Speechs in the year
Tempat/Venue	:	DEWAN RAKYAT
Tarikh/Date	:	12/09/2003
Tajuk/Title 	:	THE 2004 BUDGET SPEECH
Versi 		:	ENGLISH
Penyampai	:  	PM 


   Mr. Speaker Sir,
   1.  I beg to move the Bill entitled "An Act to apply  a
   sum  from the Consolidated Fund for the service of  the
   year  2004 and to appropriate that sum for the  service
   of that year'' be read a second time.
   In  the  name  of  Allah, the most  gracious  and  most
   2.  Praise be to Allah, for enabling the Government  to
   once  again  table  the 2004 National  Budget  in  this
   Honorable  House.  The Mid-Term Review  of  the  Eighth
   Malaysia   Plan  (8thMP),  which  is  currently   being
   undertaken  will be tabled in this House on 30  October
   3.  In  formulating the 2004 Budget, we have therefore,
   taken into account the performance of the first half of
   the  8thMP  period with the view to ensuring  the  full
   implementation of development policies and strategies.
   Mr. Speaker Sir,
   4.  The  nation has just celebrated its  46th  year  of
   independence.  We  are  grateful  to  the  Almighty  as
   Malaysians  from  all  walks  of  life  were  able   to
   celebrate  the  occasion in an  environment  of  peace,
   prosperity and jubilance. We value our independence. We
   are  free  from  colonisation. We are  also  free  from
   domination by super powers. We are also able to  regain
   our  honour  and  dignity. We are able  to  manage  our
   country.  Our country has achieved significant progress
   as well as gained recognition and respect of the world.
   5.   When  we  gained  independence,  our  economy  was
   completely  dependent on rubber and tin.  However,  our
   efforts  to  transform the economy since the  70s  have
   turned  Malaysia  into  a  modern  economy,  with   the
   industrial and services sectors contributing almost 90%
   to  the  Gross Domestic Product (GDP). The  nation  has
   embarked on the development of heavy industries and  is
   now  producing our very own national cars,  which  have
   penetrated nearly 80% of the domestic market. Today, we
   are the 17th largest trading nation in the world and  a
   major  exporter  of  electronic  products.  Exports  of
   manufactured goods exceed 85% of the nation's exports.
   6.  To  meet our industrialisation needs, we have  also
   put   in  place  a  network  of  modern  and  efficient
   infrastructure.  The  nation is now  connected  by  the
   North-South and East-West Highways. We have also  built
   modern  urban  transportation in Kuala Lumpur  and  its
   surroundings  with the construction of the  Light  Rail
   Transit (LRT), monorail and electric rail commuter.  We
   have    also    constructed   ports   and   world-class
   international airports. Malaysian ports presently  have
   the  capacity  to handle 11 million TEU containers  and
   about 450 million tonnes of cargo. Port Klang presently
   ranks  11th while the Port of Tanjung Pelepas  22nd  in
   the  World  Container  Port League.  The  Kuala  Lumpur
   International Airport (KLIA), which has the capacity to
   handle  25  million passengers and 5 million tonnes  of
   cargo, is the most modern airport in the region.
   7.  We have also made headways in the area of ICT.  The
   Multimedia Super Corridor (MSC) has been developed with
   state-of-the-art multimedia infrastructure. Indeed, MSC
   marks  yet  another significant step towards propelling
   the  nation into an ICT-based economy. To date, MSC has
   attracted  more  than 900 local and  international  ICT
   companies,  far exceeding the target of 500  for  2003.
   Clearly, earlier skeptics have now been proven wrong.
   8.   In  the  past,  the  construction  of  such  large
   infrastructure  was  carried  out  by  foreigners.  Now
   Malaysians   have   the  expertise  and   technological
   capability  to undertake these projects ourselves.  The
   nation has nearly 44,000 engineers in civil, mechanical
   and  electrical engineering as well as 3,000 architects
   and  2,000  quantity surveyors. With our experience  in
   the  construction of the Second Link, the Kuala  Lumpur
   Telecommunications  Tower  and  Petronas  Twin  Towers,
   Malaysians   have  successfully  built  the   Putrajaya
   Administrative  Centre,  a well-planned  and  beautiful
   city, a model for other countries.
   9.  We have been successful in the construction of  the
   Sepang F1 track, which is acclaimed as one of the  best
   in   the  Grand  Prix  circuits.  Our  young  engineers
   participated  in the venture to further  enhance  high-
   performance cars used by Sauber Petronas to compete  in
   the  FI  race. Such experience has contributed  towards
   further   developing  the  engineering  capability   of
   Petronas   to  produce  petroleum  products   for   the
   automobile industry.
   10.  Many Malaysian companies have ventured abroad. The
   largest  is  Petronas, which is now one  of  the  major
   international  petroleum  companies,  operating  in  34
   countries  across the world. Petronas  is  involved  in
   exploration, production, refinery and marketing of  oil
   and gas and is listed in the Fortune Global 500.
   11.  We  have  also  become a centre of  excellence  in
   education.  Today,  we have 18 public  institutions  of
   higher  learning,  including an  International  Islamic
   University, as well as hundreds of private colleges  to
   meet the educational needs of Malaysians. A total of 70
   colleges has also been established to produce technical
   manpower.  We have also been recognised as a centre  of
   excellence in education by foreign students. Currently,
   there  are more than 36,000 foreign students  from  150
   countries studying in our local institutions.
   Mr. Speaker Sir,
   12.  These achievements require a shift in the  mindset
   of  Malaysians towards the adoption of positive  values
   and     attitudes,    especially    perseverance    and
   determination, ability to compete, to be confident  and
   innovative as well as resilient. We began 21 years  ago
   with  the  adoption of the Look East Policy to  emulate
   the work ethics and culture of the Japanese and Koreans
   that  emphasises dedication, discipline and loyalty  as
   well    as   diligence   towards   attaining   national
   development. We also instilled the principle of  clean,
   efficient and trustworthiness as well as leadership  by
   example.  The  public service has  been  built  on  the
   principle of efficiency, discipline and quality.
