KL unveils $23.99 billion budget to spur growth

KL unveils $23.99 billion budget to spur growth

KUALA LUMPUR (AFP): Malaysia announced yesterday measures to
lure high-technology industries and curb imports of intermediate
goods in its 1997 budget, which was aimed at coping with lower
economic growth.

Deputy Prime Minister Anwar Ibrahim said 1997's budget of
59.982 billion ringgit (US$23.99 billion) would be 1.2 percent
lower than the 1996 allocation.

With revenue estimated at 60.778 billion ringgit, it would be
Malaysia's fifth surplus budget.

A total of 17.269 billion ringgit of budget spending would be
channeled to development and the rest for operating expenditure
next year, Anwar said.

Anwar, who is also finance minister, said the budget was aimed
at strengthening the foundation of the economy and ensuring the
well being of Malaysians.

"The budget strategy is to ensure a "sustained economic growth
in the medium and long term," Anwar told parliament.

Economic growth is expected to slow sharply to 8.2 percent
this year from 9.5 percent last year. Gross domestic product
growth is projected to slow further to 8.0 percent next year.

To underscore Malaysia's intense efforts to develop an
information-technology hub, dubbed as a multi-media super
corridor, Anwar announced a 100 percent import tax exemption on
multimedia equipment.

Multi-media corridor companies would also enjoy a 10-year
pioneer status allowing them an income tax holiday to encourage
their development in the technology hub, Anwar said.

To curb credit spending, Anwar said a service tax of 50
ringgit per year would be imposed on credit cards. There are now
about two million credit cards in circulation in the country.

"Smart cards and credit cards are extensively used. But it
should not lead to indebtedness," Anwar said.

Anwar did not announce any cuts in personal or corporate
taxes.

To correct Malaysia's wide current account deficit, Anwar
announced specific measures to curb imports of intermediate goods
and promote the tourism and shipping sectors.

Exports of professional services, including financial,
engineering, legal and accounting services would be exempted from
services tax.

Import duty and sales tax would be imposed on intermediate
goods like spares and consumables used in manufacturing, such as
screws and bolts, filters, valves, gaskets, refractory bricks,
grinding stones, sandpaper and catalysts.

Such taxes would also be imposed on certain hotel and
equipment such as crockery, cutlery, linen and covers.

A five percent import duty currently imposed on components in
the assembly industry would be reduced gradually.

The minister also announced a one-month bonus for the
country's more than 800,000 civil servants that would cost the
government a pay-out of one billion ringgit this year.

Malaysia is forecast to have a 1996 current account deficit of
14.771 billion ringgit (5.9 billion dollars) compared to 18.69
billion ringgit last year. 1997's deficit is expected to improve
to 11.497 billion ringgit.