|
I.
INTRODUCTION
1.
We are grateful to the Almighty for enabling us to be gathered here
today for the tabling of the 2001 Budget.
We stand at the threshold of the first Budget of the twenty-first
century as well as at the beginning of the Eighth Malaysia Plan and the
Third Outline Perspective Plan. As
such, this Budget is indeed crucial.
This Budget goes beyond numbers and statistics on our performance
and budgetary allocations. It
underscores the implementation of strategic plans that will propel us
towards achieving Vision 2020.
Strategic
Vision Interrupted
2. The Asian financial crisis almost
derailed us from our goal of achieving developed nation status.
We have lost precious time and were forced to divert our attention
and utilise our scarce resources in overcoming the crisis.
The crisis was also a timely wake-up call for some of us.
Prior to the onset of the crisis, our Gross Domestic Product (GDP)
expanded at an average annual rate of nine per cent during the period 1987
to 1996 while inflation was contained at a low level of 3.5 per cent.
The nation was successful in attracting a steady flow of foreign
direct investment. The
manufacturing sector grew strongly by more than 14 per cent.
The Kuala Lumpur Stock Exchange (KLSE) was also a major destination
for international portfolio fund managers.
Market capitalisation peaked at 891 billion ringgit in February
1997 while the banking system was accredited as one of the strongest in
the region.
3. After two years, our economic growth
has resumed and rebounded to levels beyond our earlier expectations.
Today, many have come to accept and acknowledge the Government’s
ingenuity in formulating our own unique strategies and policies.
This success has indeed been a source of pride for us.
We received accolades from the academia, other Governments and even
the International Monetary Fund (IMF) and World Bank.
Since the economy has regained its growth momentum, we can once
again resume the implementation of strategic initiatives towards achieving
developed nation status.
Achievements
in the Pre-Crisis Period Towards Vision 2020
4. Before the
onset of the crisis, our progress towards Vision 2020 was on track.
We had clear objectives and had invested substantially in the
provision of modern infrastructure such as the construction of highways
and ports, the provision of telecommunication services and public
amenities. We had balanced growth and this has resulted in a decline in
the incidence of poverty from 17.1 per cent in 1990 to 6 per cent this
year.
5. We have launched several strategic
initiatives, including the establishment of the Multimedia Super Corridor
(MSC) as well as the bold initiative to target technology and
knowledge-based companies to locate within an area provided with
world-class infrastructure facilities, attractive financial incentives as
well as legislative and regulatory framework, tailor-made for the
development of MSC. We have
embarked on building a new administrative centre, Putrajaya; a multimedia
centre, Cyberjaya and the Kuala Lumpur International Airport (KLIA), to
rival any airport in the world. The
Government is also committed to developing the nation as a regional
financial centre, strengthening the banking system and developing the bond
market, thereby further broadening and deepening the nation’s financial
market.
Moving
Ahead
6. Although we
have been meticulous in our preparation to move ahead, we realise that the
world economic environment is undergoing drastic changes.
We are confronted with the challenges of globalisation,
liberalisation and the digital wave, in particular their implications on
the nation’s competitiveness. We need to review and update our implementation plans to take
into account the new realities, and where necessary, reformulate
strategies.
7. The world is witnessing, among others, trends
in the mergers of large conglomerates that now challenge the traditional
ways of conducting and managing businesses.
The advent of the knowledge-based economy or K-economy is now a
reality and threatens the conventional concept of comparative advantage.
The global technological revolution and the use of information and
communications technology (ICT) have opened up prospects and business
opportunities in various new fields.
We accept globalisation. We
only need to be cautious and vigilant in facing all the challenges and
impediments whilst preparing to seize the tremendous opportunities that
are emerging.
II
ECONOMIC CHALLENGES
8. The nation’s economic recovery has
been impressive. It has been
a ‘V-shaped’ recovery with GDP rebounding from a contraction of 7.4
per cent in 1998 to a growth of 5.8 per cent in 1999.
GDP is expected to expand by 7.5 per cent this year, far exceeding
the earlier forecast of 5.8 per cent.
We take even greater pride in the fact that this growth was
achieved in an environment of low inflation.
Income per capita continued to increase to 12,883 ringgit,
exceeding that prevailing in the pre-crisis period.
The purchasing power parity of rakyat
has also risen to 7,716 US dollars. The
balance of payments continues to strengthen with the current account
surplus totalling 29.8 billion ringgit or 9.9 per cent of Gross National
Product (GNP). The external reserves as at 23 October 2000, amounted to 32.3
billion US dollars, sufficient to finance 5.1 months of retained imports.
The Kuala Lumpur Composite Index is now at 796.22 points,
indicating a recovery of 14.1 per cent compared with the lowest level of
697.80 points registered during this year.
9.
Inflows of foreign direct investment (FDI) have increased.
Investment applications in the manufacturing sector to the Malaysian
Industrial Development Authority (MIDA), increased significantly by 67.6
per cent valued at 17.5 billion ringgit in the first seven months of 2000.
In the 2000 Budget, I announced the Pre-Packaged Incentives to encourage
investment and business activities. To date, the Government has approved a
total of seven projects valued at 11.25 billion ringgit. In addition,
investments in high technology projects in MSC totalled 2.8 billion
ringgit.
10. Although our economic performance has been remarkable and the
strong growth momentum is expected to be sustained, there still exist
risks and uncertainties in the economic and business environment both from
within and without that can threaten
our sustained growth. Among
the major challenges are to:
i. increase
inflows of FDI;
ii. improve the
nation’s competitiveness;
iii. sustain the
surplus in the balance of payments and contain inflationary pressures;
iv. improve the
efficiency of the services sector;
v. diversify
exports and export markets; and
vi. ensure that
wage increases are commensurate with productivity improvements.
11. As
such, we need to redouble our efforts, mobilise our resources and move in
concert to face the challenges before us.
We need to be more resourceful and vigilant in order to ensure
accelerated economic growth. We have to review and update the
implementation of our development plans to take into account the new
realities. We also need to intensify our determination, strengthen our
resolve and confidence in our ability to continue to progress.
|
