Thursday June 26, 2008 MYT 2:01:16 PM

Govt raises development expenditure to RM230bil

By JOSEPH CHIN

KUALA LUMPUR: The government is allocating another RM30bil for development expenditure under the Ninth Malaysia Plan (9MP), increasing the ceiling to RM230bil, according to the Mid-Term Review of the Plan.

The extra money would be to finance priority projects including food security, building more rural roads and low cost housing and to accommodate the surge in cost of building materials for approved infrastructure projects under the 9MP (2006-2010).

In the report released Thursday, it said the priority projects for the second half of the 9MP included a food security programme, building rural roads, providing low cost housing while coping with the surge in cost of building materials for approved infrastructure projects.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said the Mid-Term Review was taking place amidst an extremely challenging operating environment, not only for Malaysia but other nations also, driven by rising global commodity prices including fuel, metals and food, and also uncertainty in global financial markets.

“Against this backdrop, the Mid-Term Review represents a time to reassess national priorities in order to ensure that lower income groups are protected. It is a time to re-examine policies in order to incorporate changes required by the new challenging environment.

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

Of the RM230bil in development expenditure allocated, so far RM70bil or 30.4% has been used while the balance of RM160bil would be used in the remaining second half of the 9MP. The allocation and usage of funds according to five thrusts are:

1 Moving economy up value chain: Of the RM52.83bil allocated, RM18.93bil has been used up and the balance of RM33.9bil for projects under the remaining 9MP.

2 Raising capacity for knowledge and innovation: Of the RM44.63bil allocated, RM8.84bil used up (balance: RM35.79bil)

3 Addressing persistent socio-economic inequalities: Of the RM17.6bil allocation, RM3.56bil has been used (balance: RM14.04bil)

4 Improving standard and sustainability of quality of life: Of RM97.02bil allocation, RM31.54bil has been used (balance: RM65.47bil)

5 Strengthening institutional and implementation capacity: Of RM17.9bil, RM7.12bil has been used (balance: RM10.78bl)

The report said the top of the agenda during the remaining part of the 9MP was to:

* eradicate poverty;
* provide affordable housing to the low and middle income;
* provide access to water and electricity and enhance healthcare;
* 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 Mid-Term Review would also focus on managing the increase in the price of oil and food as the government sought to minimise its impact on the people, particularly the poor.

While the subsidy on petroleum and gas would be systematically and gradually reduced, a social safety net would be introduced to ensure the poor and deserving would continue to receive some form of support to mitigate its impact.

To improve its governance structure to ensure it gets maximum value for the money spent, it said the government was adopting an open tender process.

“Implementation and project management capability will be enhanced to improve efficiency, ensure timely delivery of projects and minimise wastage,” it said.

On the economy, it said gross domestic product (GDP) in real terms grew at 6.1% per annum in 2006-2007, surpassing the 9MP target of 6%.

The government targeted GDP to grow 6% in the second half of 9MP, underpinned by stronger growth in services and construction despite slower growth in agriculture, mining and quarrying and manufacturing.

Steps would be taken to cut expenditure on subsidies and improve efficiency in expenditure. At this level of expenditure, the government expected the fiscal deficit to be sustained at 3.2% of GDP in 2010, a revision from the 3.4% deficit under the original target. The government would also expand revenue base by reviewing tax incentives and improving tax collection.

As the Prime Minister had stated, “The road ahead will test our resilience and as such, efforts must be refocused and multiplied towards overcoming these difficulties. We shall emerge from this period stronger and better able to withstand future trials.”