   13.   The   Government   also  adopted   the   Malaysia
   Incorporated   Policy,   recognizing   the    paramount
   importance of closer cooperation between the public and
   the  private sectors as well as the employees  to  work
   together  to achieve economic growth. The Privatisation
   Policy  was  implemented to meet the increasing  demand
   for   public   infrastructure  facilities  apart   from
   reducing the financial burden of the Government.
   14.  We are a country with a vision. We are almost mid-
   way towards our Vision 2020 to become a fully developed
   nation   in  our  own  mould.  We  have  succeeded   in
   diversifying  our  economy. We  have  also  achieved  a
   paradigm shift in the mindset of Malaysians so that  we
   can  become  a more responsible, modern and progressive
   society, with astute thinking skills and proud  of  our
   achievements  and have confidence in our abilities,  in
   line with the information age.
   Mr. Speaker Sir,
   15.  In  the span of almost half a century, our ability
   to  manage  the  economy has often been  put  to  test.
   Malaysia   experienced   its  first   recession   since
   independence  in  1985,  following  sharp  declines  in
   commodity  prices.  We  experienced  deficits  in   the
   balance   of  payments  and  the  Government  financial
   account.  We  have  not  forgotten  the  Black   Monday
   incident on 19 October 1987 when major stock markets in
   the  world  crashed  and adversely affected  our  stock
   16.  These  experiences have made  us  wiser  and  more
   confident  in  planning and managing our  economy.  The
   high  level of economic growth averaging more  than  9%
   achieved during the period 1988-1996 bears testimony to
   our success.
   17.  The regional financial crisis was yet another test
   of  our resilience and capability. We have thwarted the
   attempts  of  international  currency  speculators   to
   impoverish  the  nation by devaluing the  ringgit.  The
   Government implemented unorthodox measures and did  not
   yield to pressures to seek IMF financial assistance and
   subjecting the nation to IMF policy prescriptions.  Our
   measures were severely criticised then and were said to
   be  doomed  to  failure. The ringgit  peg  and  capital
   controls   were  strongly  objected  to,   whilst   the
   establishment  of Danamodal, Danaharta  and  CDRC  were
   construed  as  bailouts of Government cronies.  On  the
   contrary,    these   agencies   have    succeeded    in
   strengthening our banking system. With this success, we
   have   gained   recognition   from   the   world    and
   international  agencies.  They  are  now  urging  other
   countries to learn from our experience.
   18.  Danamodal  had  injected  RM7.6  billion  into  10
   banking  institutions  to  enhance  their  capacity  to
   provide  loans, while more than 70% of the  loans  have
   been repaid.
   19.  Danaharta  has to date succeeded in  reschedulling
   NPLs  worth RM50 billion. The NPL is currently at 6.7%.
   Meanwhile, CDRC had successfully resolved 48  corporate
   debt  restructuring cases amounting to RM52.6  billion.
   Indeed with all these, we have strengthened the banking
   institutions as well as restructured and turned  around
   companies. As such, we have also avoided fire sales  of
   our national assets to foreigners.
   20.  Our success in overcoming the financial crisis and
   in  turning around the economy has disappointed all our
   critics.  Only  politicians and  the  mass  media  with
   vested interests refuse to acknowledge our success.
   21.  Our ability to manage the economy has resulted  in
   the  nation achieving a growth rate of 6.7% during  the
   First  Outline Perspective Plan, OPP1 1971-1990  period
   and  7.1% in the Second Outline Perspective Plan,  OPP2
   1991-2000  period.  Consequently, Malaysians  from  all
   walks of life have benefitted from the economic growth,
   with  per capita income increasing from RM1,132 in 1970
   to  RM13,683 in 2002. Our purchasing power  parity  has
   also  improved significantly from US$1,247 to US$8,862.
   At the same time, the incidence of poverty has declined
   substantially  to  5.1% in 2002  from  52.4%  of  total
   households in 1970.
   22.  However, we sympathise with those in some  states,
   who  remain entrapped in poverty and sufferings in  the
   midst  of  our prosperity. This is because the  leaders
   whom  they  elected are incompetent  and  incapable  of
   bringing  development to the states. Even  worse,  they
   claimed poverty and sufferings are fated and should  be
   accepted.  They  believe that  it  is  also  fated,  if
   Islamic states are poor, backward and undeveloped.
   Mr. Speaker Sir,
   23. The success, prosperity and excellence that we have
   achieved, is all due to Malaysia.
   24. However, let us not be lulled into complacency.  We
   must be prepared to face challenges and brace ourselves
   for future tribulations.
   25.  With  our capability to successfully  develop  and
   manage our economy, Malaysia is now regarded as a model
   for  developing countries. Many officials  and  leaders
   from  developing countries have come to learn from  our
   development experience. Malaysian officials have  often
   been  invited  by other countries to provide  expertise
   and  training in various aspects of administration  and
   26.  Our  willingness to express our  strong  views  on
   international issues, including against injustices  has
   inspired  those  who  are unable to  do  so.  As  such,
   Malaysia  has become the spokesman for the third  world
   and  given  the honour to host and lead the Non-aligned
   27.  Malaysia has also been recognised as  an  advanced
   and  progressive Islamic nation and become a  model  to
   many  Islamic  countries. They  are  impressed  by  our
   success  in  building a truly developed and  prosperous
   Islamic  nation.  We have succeeded in undertaking  the
   jihad  in  many  aspects  of development,  particularly
   economic,  social, religious and political  and  proven
   the capability of the Islamic community in this age. As
   such,  we  have been chosen to host and lead  the  10th
   Conference  of  the  Organisation of Islamic  Countries
   (OIC) in October this year.
   28.  To  be  able  to  voice our views  effectively  at
   international  fora,  we  must  be  proficient  in  the
   English language. In the past, Malaysian officials have
   often  been tasked to chair committees and lead in  the
   drafting  of communiques at international meetings,  as
   we  were proficient in English. To enable the nation to
   become  a global player in the international arena,  we
   must  master the English language. In this  regard,  we
   have   embarked   on  the  teaching  of   science   and
   mathematics   in   English.  These  are   subjects   of
   importance  in  this era of information technology.  As
   our  society  progresses, our  language  will  also  be
   enriched.  No  one  will  be interested  to  learn  the
   language of poor and backward people.
