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INTRODUCTION
Mr.
Speaker Sir,
1.
Let us be thankful to God for the blessings He has bestowed on us through
the new mandate given by the rakyat to the Barisan Nasional Government to
once again form the Government. I would also like to take this opportunity
to record our deepest appreciation to the rakyat from all walks of life
for the support and confidence they have in the Barisan Nasional. This
victory is indeed a victory for the rakyat as well as for democracy,
stability, peace and development. In addition, my heartiest
congratulations to all Members of the House who have been elected to
represent their respective constituencies.
2.
The success of the Barisan Nasional is evidence of the maturity of the
rakyat in making a wise and apt choice. Once again, support from the
rakyat will enable the Barisan Nasional to continue to govern and develop
this nation. We are thankful that the election proceeded smoothly, without
any disturbances and in the spirit and tradition of democracy.
Mr. Speaker Sir,
3.
On 29 October 1999, I presented the 2000 Budget in this House. As
Honourable Members are aware, the 2000 Supply Bill could not be approved
as Parliament was dissolved on 11 November 1999. As such, the 2000 Supply
Bill is now tabled again in this House for debate and approval.
4. Since our nation gained independence 42 years
ago, the rakyat have enjoyed improving standards of living. The Quality of
Life Report 1999 indicates that the quality of life index as a whole,
increased from 86.2 points to 105.7 points during the period 1980-98. This
increase was achieved, particularly in education, income and distribution,
family life, health, transport and communication, social participation,
housing and the work environment.
5. These improvements are the result of the
persistent efforts of the Government in undertaking policies and
programmes. However, the path towards achieving this success has not been
easy. There were many challenges and obstacles. Despite this, the nation
has successfully made great strides in development. During the recent
crisis, there were severe external pressures on the nation for rejecting
the policy approach proposed by the International Monetary Fund (IMF). But
with the courage, determination and confidence of the rakyat, we have
successfully overcome the crisis. We have not only revived the economy but
also protected the interests of the rakyat. Malaysia has now emerged as
the only country that successfully withstood external pressures during the
financial crisis and implemented its own approach of macroeconomic
management.
6. We must be proud of our ability to formulate and
determine our own political system and the nation’s approach in
development based on our needs and priorities, without submitting to the
demands of those with their own agendas. We must believe in our
capabilities to resolve problems in our own way. The spirit of
independence must continue to be imbued in all Malaysians. We should be
prepared to make sacrifices to defend our political and economic
independence.
7. It is with this spirit of independence that we have
successfully overcome the worst economic crisis ever experienced by the
nation. This success has been achieved despite predictions of failure and
adverse consequences on this nation by parties envious of our
achievements. As a result of the rakyat’s courage and hard work, we have
overcome the economic crisis without having to resort to external
assistance, while ownership of the nation’s assets continues to remain
in our hands. The Government is confident that with the new mandate from
the rakyat, the nation will continue to enjoy even greater prosperity
through sustained and equitable economic growth.
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ECONOMIC
PERFORMANCE IN 1999 AND PROSPECTS FOR 2000
Mr.
Speaker Sir,
8. Latest statistics indicate that the nation’s
economic recovery has strengthened and become more broad-based, with the
annual rate of growth in real Gross Domestic Product (GDP) increasing from
4.1 per cent in the second quarter of 1999 to 8.2 per cent in the third
quarter and 10.6 per cent in the fourth quarter. This represents a
significant recovery given the five consecutive quarters of contractions,
beginning the first quarter of 1998. This strong recovery is supported by
the rapid expansion in output and export of manufactured goods, in
addition to the recovery in the construction sector. At the same time,
domestic demand is on the increase, supported by both public and private
expenditure. As a result, our latest estimate of growth in real GDP for
1999 based on current economic performance is 5.4 per cent, which is
higher than the 4.3 per cent estimated when I presented the 2000 Budget
last October. Clearly, the economy has recovered and the financial crisis
has ended.
9. The rapid pace of economic growth was supported by
stronger economic fundamentals. The nation’s external trade position
continues to register surpluses for 26 consecutive months since November
1997 to December 1999. For the year 1999, trade surplus amounted to 72.3
billion ringgit, which is the largest surplus ever recorded. Consequently,
the current account of the nation’s balance of payments is now estimated
to register a surplus of 47.4 billion ringgit. This surplus has enabled
external reserves to increase from 20.2 billion US dollars at end August
1998 to 33.8 billion US dollars on 24 February 2000, sufficient to finance
6.4 months of retained imports. At the same time, the rate of inflation
declined from 5.3 per cent in 1998 to 2.8 per cent in 1999.
