Thursday, June 26, 2008

9MP Mid Term Review

9MP Mid Term Review by Prime Minister

KUALA LUMPUR: The policy and strategy framework for the mid-term review of the 9MP, outlined by Prime Minister Datuk Seri Abdullah Ahmad Badawi Thursday, focuses on these five thrusts:

1. Move economy up the value chain by focusing on enhancing productivity and competitiveness of the nation, generate new sources of growth and expand into new markets.

2. Raise the capacity for knowledge and innovation and nurture first class mentality. The key initiatives are to improve the quality of and accessibility to education; making national schools the preferred choice; providing tertiary education of international repute; nurturing R&D and innovation capability; and fostering a society with exemplary values.

3. Address persistent socio-economic inequalities by further reducing the incidence of poverty, improving distribution of income, reducing regional disparities, restructuring employment and wealth ownership, and developing bumiputra Commercial and Industrial Community (BCIC).

4. Improve the standard and sustainability of quality of life, accessibility to and quality of healthcare and other social amenities will be enhanced and environmental management improved.

5. Strengthen the institutional and implementation capacity.

Priority during the remaining 9MP would be on people-centred projects that bring tangible benefits and improve the quality of life of the people.

The main initiatives topping the agenda are:

·eradicating poverty;

·providing affordable housing to the low and middle income;

·providing access to water and electricity;

·enhancing health care;

·improving the standard of living of marginalised groups;

·narrowing intra and inter ethnic income and wealth gaps;

·strengthening human capital;

·upgrading public safety;

·improving environmental management and conservation;

·and developing regional corridors and accelerating development of Sabah and Sarawak.

The development expenditure ceiling has been raised to RM230bil from RM200bil approved under 9MP, to finance priority projects including the food security programme, construction of rural roads and provision of low cost housing.

Macroeconomic performance and prospects

* GDP to grow 6.0% per annum in 2008-2010, driven by domestic demand, particularly private sector expenditure

* On supply side, services, manufacturing and agriculture sectors will remain as main sources of growth

* Private investment to grow 10.6% per annum. In nominal terms, private investment to reach RM121.0bil or 56.4% to total investment in 2010

* Public investment to grow at 6.3% per annum

* Private consumption to grow at 7.6% per annum with its share to GDP increasing to 52.9% in 2010

Sectoral Output:

* Services sector to sustain growth momentum at 7.9% per annum, led by financial and business services subsector growing at9.8% per annum

* Manufacturing sector to grow at slower pace of 3.5% per annum, due to sluggish global demand of electrical and electronics products

* Agriculture sector to grow at 4.4% per annum

* Mining sector to grow at 3.4% per annum, with oil and gas subsector accounting for 98.7% to sector

* Construction sector is grow 5.8% per annum, boosted by civil engineering activities, residential and commercial property subsector

Fiscal Deficit: Federal government expected to be sustained at 3.2% of GDP in 2010

Moving economy up value chain:

·Increasing value added of the services sector by 7.9% to RM948bil

·Increasing share of services sector to GDP to 55.7%

·Targeting 24.6 million tourist arrivals with receipts of RM59.4bil

·Increasing tourist per capita expenditure to RM2,417

·Increasing value added of the manufacturing sector by 3.5% to RM168.9bil.

Targeted value added of major subsectors - E&E (RM32.9bil); M&E (RM19.2bil);

Petrochemical (RM20.5bil);

Transport equipment (RM16.2bil)

·Average annual investment level of RM27.5bil - E&E RM14.0bil; M&E RM1.7bil, Petrochemical RM1.7bil; Transport equipment RM2.1bil; Medical devices RM800mil;

·Increasing food production and self sufficiency level (SSL).

.Production of rice to increase by 27.4% to 2.9 million tonnes (86% of SSL);

Fisheries production to increase by 33.4% to 1.8 million tones (103% of SSL); Beef by 31.2% to 45,000 tonnes (28% of SSL); Poultry by 18.2% to 1.3 million tones (122%of SSL).