   Mr. Speaker Sir,
   29.  The  Government had announced the Package  of  New
   Strategies  Towards Stimulating The  Nation's  Economic
   Growth  in May this year. The Package focused  on  four
   main  strategies, namely promoting private  investment,
   strengthening the nation's competitiveness,  developing
   new  sources of growth and increasing the effectiveness
   of the delivery system. Ninety measures were formulated
   under  this Package. Indeed, the impact of the  Package
   of New Strategies has indeed been positive.
   30.  The performance of the Malaysian economy since the
   implementation of the Package of New Strategies is very
   encouraging,  with  a  growth of  4.6%  for  the  first
   quarter of 2003. During the second quarter, GDP  growth
   remained strong at 4.4%, higher than expected,  despite
   the negative impact of the war in Iraq and Severe Acute
   Respiratory  Syndrome  (SARS). As  such,  the  economic
   performance for the first half of 2003 has achieved the
   growth target of 4.5% for the whole year. Clearly,  the
   approach taken by the Government and the support of all
   Malaysians have contributed to the stronger growth.
   31.  All  sectors  of  the  economy  registered  strong
   growth,  with  the manufacturing sector  recording  the
   highest  growth  of 6.5%, followed by mining  4.5%  and
   services 4.2%.
   32.   In  terms  of  expenditure,  private  consumption
   continued to increase by 3.9% during the first half  of
   the  year,  while  private sector investment  responded
   positively to the incentives provided under the Package
   of   New  Strategies.  Private  sector  investment   is
   expected to record a growth of 2%, after experiencing a
   sharp deceleration since the financial crisis.
   33.  Notwithstanding  the  weak  external  demand,  the
   contribution   of   exports  to  GDP  growth   remained
   positive,  reflecting the competitiveness of  Malaysian
   products in the international market. This is also  due
   to our concerted efforts to seek new markets, mainly in
   Africa,  South  America  and  West  Asia,  apart   from
   expanding  regional  markets,  especially  among  ASEAN
   countries  and  East Asia. This has  also  reduced  our
   dependence  on  traditional  markets  like  the  United
   States and Europe.
   34.  The feel good factor has clearly returned  to  the
   share  market. The Kuala Lumpur Composite Index  surged
   to  its  highest level of 756.48 points on 5  September
   2003  compared  with 632.43 points on 2  January  2003.
   Total  daily transactions reached 586 million units  or
   RM1.17  billion compared with 107 million units  valued
   at  RM0.5  billion during the same period.  The  market
   capitalisation is now at RM581.98 billion compared with
   RM473.16  billion on 2 January 2003. The buoyant  stock
   market  has also attracted active domestic and  foreign
   investor    participation   with   total   transactions
   increasing more than three-fold.
   Mr. Speaker Sir,
   35. The tourism sector in particular has recovered from
   the  negative  impact of SARS. The preventive  measures
   put  in  place  by  the Government  have  succeeded  in
   containing the spread of the disease. In addition,  the
   US-led invasion on Iraq has not adversely affected  us.
   The  measures  under the Package of New  Strategies  to
   mitigate   the   impact  of  SARS  have   indeed   been
   36.  The  better performance of the economy has further
   strengthened   the   nation's  economic   fundamentals.
   International reserves continue to increase to  RM146.9
   billion  or  US$38.7 billion, which  is  sufficient  to
   finance  6 months of retained imports and is 4.3  times
   our  external  short-term  debts.  The  banking  system
   remains   strong  with  several  banking   institutions
   recording  good  profits. The  high  liquidity  in  the
   system has enabled the Government to continue with  its
   accommodative   monetary  policy,   particularly   with
   respect  to the low interest rate regime. In  addition,
   the  Government  continues to mobilise non-inflationary
   domestic  resources  without crowding-out  the  private
   sector. As such, the Government does not have to depend
   on   external   sources  of  funding  to  finance   its
   development programmes. Price increases have also  been
   contained with the increase in the Consumer Price Index
   at 1.2%.
   37.   Despite  signs  of  improvements  in  the  global
   economy,  it  is unlikely that the world  economy  will
   recover to its level before the financial crisis in the
   immediate term. The path to sustained recovery  remains
   uncertain,   given   the  geo-political   risks   still
   prevailing.  The  super powers continue  to  force  and
   exert  pressure to effect regime changes  in  countries
   which oppose them. Since the September 11 incident, the
   global war against terror has been used as an excuse to
   threaten nations accused of sympathising and protecting
   38.   This   is  how  super  powers  legitimise   their
   aggression and oppression on countries like Afghanistan
   and  Iraq  and  justify their pre-emptive  measures  on
   other countries. Clearly, they practise the law of  the
   jungle.  For  the super powers, might is  right.  Their
   strength legitimises everything.
   39.  We have repeatedly stressed that the only solution
   to  the geo-political conflicts is to identify the root
   cause of terrorism. Force and massive retaliation  will
   further  aggravate the situation and undermine  efforts
   to revive the global economy.
   40.  The development in the global economic environment
   calls  for  greater concerted efforts towards enhancing
   regional  cooperation.  Stronger  regional  cooperation
   will  enable  us  to speak with one voice.  During  the
   Asian  financial crisis, countries in the  region  have
   demonstrated   their  willingness  to  collaborate   to
   provide  support to affected economies. More than  half
   of the funds mobilised to assist the affected economies
   was   from  this  region.  In  addition,  the   ASEAN+3
   countries have also mobilised billions of dollars under
   the  Chiangmai  and the Miyazawa Initiatives.  We  have
   also pointed out the weaknesses and shortcomings of the
   international  financial system, which had  contributed
   to the Asian financial crisis.
