malaysian
government has prescribed the wrong treatment for the economy is incorrect, the
House of Representatives was told Monday.

Deputy Finance Minister Chor Chee Heung said measures taken by the
government to overcome the impact of the economic crisis, had yielded positive
outcomes.

"This can be seen from the smaller contraction in the country's economy,
that is from 6.2 per cent in the first quarter of 2009 to 3.9 per cent in the
second and 1.2 per cent in the third," he said.

He was answering a question from Dr Dzulkefli Ahmad, a MP who had asked the
Finance Minister to state why major towns in Malaysia were faced with the
pressure of inflation when the country's gross domestic product (GDP)had
experienced a contraction in the first and second quarters of 2009.

He also asked if this meant that the government's prescription, for treating
the economy was wrong, and off target.

Chor said in 2008 and 2009, many countries including Malaysia had
implemented stimulus packages and accommodative monetary policies to overcome
the impact of the global financial and economic crisis.

According to Chor, the country's inflationary pressure had reduced this year
resulting from the fall in the price of food commodities and oil, following the
global economic crisis.

"As such, inflation which is measured through changes in the annual Consumer
Price Index (CPI), recorded an increase of 3.7 per cent in the first quarter of
the year and slowed down to 1.3 per cent in the second.

"From January to October 2009, inflation only registered a rise of 0.6 per
cent compared to 5.5 per cent for the same period last year," he said.

He said that inflation in towns also showed a slow rise this year compared
to 2008.

He highlighted that inflation in towns in the first quarter of 2009 was 3.6
per cent, 1.2 per cent in the second and fell to 2.4 per cent in the third
compared to 2.6 per cent, 4.7 per cent and 8.2 per cent in the same quarters of
2008.

To another question, Chor said to overcome the glocal economic crisis, the
government though Bank Negara Malaysia had maintained the overnight policy rate
(OPR) at two per cent.

He said the government would monitor current conditions before deciding on
whether the OPR rate should be increased in future.

He said the OPR rate at two per cent may be maintained next year if Bank
Negara felt it was sufficient to take the country out of the economic crisis.

-- BERNAMA