Govt to introduce measures to insulate country’s economy

Govt to introduce measures to insulate country’s economy

KUALA LUMPUR: The Government will introduce several measures to insulate the country’s economy from the global financial crisis, Datuk Seri Najib Tun Razak said.

The Finance Minister said among them were making structural changes to encourage better and competitive economic growth, encourage more investments from the private sector in the local economy and implementing progressive liberalisation of the services sector.

Najib said more efforts would also be made to encourage more foreign direct investments in certain economic sectors and sub-sectors.

“The meeting also decided that more skilled or k-economy workers were needed here, especially for the main growth corridors,” he said.

Najib said the measures were discussed in the Economic Council meeting, which was chaired by Prime Minister Datuk Seri Abdullah Ahmad Badawi at Parliament House on Monday.

He added it was important that the programmes announced in the Budget 2009 and the RM7bil stimulus package, introduced to reinforce the economy, were implemented soon.

“Right now, that’s our priority. These projects must take off, hopefully in the first quarter of next year,” he told reporters Monday.

Najib said the council also discussed efforts to stabilise the national economy at the macro level, adding that the members also noted that the uncertainties in the future of the global economic scenario might be longer than expected.

To a question, Najib said the Government would only come up with additional stimulus packages if the situation warranted them.

“We have the capacity to make capital injections, but at the same time we cannot allow the Government’s fiscal deficit to become too high,” he added.

Earlier, in his welcoming speech to the Council, Abdullah said Monday’s meeting would focus on ensuring sustained and rapid economic growth and meet challenges of the bearish global economic outlook.

Abdullah said although Malaysia has strong macro-economic fundamentals and resilient banking and financial system, it was not completely insulated.

“Malaysia is a very open economy and we expect to experience a slowdown in growth next year, stemming mainly from softening export demand and lower foreign direct investment (FDI) inflow.

“Hence, the growth forecast has been accordingly trimmed to 5% for this year and 3.5% for 2009,” he added.

Abdullah said while the stimulus package announced by Najib last week was a short-term policy response, the Government believed that it should also take the opportunity to address medium- and long-term structural issues and formulate a strategic package to ensure rapid growth of the economy.

He added that China and India, which registered double-digit gross domestic product (GDP) growth recently, are also bracing for a slowdown.

“The affected economies have introduced a wide range of measures, some unconventional, to prevent the collapse of the financial and banking system and stimulate economic growth.

“Massive funds have been injected into the financial system by the United States and Euro zone economies to eliminate toxic assets, improve liquidity and re-start inter-bank lending,” he added.

Source : The Star