   Mr. Speaker Sir,
   41.  It  has been more than a decade, since we proposed
   the  establishment  of  the East Asian  Economic  Group
   (EAEG). The proposal was rejected then and even  deemed
   to  be dangerous. However, after 13 years, the proposal
   is considered viable and has become a reality that will
   lay  the  foundation  for greater economic,  trade  and
   financial cooperation. We had remained steadfast in our
   stand despite the opposition. If EAEG had been accepted
   earlier,  we  could  have avoided the  Asian  financial
   crisis  or  at least minimised its impact.  Since  many
   years  have passed since we first mooted this idea,  we
   need  to  redouble  our efforts towards  realising  the
   42.  The  East Asia region has trillions of dollars  in
   reserves, which are largely invested in the West. It is
   now  timely  that  we  seek  the  best  alternative  to
   maximise  the use of these resources for the prosperity
   of   the  region.  In  this  regard,  we  welcome   the
   establishment  of  the  Asian  Bond  Market  Initiative
   (ABMI), which was initiated by the Finance Ministers of
   East  Asia. Under this Initiative, long-term  financial
   instruments  will be made available to finance  private
   sector investments. This will help prevent mismatch  in
   financing  as experienced during the financial  crisis,
   where  short-term borrowings were used to finance long-
   term investments. This will also avoid foreign exchange
   risks.  To ensure success of this Initiative,  Malaysia
   will  provide appropriate tax incentives. In  addition,
   we  will also take the opportunity to widen the use  of
   Islamic  financial instruments in ABMI,  based  on  our
   experience  and  expertise in  developing  the  Islamic
   financial system.
   43.  Regional  cooperation  must  be  based  on  mutual
   benefits  and  respect  as well  as  equal  rights  and
   democracy. No one should be selfish and pressure  their
   neighbours.  No one should dominate other  nations  nor
   force  others into agreements. Agreements must  not  be
   biased.  Unilateralism  cannot  be  accepted.  Instead,
   progress must be based on consensus, consultations  and
   mutual  understanding. Shortfalls and inequities  among
   neighbours  must  be  redressed as best  possible.  The
   prosper-thy-neighbour principle must be the  underlying
   thrust and practice in relations among nations.
   44.  However, the action of a neighbouring  nation  had
   often tested our patience with baseless accusations. We
   will not do the same. We will continue to adhere to the
   principle  of good neighbourliness and fair play.  When
   two  parties  are  unable to resolve  disputes  through
   negotiations, then there is a need for a third party to
   arbitrate.   We   are  willing  to  seek   arbitration.
   Confrontation  and  war  are not  our  way  to  resolve
   disputes. Threatening and demeaning others are also not
   our way. We do not give baseless excuses neither do  we
   manipulate facts. It is our hope that our proposal  for
   arbitration will be accepted as soon as possible.
   Mr. Speaker Sir,
   45.  The  external environment remains uncertain.  Many
   people  are still living in fear, especially to  travel
   by  air,  which  have restricted business transactions.
   Therefore,  we  cannot depend on the  external  sector.
   Neither   can   we  continuously  rely  on   Government
   expenditure  to  generate  economic  growth,   as   its
   financial resources are not unlimited.
   46. As such, the private sector must resume its role as
   the  engine of economic growth. We must also  seek  new
   markets for our exports. We must become a truly trading
   nation  whereby  we produce our own  goods  and  export
   directly to foreign importers.
   47. When we planned to become an industrialised nation,
   we   were  driven  by  the  need  to  provide  as  many
   employment  opportunities as possible for  our  people.
   The   agriculture   sector  was  unable   to   generate
   sufficient  jobs. Only the manufacturing  sector  could
   provide significant job opportunities.
   48.  The  Government did not intend to earn tax revenue
   from  industries. Hence, we were prepared to  give  tax
   exemptions  for  longer period as  long  as  there  are
   employment opportunities for our people.
   49.   Our  industrialisation  strategy  has  been  very
   successful. Job opportunities are so abundant  that  it
   had  led  to  an  influx of foreign  workers  into  the
   country. Malaysians who are willing to work will always
   find jobs.
   50. In line with the growth in the manufacturing sector
   driven  especially by foreign investment, the  nation's
   trade has increased rapidly. Currently, our total trade
   is  RM760 billion equivalent to US$200 billion. We  can
   justly  be  proud  of our success in  transforming  our
   nation from an agricultural to an industrial economy.
   51.   Malaysians   have   benefitted   immensely   from
   industrialisation.  At  the same  time,  we  have  also
   acquired  skills  that enable us to establish  our  own
   industries.  There are many electrical  and  electronic
   products as well as other manufactured goods which  are
   produced by Malaysians. When we produce our own  goods,
   the contribution to national wealth is higher.
   52.  We do not intend to reduce foreign investment  but
   to   maximise   national  wealth,  we   must   increase
   investments by Malaysians. Furthermore, foreign  direct
   investment has been declining and has largely flowed to
   low-wage economies.
   53. Japan, South Korea and Taiwan have not depended  on
   foreign  investment for their industrialisation.  Their
   local  entrepreneurs with the support of the Government
   have developed their industries through acquisition  or
   development of their own technology. We were unable  to
   do  so  initially as we did not have adequate  capital,
   technology,   management  skills  and   global   market
   knowledge. However, after we have gained knowledge  and
   experience  in these areas, we are now able to  venture
   and  develop our own manufacturing industries. This  is
   evident  from the increased number of our own products,
   including  automobiles, lorries, buses,  light  trains,
   electrical  and electronics, various types  of  cranes,
   IT,  refineries for oleo and petrochemical products  as
   well as construction materials and many others.
   54.  Our  investors  are  less confident  in  venturing
   abroad and prefer to focus only on the domestic market.
   Since our domestic market is small, our local producers
   cannot reap economies of scale that will enable them to
   reduce  costs.  We can only compete with  the  advanced
   economies,  if  we produce high quality products  on  a
   large-scale basis. As such, our producers must be  bold
   in   undertaking  ventures  to  produce  high   quality
   products on a large-scale for the world market.
   55. Apart from manufacturing, we must also increase our
   agricultural  production. There are  many  agricultural
   products that can be processed to give higher value. In
   addition,  the tourism and education sectors  can  also
   contribute towards national economic development.
   56.  In  fact,  we  must  take stock  of  our  existing
   capacity  as  well  as  potentials  in  the  industrial
   sector.  There  are  many areas  that  can  be  further
   developed to contribute to our economic growth as  well
   as to enable us to become a larger trading nation.
