PUTRAJAYA: Following are the highlights of Prime Minister Datuk Seri Najib Razakâ€™s speech.
Malaysiaâ€™s GDP will grow by between 4.5 â€“ 5.5 per cent in 2015;
The current account will remain in surplus in 2015; and
The ringgit exchange rate will over time adjust to reflect Malaysiaâ€™s strong fundamentals.
However, Najib said that the falling oil price necessitated a review of fiscal assumptions underpinning the 2015 Budget, with the revised forecast predicting a revenue shortfall of RM13.8 billion. Without any fiscal measures, this would lead to a deficit increase to 3.9 per cent of GDP.
In light of falling oil prices, volatile capital flows and a worsening global economic outlook, Najib therefore announced that:
Malaysiaâ€™s fiscal deficit target would be revised to 3.2 per cent of GDP in 2015 â€“ higher than the 3 per cent set out in the Budget, but lower than the 3.5 per cent in 2014, and in line with the Governmentâ€™s continuing commitment to fiscal consolidation.
Development Expenditure for 2015 would be fully maintained, but Operating Expenditure is expected to be reduced by RM5.5 billion.
Najib also set out a strategy to counter external developments and strengthen Malaysiaâ€™s economic resilience by continuing fiscal reform and consolidation, assisting people and businesses affected by recent floods, and ensuring sustainable economic growth.
Firstly, to boost exports of goods and services, the Government will:
– Actively promote import-substitution services, such as shipping, port, education and professional services;
– Improve logistics and trade infrastructure;
– Accelerate implementation of the National Export Councilâ€™s recommendations;
– Intensify the tourism industry;
– Review the levy on foreign workers;
– Waive visa fees for tourists from, among others, China.
Second, to enhance private consumption, the Government will:
– Give priority to local contractors to undertake reconstruction works in their respective flood affected areas;
– Intensify promotion of â€œBuy Malaysiaâ€ products;
– Increase the frequency and extend the shopping hours of nationwide mega sales;
– Accelerate promotion of domestic tourism through competitive domestic air fares;
– Encourage the private sector to leverage benefits from the establishment of the ASEAN Economic Community.
Third, to accelerate private investment, the Government will:
– Set up a Services Sector Guarantee Scheme amounting to RM5 billion for SMEs in the services sector, with maximum financing of RM5 million and a 70 per cent Government guarantee;
– Encourage GLCs and GLICs to invest domestically;
– Further reduce the cost of doing business;
– Allocate 30 per cent of the annual procurement budget of Government agencies and GLCs for goods and services to local SME producers;
– Increase local goods and services in Government procurement.
Following recent severe flooding, the Prime Minister also announced measures to assist flood-affected people and businesses, and to rebuild damaged infrastructure.
The Government has provided an initial allocation of RM500 million for rehabilitation works and welfare programmes for flood victims, bringing the total to RM787 million, and will:
– Provide an initial allocation of RM800 million for repair and reconstruction of basic infrastructure such as schools, hospitals, roads and bridges;
– Provide RM893 million under the 2015 Budget for flood mitigation projects;
– Build 8-ft stilt houses for those who have land and whose homes were damaged by the floods;
– Hand over 1,000 units of completed low-cost houses in Gua Musang;
– Provide RM500 per flood affected household;
– Provide RM5,000 for the next-of-kin who have lost family members.
For businesses affected by floods, the Government will:
– Provide an additional RM100 million to TEKUN and RM100 million to AIM to provide soft loans to support SMEs and microenterprises;
– BSN, Agrobank, SME Bank, TEKUN and AIM will defer existing loan repayments of up to six months;
– Bank Negara Malaysia will establish a RM500 million Special Relief Facility for SME loan financing at a concessionary rate of 2.25 per cent with a grace period of up to six months through banking and development financial institutions;
– Bank Rakyat will offer a personal loan scheme of up to RM50,000 at a financing rate as low as 3.9 per cent, while loan repayments will start after six months from loan disbursement;
– A sum of RM500 million will be provided by financial institutions with a 70 per cent guarantee under a Flood Relief Loan Guarantee Scheme;
– SMEs in the flood affected areas will be exempted from levy payment to the Human Resources Development Fund (HRDF) for a period of six months with effect from 1 February 2015.
Prime Ministerâ€™s Office.