Malaysia announces anti-inflation step

Malaysia announces anti-inflation step

KUALA LUMPUR (Agencies): Malaysian Deputy Prime Minister Anwar
Ibrahim has unveiled several measures aimed at containing
inflation and said more would be announced in the coming weeks.

Anwar said Wednesday that the Malaysian government would take
stern action against profiteers who hike prices of goods
unnecessarily.

The fast growth of Malaysia's economy, expected to hold to
eight percent this year for the eighth straight year, has raised
concern among some analysts that the economy may be overheating.

"The ministry will be very firm and tough and it will take
action against unscrupulous businessmen who continue to exploit
consumers," he told reporters after a cabinet meeting.

Anwar, who is also finance minister, was quoted by Reuters as
saying that the government would remove regulations hampering
imports of essential food items such as beef, fish and
vegetables.

It would also increase the supply of medium and low-cost
housing in the country to meet demand.

Regulations would be eased to allow increased imports of
cement to meet demand in the burgeoning construction sector to
hold down price pressures, he said.

Apart from a few measures he detailed on Wednesday, Prime
Minister Mahathir Mohamad will also announce more anti-inflation
moves in early June and again on July 1, Anwar said.

He did not announce any credit controls to limit domestic
loans for car and housing purchases as analysts had expected.

Instead, he said the government was closely monitoring housing
purchases by foreigners who bought property in Malaysia for
speculative reasons, pushing up prices.

Malaysia's government has taken a hawkish stance in a battle
to keep inflation below four percent. Last year, it freed import
tariffs for more than 500 items and more recently issued stiff
warnings to shopkeepers as public complaints mounted over a spate
of post-election price hikes.

The government also acted swiftly in revoking an electricity
tariff hike announced by listed state-owned power giant Tenaga
Nasional, causing the company's share price to tumble on the
stock exchange this month.

"We don't think it was proper for (Tenaga) to make an
announcement on the price increase two days after the elections,"
he said, adding that the government wants the power giant to cut
costs.

Inflation averaged 3.3 percent for the first quarter of this
year. It was 3.7 percent for the whole of 1994.

Growth

Meanwhile, Rashid Hussain Securities, a top Malaysian
brokerage, said in its economic update yesterday that Malaysia's
economy grew by an annual rate of 9.8 percent in the three months
to March, underpinned by buoyant exports and domestic demand, but
inflation was still under control.

Manufacturing continued to lead the way, but overall growth
was lifted by stronger expansion in agriculture and mining
output, said Rashid Hussain Securities in its economic update
compiled by its research unit.

"Private consumption remained strong, registering sharper
increases in the sales of cars and higher demand for loans for
business and consumption," the report said.

The Malaysian economy is officially projected to grow by 8.9
percent this year from 8.7 percent last year.

Although Deputy Prime Minister Anwar Ibrahim announced no new
credit controls on car or housing loans, he said the government
would not entertain appeals to raise prices, including the price
of cement.

Property purchases by foreigners for speculative purposes
would be closely monitored, he said.

Rashid Hussain economist Chua Hak Bin said current economic
indicators did not yet suggest a need for credit controls or
sharp monetary tightening.

"Inflation remains under control at 3.3 percent for the first
four months of the year, compared with 4.4 percent in the
corresponding period of last year," Chua told AFP.

Business loans picked up from 9.3 percent in the fourth
quarter of last year to 12.2 percent in the first two months of
the year.

Consumer credit was sustained at a high growth rate of 16
percent in the first two months from 16.3 percent in the fourth
quarter of last year.