   57.  We  trade  with more than 200 countries,  big  and
   small.  However, there are many more countries that  we
   have  not  explored  fully as trading  partners.  These
   include  the  Gulf,  North  Africa  and  other  African
   58.   Malaysia   has  made  a  name  in  infrastructure
   development.  In  the  past, foreign  contractors  were
   awarded contracts to build roads, bridges and dams. But
   now  Malaysians  are  able to compete  to  secure  such
   contracts. In oil exploration and production,  Petronas
   has  operations  in  more than 30  countries.  We  need
   another   consortium  to  undertake  oil   exploration,
   production  and  refining. In Malaysia, the  Government
   can   allow   another  consortium  to   undertake   the
   development  of  marginal fields  so  as  to  gain  the
   confidence of other countries.
   59.   In  promoting  Malaysian  companies  abroad,  the
   quality  and  ability  of Malaysian  companies  are  of
   paramount importance. We must not allow companies which
   do  not  have  the  capability to  seek  contracts  and
   business  opportunities abroad so as to  sell  them  to
   other  companies. This will only result in the  erosion
   of  confidence in Malaysian companies as  well  as  our
   Mr. Speaker Sir,
   60.  We  have constructed ports and airports to provide
   excellent  services to our exporters and importers.  In
   addition,   our   traders  must   fully   utilise   our
   expressways and railways.
   61.  Currently,  in the production of  goods,  not  all
   components are produced locally. Many are sourced  from
   overseas.  Of  importance is  the  brand  name  of  the
   product. There are many well-known brands in the  world
   that  have components made in Malaysia. However,  these
   products are not regarded as Malaysian products.
   62. We must also have Malaysian brands even though they
   may  use  components from other countries. It  is  also
   necessary to create as well as design Malaysian  brands
   that  can  be marketed abroad. Western brands  are  not
   always   necessary.  Today,  Hitachi,  Honda,   Toyota,
   Hyundai, Samsung and many others are well known in  the
   world.  It  is, therefore, not impossible for Malaysian
   brands in our language to be accepted globally.
   63.  We  must  further enhance our trade  by  exporting
   goods and services produced by Malaysians. However,  we
   do  not  have to reduce the export of goods by  foreign
   investors in the country. The involvement of Malaysians
   in   the  production  of  all  goods  and  services  in
   industries must be increased. They must also manage  by
   themselves all aspects of trade, both for domestic  and
   foreign markets. The Government will provide support in
   terms  of  putting  in place appropriate  policies  and
   funds as well as improving the delivery system.
   Strengthening Small and Medium Industries
   Mr. Speaker Sir,
   64.  The  Government continues to  give  focus  on  the
   development  of small and medium industries  (SMIs)  as
   part of its efforts to promote private investment. SMIs
   will  be  further developed not only to  support  large
   domestic industries, but also to produce components for
   industries  abroad. The Government  has  established  a
   Micro-Credit Scheme under the Package of New Strategies
   to  provide  easier accessibility to  loans  for  small
   entrepreneurs,  such as farmers, cattle rearers,  night
   market traders, hawkers and others. The response to the
   Scheme has been overwhelming.
   65.  To  date, Bank Pertanian Malaysia (BPM)  and  Bank
   Simpanan  Nasional  (BSN) have received  almost  88,000
   applications  worth  RM1.4  billion,  of  which  nearly
   42,000  applications valued at RM430 million have  been
   approved.  Loan repayments have also been  encouraging,
   with almost 86% of schedulled repayment being received.
   The   Government  is  encouraged  with  this  response.
   However,  there are a few who have abused  and  misused
   this  facility. To those who have received these loans,
   they  must ensure that they repay on schedule. We  must
   be  reminded by the saying of the Prophet  that  it  is
   indeed  a  cardinal sin for one to leave  debts  behind
   upon death, with no one to settle them.
   Stimulating Private Consumption
   66.   One   of  the  measures  to  stimulate   economic
   activities  is  to encourage greater domestic  consumer
   spending.  Every  ringgit that is spent  will  generate
   significant  multiplier impact on the economy.  Towards
   this   end,  the  Government  has  introduced   various
   measures to increase disposable income through tax cuts
   and   provision   of  incentives,  reduction   in   the
   employee's  contribution to EPF as  well  as  providing
   bonus  for  Government  employees  when  our  financial
   position  permits.  In addition, our  national  savings
   rate at 32% further strengthens our financial position.
   The ringgit peg has ensured stability in our purchasing
   67.  The  ability  to balance savings  with  investment
   reflects  sound financial management. This is the  best
   financial practice.
   Enhancing   Competitiveness  to  Face   Challenges   of
   Mr. Speaker Sir,
   68.  Globalisation as presently interpreted  means  the
   free  flow  of trade across boundaries. The  Government
   cannot  intervene in the market system. The  market  is
   supposedly able to regulate itself.
   69.  In  fact, the market is only interested in reaping
   huge  profits.  As such, the developed  countries  have
   formed   larger   companies  and  banks   to   overcome
   competition by traders of developing countries.  It  is
   not  possible  for  the small companies  and  banks  in
   developing  countries  to withstand  the  onslaught  of
   giant  companies  when  they have  access  to  domestic
   markets  as a result of globalisation. This  is  not  a
   level playing field. Once again, might is right is  the
   belief of the day.
   70.  We  support globalisation but not as advocated  by
   the  West.  We  must  have our  own  interpretation  of
   globalisation, which we will pursue relentlessly  until
   its acceptance in WTO.
   71.  We  must  persevere and stand  up  to  face  these
   challenges.  We must enhance our sovereign  competitive
   edge to enable us to compete with global players in the
   international market. This can only be achieved through
   increasing  productivity, reducing the  cost  of  doing
   business,  acquiring technology and be more innovative.
   Efforts  to  improve the effectiveness  of  the  public
   sector  delivery  system have contributed  towards  the
   efficient   implementation  of  Government  development
   policies and strategies. In addition, measures must  be
   taken to effect a shift in the mindset of Malaysians to
   enable us to become more competitive.
