05 November 2008

Malaysia's RM7b stimulus plan.

Our Malaysian government yesterday evening unveiled a RM7 billion stimulus package to reinforce and stimulate the economy, and at the same time, bring relief to the public at an economically challenging time. I think that this stimulus plan is a very good sign for the local economy; it should be a good confidence builder for the private sector, pumping in more money into the system and hence encourage further spending.

Of the RM7 billion, some RM1.2 billion has been allocated to build 25,000 units of low- and medium-cost houses. Another half a billion ringgit has been set aside to upgrade and maintain police and army facilities. I think that this allocation will be very good for the whole industry, and as per what the MBAM President had said, this stimulus package will ensure continued growth in the construction sector, benefitting about 140 construction-related industries.

Ng Kee Leen, MBAM President.

Further to the fund allocations, various policies were also unveiled - such as extending the opening hours of hypermarkets up til 11pm on weekdays and 1am on weekends. Of course there will be pros and cons for this extension of hours; I mean some residents would complaint that extension of hours causes later traffic jams etc etc. But generally, most of the public would benefit from this - freedom to shop at later hours, hence being able to avoid the usual rush hours.

The Government also announced that import duties for cement, long iron and steel products have been abolished. I reckon that the construction industry would welcome this announcement tremendously - as this is additional liberalization of the entire steel and cement markets. Allowing freedom and ease of imports would also allow more competitive pricings - hence benefits to the end users and contractors.

There were good news for the property sector too. The Government will also allow foreign individuals and companies to purchase commercial real estate worth half a million ringgit and above without requiring any FIC approval. This is a great incentive for commercial developers who are launching their products overseas. I think that this will mean a lot to the local property market, especially during these tough economic times.

I also gave my input on the stimulus package yesterday, through the Business Times.

I had mentioned that this package is "good news" because these are truly high multiplier projects, benefitting large groups of engineers, architects, surveyors, contractors, subcontractors, suppliers and property developers. To add to that, I think the key point to this stimulus package is the "execution". If the projects are to be rolled out simultaneously, it may cause a detrimental effect on the industry with a sudden surge in demand.

Hence, the execution is the key factor here - the Government need to progressively roll out these projects.


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