10. The improved performance of the economy and stronger
economic fundamentals further enhanced investor confidence. The composite
index of the Kuala Lumpur Stock Exchange (KLSE) increased to 1,009.53
points on 24 February 2000, an increase of 284 per cent compared with the
lowest level of 262.7 points on 1 September 1998. Market capitalisation of
the KLSE also increased by 551.18 billion ringgit or 304 per cent from
181.49 billion ringgit to 732.67 billion ringgit in the same period. With
the improved economy and better financial performance of the corporate
sector, the KLSE should continue to perform well. However, there are
investors and analysts who continue to turn to the west for indicators to
gauge local market performance. The performance of the KLSE should be
determined by developments in the domestic economy and the performance of
companies listed on the KLSE.
11. The performance of the financial and corporate
sectors continue to strengthen. Malaysia is among the countries which has
successfully managed the problem of non-performing loans (NPLs), increased
capital injection in the banking system and encouraged corporate
restructuring. As at 31 December 1999, Danaharta has taken over NPLs
amounting to 45.5 billion ringgit. Of this total, Danaharta has already or
is in the final stages of resolving NPLs amounting to 17.6 billion ringgit
at gross value. Danamodal has injected capital, totalling 7.59 billion
ringgit into 10 banking institutions. Up to 9 February 2000, the Corporate
Debt Restructuring Committee (CDRC) received 67 applications with debts
totalling 36.3 billion ringgit. Of these, 19 debt restructuring schemes
involving 14.1 billion ringgit have been resolved.
Mr.
Speaker Sir,
12.
The performance of the Federal Government expenditure also improved in
1999. Following the fiscal stimulus measures and more efficient financial
management by the Government, the shortfall in development expenditure was
reduced from 19.9 per cent in 1998 to 12.5 per cent in 1999.
13. The financial performance of the Federal Government
also improved in 1999. The Government recorded a smaller overall deficit
of 9.5 billion ringgit or 3.4 per cent of Gross National Product (GNP)
compared with a deficit of 16.1 billion ringgit or 6.1 per cent of GNP
estimated in the original 1999 Budget. The improvement in financial
performance is due to higher revenue collection of 58.7 billion ringgit,
compared with the original estimate of 47.2 billion ringgit. In addition,
actual operating expenditure decreased to 46.7 billion ringgit compared
with the original estimate of 47 billion ringgit.
14. The improved performance in the economic and
financial sectors as well as the better performance of Government
expenditure have positive impact on the social sector. Average household
income increased by 3.7 per cent from 2,392 ringgit in 1998 to 2,480
ringgit in 1999. As such, the poverty level declined from 8.5 per cent to
6.9 per cent during the same period. The hardcore poverty level decreased
from 1.9 per cent to 1.4 per cent. Furthermore, the rate of unemployment
decreased from 3.2 per cent to 3.0 per cent.
15. Prospects of economic growth for 2000 are
increasingly promising. Expansion of the global economy is expected to
remain strong with output growth of about 4 per cent. The economies of
Malaysia’s trading partners in East Asia are expected to continue to
recover. Economies in Europe are gradually improving while the United
States economy remains strong. Against the background of these
developments, as well as the pragmatic policies and measures undertaken by
the Government to further strengthen the economic recovery, GDP is
expected to expand at 5.8 per cent. This is higher than the original
forecast of 5 per cent during the presentation of the Budget in October
1999. Despite the increase in imports of goods and services following
stronger domestic demand, the current account of the balance of payments
is expected to continue to record a surplus, given the strong performance
of exports. At the same time, the Government will continue to monitor
pressure on prices of goods and services. If necessary, additional
measures will be undertaken, especially to increase supplies to ensure
that the inflation rate remains low.
16. During the presentation of the 2000 Budget in
October 1999, I had proposed several tax measures as well as increases in
the salaries and housing allowances of Government employees. After taking
into consideration these proposals, the overall deficit was projected at
about 5 per cent of GNP in 2000. However, with better economic growth,
revenue collection is expected to increase to 61.8 billion ringgit
compared with 58.8 billion ringgit estimated earlier. As such, the Federal
Government deficit for the year 2000 is expected to be lower at 4.5 per
cent of GNP. These improvements reflect the Government’s fiscal policy
that is responsible, visionary and prudent.
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