   Mr. Speaker Sir,
   72.  The  Government has taken prompt and bold measures
   to  implement policy shifts from growth that is  solely
   based  on exports to domestic-led growth. The shift  in
   policy  has  succeeded in preventing the  country  from
   experiencing recession. As such, the thrust of the 2004
   Budget  will  continue with policies and strategies  to
   stimulate  and accelerate domestic economic activities,
   with  greater participation of Malaysians  in  economic
   growth. However, the Government cannot continue  to  be
   the   engine   of  growth.  As  such,  the   Government
   introduced the Package of New Strategies to enable  the
   private  sector  to resume its role as  the  engine  of
   73.  Taking  these into consideration, the 2004  Budget
   will focus on the following strategies:
   First  :  Accelerating  domestic  private  sector   and
   stimulating  the services sector to spearhead  economic
   Second  :  Implementing fiscal consolidation towards  a
   balanced budget in the near term.
   Third  :  Implementing monetary policy that can support
   and harness private consumption and investment.
   Fourth  :  Enhancing  the nation's  competitiveness  to
   enable Malaysia to become a truly trading nation.
   Fifth  :  Strengthening the social  agenda  and  caring
   society  to  enhance the quality of life and well-being
   of Malaysians.
   First Strategy:
   Domestic Private Sector as the Engine of Growth
   Mr. Speaker Sir,
   74. During the ten years prior to the financial crisis,
   the  private  sector  had been  successful  in  driving
   economic growth with their investment expanding by more
   21%  per annum. A major contributor to this growth  was
   from  foreign direct investment (FDI), particularly  in
   the  manufacturing sector. Indeed, almost  90%  of  our
   exports  are  goods  produced by foreign  companies  in
   75.   Foreign  companies  in  Malaysia  finance   their
   investments largely from our domestic sources. As such,
   the  inflow  of  foreign capital into  the  country  is
   actually  smaller  than perceived.  Furthermore,  these
   companies  do  not produce Malaysian brands,  have  low
   backward  and  forward  linkages  and  utilise  foreign
   technology  developed abroad. The main contribution  of
   FDI  has only been in terms of job creation. But today,
   since  Malaysians are fully employed, it only  benefits
   foreign workers.
   76.  We  must  change all these and be bold  enough  to
   transform the economy from being FDI-driven to domestic-
   led  investment.  We  must act immediately  to  make  a
   quantum  leap to become the nation's investor, producer
   and  exporter. Our domestic private sector must develop
   and  produce  Malaysian brands of world-class  quality,
   able to penetrate international markets. We must export
   goods,  which  we  produce ourselves. We  must  promote
   private  sector  initiatives to produce local  products
   with  high  value  creation,  beginning  from  our  own
   research findings to utilising local components as well
   as  domestic logistics. This will ensure wider spin-off
   effects and higher wealth creation for all Malaysians.
   77.  We  must redouble our efforts to become  a  global
   trader  by promoting Malaysian products directly  to  a
   wider   international  market,   in   particular   non-
   traditional  markets. As one of the strategic  measures
   towards   this  goal,  MATRADE  will  be  corporatised.
   MATRADE  will  bring  in  expertise  from  the  private
   sector,  including  expatriates  in  the  promotion  of
   exports. For this purpose, the Government will  provide
   a  launching  grant  of  RM100  million.  MATRADE  will
   immediately   undertake  roadshows,  including   export
   promotion  on wheels to the Middle East and Africa.  In
   addition,  the  Government will also encourage  private
   sector initiatives to establish trading houses for  our
   exports.  The  Government  will  identify  and   assist
   capable  individuals and private companies to undertake
   these initiatives.
   Mr. Speaker Sir,
   78.  SMIs can contribute to economic growth. They  also
   have  the potential to produce high quality and  value-
   added  products,  which  can be exported.  A  strategic
   direction   for  the  development  of  SMIs   must   be
   formulated  not only to enable them to be the  backbone
   of  large industries but also able to export their  own
   products  abroad.  Towards this end, a  High-Level  SMI
   Council has been established to formulate comprehensive
   policies  and  strategies to ensure a  more  integrated
   development of SMIs in all sectors.
   79.  To  encourage SMIs to increase their  investments,
   the  Government proposes to increase the  threshold  of
   chargeable income that is subject to a corporate tax of
   20% as announced in the 2003 Budget, from RM100,000  to
   RM500,000.  With  this  increase,  SMIs  will  have  an
   additional RM322 million for reinvestment.
   80.  To  further strengthen the role of private sector,
   the Government proposes the following measures:
   i.  providing  existing locally owned companies,  which
   reinvest  in the production of machinery and equipment,
   including heavy machinery and machine tools,  with  the
   following incentives:
   a.  Pioneer  Status with tax exemption of  70%  on  the
   increased  income from reinvestment for a period  of  5
   years; and
   b.  Investment  Tax Allowance of 60% on the  additional
   investment for a period of 5 years;
   ii.  enhancing incentives for companies producing goods
   using oil palm biomass as follows:
   a.  increasing  the rate of income tax exemption  under
   Pioneer  Status  from 70% for 5 years to  100%  for  10
   years; and
   b. increasing the rate of Investment Tax Allowance from
   60% to 100% for 5 years;
   iii.   providing  existing  companies  using  oil  palm
   biomass with the following incentives:
   a.  Pioneer  Status with tax exemption of 100%  for  10
   years on the increased income from reinvestment; and
   b.  Investment  Tax Allowance of 100% for  5  years  on
   additional investment;
   iv.  improving tax incentives for companies  in  Sabah,
   Sarawak and the eastern corridor of Peninsular Malaysia
   as follows:
   a.  increasing  the rate of income tax exemption  under
   the Pioneer Status from 85% to 100%; and
   b. increasing the rate of Investment Tax Allowance from
   80%  to 100%. This allowance can be fully deducted  and
   not limited to 85% of the statutory income; and
   v.  exempting  tax on income remitted  from  abroad  by
   individuals, as presently enjoyed by companies.  It  is
   hoped that this measure would encourage individuals  to
   remit  their income from their investments  or  savings
   abroad for domestic investment.