·Increasing ICT value added to RM30bil; Increasing ICT-related jobs to 500,000

Highway projects:

·Construction of East Coast Expressway Phase II from Kuantan - Kuala Terengganu.

·Senai-Desaru and Kemuning-Shah Alam highways; Construction of roads to link resettlement areas with rural industrial areas and estates, particularly in Sabah and Sarawak. Upgrading of Kuching, Kota Kinabalu, Kuala Terengganu and Labuan airports

·Construction of Seremban-Gemas and Ipoh-Padang Besar electrified double tracking rail projects. To be completed in 2012 and 2013, respectively.

Mid-Term Review of Ninth Malaysia Plan prepared by Economic Planning Unit

What's out:

* No allocation given for RM1.6bil Penang Monorail project under 9MP
* No allocation for Penang Outer Ring Road project under 9MP
* Proposed administrative centres in several states put on hold

Projects were deferred as they were not people-centric as yet and would not have an immediate impact.

What's in:

Additional RM30bil for development expenditure under 9MP used for: * RM10bil for the various Corridor initiatives
* Additional RM2bil for Sabah, Sarawak development
* Food security (RM3bil)
* Strategic investment fund (RM3bil)
* Double tracking rail project (RM2bil)
* Additional rural infrastructure (RM2bil)
* Public transportation (RM1.6bil)
* Low and medium cost housing projects (RM1bil)
* High impact education fund (RM500mil)

When the 9MP was prepared, the cost of light crude oil was then at US$55 per barrel. When the Mid-Term Review was carried out, oil was at RM100 per barrel in February.

Poverty eradication

To address persistent socio-economic inequalities, the government's target is to eradicate hardcore poverty and reduce overall poverty to 2.8% by 2010. In Peninsular Malaysia, the percentage of hardcore poverty has been reduced from 0.7% in 2004 to 0.3% in 2007; while for Sabah it was reduced from 6.5% to 3.7% while for Sarawak it was reduced from 1.1% to 0.7%. The country's urban hardcore poverty rate was reduced from 0.4% to 0.3% and for rural, from 2.9% to 1.4%.

Overall poverty in Peninsular Malaysia was reduced from 3.6% to 2.3% while for Sabah, it was reduced from 23% to 16% and Sarawak from 7.5% to 4.2%. For the country's urban poverty rate, it was reduced from 2.5% to 2% and for rural from 11.9% to 7.1%

Income distribution

Income distribution to reduce income gaps among ethnic groups as well as between rural and urban areas has seen Bumiputera's mean income increased by 5.2% to RM3,156 in 2007 from RM2,711 in 204. During the period, the Chinese's income rose 3.0% to RM4,853 from RM4,437, Indians' income rose 3.2% to RM3,799 from RM3.456 and for others, a 15.5% increase to RM3,651 from RM2,312.

In urban areas, income rose 3.3% to RM4,356 from RM3,956 and for the rural area, there was a 6.8% increase to RM2,283 from RM1,875

Ownership restructuring

The government's target under the 9MP is to attain bumiputera equity ownership between 20% and 25% by 2010, which excludes government companies like Petroliam Nasional Bhd and Khazanah Nasional Bhd. The equity ownership is based on the par value of the shares and not on market capitalization.

Bumiputera ownership has increased from 18.9% in share capital in 2004 to 19.4% in 2006. During the period, individual ownership increased from 15.0% to 15.1% while for institutions, including Permodalan Nasional Bhd, it increased from 2.2% to 2.6%.

For non-bumiputeras, it increased from 40.6% in 2004 to 43.9% in 2006. Chinese ownership group saw an increase from 39.6% to 42.4%, while for Indians it showed a slight decline from 1.2% to 1.1%.

However, there was a decline in foreign ownership from 32.5% to 30.1% while for nominees, it fell from 8.0% to 6.6%.

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