Malaysia unveils new growth plan
Malaysia unveils new growth plan
KUALA LUMPUR (AFP): Malaysian Prime Minister Mahathir Mohamad unveiled yesterday a five-year multi-billion-dollar plan to achieve steady economic growth and eradicate the country's current account deficit.
The so-called Seventh Malaysia Plan increases development spending 38 percent from the previous five-year program to 162.5 billion ringgit (US$65 billion) for the five years to the end of 2000.
Much of that spending would be ploughed into infrastructure.
The plan "is designed to bring Malaysia to the threshold of the 21st century, not only stronger economically but also more united as a nation," Mahathir said in the plan tabled to parliament.
The blueprint for economic growth outlined a huge privatization program, bigger education spending, higher productivity, and a shift from labor-intensive industry to high- technology.
It called for more spending on infrastructure to avoid hampering economic growth and for aggressive action on trade to help turn the current account deficit into a surplus by 2000.
The government would aim to rein in Malaysia's economic expansion to eight percent a year, down from the rapid annual 8.7 percent growth recorded on average under the previous plan, the plan said.
Officials from the country's Economic Planning Unit that compiled the plan said the lower growth rate was aimed at ensuring long-term stability and a better quality of life.
Rapid growth had contributed to a widening current account deficit, inflationary pressures, infrastructure constraints and an acute labor-crunch, they said.
The plan aimed to turn around the current account balance, which deteriorated into 17.8 billion ringgit ($7.1 billion) deficit in 1995 from a deficit of 2.48 billion ringgit in 1990.
The development plan set a target of producing a current account surplus of 1.836 billion ringgit by 2000, the economic officials said.
We have formulated strategies to boost the services sector and turn around the deficit in five years," the economic unit's director-general, Ali Abul Hassan Sulaiman, told reporters at a briefing on the plan.
The privatization program included the national postal service Pos Malaysia Bhd., the Bakun hydroelectric dam in eastern Sarawak state and Bank Bumiputra Malaysia Bhd, the country's second largest commercial bank.
No figure was given for how much the privatization program would raise.
The economic plan said the government would more aggressively promote tourism and higher education, local port, shipping and reinsurance services to stem large outflows.
Malaysian exports would be more aggressively marketed overseas to enhance the merchandise trade balance.
The five-year plan aimed for lower inflation but no figure was given. The central bank in March said the government aimed to curb inflation to below four percent a year. Inflation in 1995 was put at 3.4 percent.
In tackling inadequate labor resources, the plan called for a shift from an investment-led economy reliant on labor-intensive production into a productivity-driven nation propelled by capital-intensive industries.
Investment in the manufacturing sector, expected to contribute 37.5 percent to growth, is projected to total 110 billion ringgit, largely to support the shift to capital- and technology- intensive industries.
To upgrade skills and strengthen the technology base, research and development and training would be emphasized, with enrollment of science and engineering students rising from 76,300 in 1995 to 132,050 by 2000.
The blueprint aimed to raise the contribution from higher productivity to output growth to 41.3 percent, compared with 28.7 percent in the previous plan.
The economy's future would depend on productivity gains if private investment were to fall, Ali warned.
The five-year plan expects private investment to increase 86 percent to 385 billion ringgit from 207 billion ringgit in the previous plan.
Of the plan's 162.5-billion-ringgit public sector investment, the federal government would contribute 41.5 percent, or 67.5 billion ringgit, with the rest provided by state governments and state enterprises.
Half of the federal government's contribution would be invested in economic sectors to sustain growth.
Among the key economic sectors, transport and communication would take 14.8 billion ringgit, or 23.4 percent of the federal government's contribution, to prevent infrastructure bottlenecks.