   81.  To  further  promote  the development  of  private
   venture capital companies, the venture capital fund for
   Malaysian Venture Capital Management (MAVCAP)  will  be
   increased  by  RM300  million, thereby  increasing  the
   total amount of funds under MAVCAP to RM800 million. In
   addition,  the Government has established the Malaysian
   Debt Venture (MDV) with a fund of RM650 million and the
   Malaysian  Technology  Development  Corporation  (MTDC)
   with  a  fund  of RM1 billion to finance investment  in
   areas,   such   as   logistics  and  modernisation   of
   82.   The  Government  has  also  granted  income   tax
   deduction  to  venture capital companies equivalent  to
   their  investments in venture companies,  provided  the
   shares   in  venture  companies  are  disposed  through
   initial  public  offerings (IPOs). To  further  enhance
   this  incentive,  tax  deduction will  be  allowed  for
   shares disposed through other approved exit mechanisms,
   such as put option and management buyout.
   83.  Apart from this, the method of computing  the  70%
   investment in venture companies will be relaxed to take
   into  account the amount of funds invested  instead  of
   the total funds of the venture capital company.
   84.  In  addition,  the Government also  proposes  that
   venture  capital  management  companies  be  given  tax
   exemption  on  income  received  from  profit   sharing
   agreements with venture capital companies.
   Stimulating the Services Sector
   Mr. Speaker Sir,
   85.  The  services  sector is a  major  contributor  to
   economic  growth  and  foreign exchange  earnings.  The
   potential sources of growth in this sector has  yet  to
   be   fully   exploited  to  produce  high   value-added
   services,   especially  those   services   related   to
   manufacturing,  education, tourism, transportation  and
   logistics as well as ICT.
   86.  In  the past, the flow of FDI had focussed on  the
   manufacturing sector. We must now undertake efforts  to
   attract  FDI  to the services sector, especially  those
   with high value-added potentials through incentives. In
   the  Package of New Strategies, we have further relaxed
   equity  conditions,  apart  from  providing  many   tax
   incentives to attract services-oriented companies, such
   as    Operational    Headquarters   (OHQs),    Regional
   Distribution  Centres (RDCs) and back-room  outsourcing
   operations by multinational companies (MNCs) to operate
   in this country.
   87. The Multimedia Development Corporation (MDC), as  a
   one-stop  shop for investment in the MSC has  succeeded
   in  attracting  many  local and  foreign  companies  to
   invest  in ICT. For companies granted with MSC  status,
   the  Government has given 10 commitments under the Bill
   of    Guarantees,    including   the    provision    of
   infrastructure,  freedom of ownership and  sourcing  of
   funds  as  well  as  recruitment of knowledge  workers,
   regardless of citizenship.
   88.  MDC  has  successfully  attracted  and  encouraged
   companies to provide shared services, especially for IT
   support services for their global operations, including
   information  and  data  processing  centres.  Recently,
   Ericsson established its headquarters here, while  HSBC
   and  Standard Chartered Bank, among the largest banking
   and  financial institutions in the world, set up  their
   electronic data processing offices to provide  back-end
   processing  and  customer  contact  services  to  their
   groups  worldwide. Shell, a major petroleum company  in
   the world and also DHL have created similar services in
   MSC.  These  activities  have  succeeded  in  providing
   employment opportunities for highly qualified Malaysian
   89.  To  further stimulate the services sector,  it  is
   timely  that  a one-stop agency be set up to  hand-hold
   and guide investors in obtaining approvals from various
   authorities, with the view to expediting their  project
   implementation.  In  view of  the  success  of  MDC  in
   developing MSC, the Government will expand its role  to
   become a one-stop agency ala MIDA for selected services
   sectors.  We  are confident that MDC will  be  able  to
   undertake its new role effectively.
   90.  The  financial sub-sector, with a contribution  of
   14.5% to the GDP, is one of the major components of the
   services  sector.  In line with the objective  to  make
   Malaysia  a  regional financial centre, the  Government
   will allow Labuan offshore companies to establish their
   marketing  offices  in Johor Bahru,  which  is  rapidly
   developing with the increasing number of MNCs that have
   relocated  their  operations there. This  measure  will
   also complement the Government's efforts in making  the
   Port  of  Tanjung Pelepas and the Senai Airport  as  an
   international logistics hub.
   Mr. Speaker Sir,
   91.  To  further enhance the incentives for  OHQs,  the
   Government  proposes that income derived by  OHQs  from
   the  provision of services to its related companies  in
   Malaysia,  will  be  given  income  tax  exemption  not
   exceeding  20%  of  its total income  from  its  global
   operations. This is similar to the incentive  currently
   enjoyed by RDCs.
   Promoting Malaysian Industries In The Global Market
   Mr. Speaker Sir,
   92.  While the nation's exports are high, we must focus
   on the production of goods and services by our domestic
   entrepreneurs for both the domestic and export markets.
   If  we  ourselves are not keen to buy our  own  locally
   produced  goods and services, it will be difficult  for
   our  producers and businessmen to market their products
   abroad.  Efforts  to  develop  domestic  products  with
   export  potentials  must be made an important  national
   agenda.  To further promote local products, a Fund  for
   the  Development and Promotion of Malaysian Brands  has
   been  established with an initial allocation  of  RM100
   million. The Government will further increase the  Fund
   by an additional RM100 million.
   93. To enhance demand for local goods and services, the
   Government   and  the  private  sector  must   together
   increase  the consumption of local products  to  ensure
   these  products have a strong domestic market base.  In
   other  countries, the domestic market has provided  the
   base  for  local industries to venture into the  global
   market.  We  must emulate these countries to  spearhead
   the growth of our domestic industries.
   94.  In order to promote domestic heavy industries, the
   Government  will  continue to support such  industries.
   Since February 2003, sales of passenger cars have  been
   declining, as consumers are postponing their  purchases
   in  anticipation of lower prices on imported cars  when
   the  automotive sector is liberalised under  AFTA.  The
   Government  has indicated earlier that  the  prices  of
   cars  will  not be lowered even after the reduction  of
   import duties on cars from ASEAN countries. To mitigate
   the  loss in revenue, the Government proposes  to  levy
   excise  duties on imported cars when import duties  are
   reduced  from 1 January 2004. Therefore, consumers  are
   encouraged  to  purchase cars now  for  themselves  and
   their families.
   95.  The  Government will also review  its  procurement
   system. Presently, the evaluation of Government tenders
   focusses   on   two  aspects,  namely   technical   and
   financial.   To   provide  a  market   base   for   our
   entrepreneurs, the use of local content and value-added
   will  be  given  due consideration in the  Government's
   tender evaluation.
   96.  The  agenda to promote domestic industries  is  of
   utmost importance. As such, the Government will require
   Tenaga  Nasional, Telekom, Proton and Petronas as  well
   as  the stable of companies under Khazanah and PNB  and
   other Government companies to spearhead the development
   of   domestic  products  and  technologies   in   their
   respective sectors. These companies must take advantage
   of  their  domestic market and their global network  as
   well  as  funds to promote domestic industries, capable
   of  competing in the international market. In line with
   this  policy,  the vendor and umbrella system  will  be
   97.  The  Government  hopes  that  our  private  sector
   companies  will  take this challenge and  work  towards
   developing   domestic  industries  that   can   compete
   globally. In this regard, the Government will ensure  a
   conducive  environment, including development  of  R&D,
   provision of funds, increased promotional and marketing
   efforts,  provision of logistics services and  improved
   public  sector  delivery  system,  in  line  with   the
   objective of achieving sovereign competitiveness.
   98.  The  Government is committed to the  New  Economic
   Policy  (NEP) launched in 1971, including the  creation
   of  a Bumiputera Commercial and Industrial Community or
   BCIC,  to  provide  opportunities  for  Bumiputera   to
   succeed as entrepreneurs. The policy has produced  many
   successful   Bumiputera  entrepreneurs  and   corporate
   leaders.  However, the financial crisis  had  adversely
   affected  them. This is one aspect of the NEP that  has
   not  been  fully  achieved.  As  such,  the  Government
   through   its  own  companies  will  intensify  efforts
   towards  achieving  this objective, especially  through
   the vendor and umbrella system, which will be reviewed.
   99.  In  this regard, we strongly oppose the agenda  to
   open  up  markets for Government procurement, which  is
   being discussed at the WTO forum in Cancun. Once again,
   the  West is using the WTO to push forward their agenda
   for  economic  colonisation. If we do not  oppose  this
   agenda,   our   efforts  to  implement   the   National
   Development  Policy, which safeguards the interests  of
   domestic entrepreneurs, including Bumiputera as well as
   the  objective  of promoting domestic industries,  will
   not be achieved.
   100. To enable us to produce quality products that  can
   compete  in the global market, we must have appropriate
   technologies  as  well as develop our own  patents  and
   brands.  Apart  from developing our  own  technologies,
   patents, products and brands, we can also acquire  them
   from  abroad.  In  the  automobile  industry,  we  have
   succeeded  in  acquiring Lotus, while in the  aerospace
   industry  we have acquired Eagle and Lance  Air  (USA),
   which  produce  twin and four-seater  aeroplanes  using
   composite  materials. InventQJaya was also  established
   to  promote a society of inventors that can develop new
   frontier  technologies. Recently, we have also acquired
   the   MM   chip  from  a  Japanese  R&D  company,   FEC
   Incorporated. The MM chip is the smallest in the  world
   measuring   0.25   square  milimetres.   In   addition,
   Malaysian-owned  companies have  also  been  successful
   internationally,  such  as fashion  design  and  shoes.
   Malaysians  also own the London Circus, the largest  in
   the  world,  as  well as Laura Ashley  and  Crabtree  &
   Evelyn and others.
   101.  To  enable  Malaysians  to  venture  into  latest
   technologies, measures are being taken to  develop  the
   aerospace  industry.  Three years ago,  the  Government
   successfully launched Tiungsat and will soon launch the
   Razaksat.  This  success  will  enable  us  to   launch
   additional  satellites, including low-orbit  equatorial
   satellite and the possibility of establishing  Malaysia
   as  a rocket launching centre. We also hope to send the
   first Malaysian astronaut into space. Malaysia Boleh.
   Second Strategy:
   Fiscal Consolidation Towards A Balanced Budget
   Mr. Speaker Sir,
   102. When the 8thMP was formulated, the Government  had
   targetted achieving a balanced budget by 2005. However,
   the   sharp   decline  in  private  sector   activities
   following  the regional financial crisis, uncertainties
   in the external environment, including the September 11
   incident,  geo-political tensions in the  Middle  East,
   war  in Iraq and the outbreak of SARS, had necessitated
   the  Government to implement several stimulus  packages
   to  revitalise domestic economic activities to  prevent
   the  economy  from going into recession. As  such,  the
   objective  of a balanced budget cannot be  achieved  in
   2005.  However,  the  Government remains  committed  to
   achieve   a  balanced  budget  in  the  near  term   by
   implementing     fiscal     consolidation     measures.
   Notwithstanding this, the public sector account remains
   strong,  with the public sector deficit below  1.5%  of
   GDP  in  2003, significantly lower than the 3% set  for
   the  euro region. The increase in public sector deficit
   is due to large investments by Petronas in 2003.
   103.  Government expenditure will focus, especially  on
   the   provision   of   more  efficient   infrastructure
   facilities  to  reduce the cost of doing  business  and
   support  economic growth. Allocations will continue  to
   be  provided  for the implementation of  programmes  to
   improve the socio-economic well-being of Malaysians. In
   this regard, emphasis will be given to the provision of
   goods  and  social  services for  the  benefit  of  all
   Malaysians, especially the lower income group.
   104.  To  ensure effective distribution  of  Government
   funds, allocations to Government agencies will be based
   on   their  financial  positions.  Agencies  with  high
   uncommitted   reserves  will  have  to  utilise   their
   reserves to finance their programmes.
   Streamlining Budget Preparation and Implementation
   105.  To  streamline Budget preparation, the Government
   has  implemented  the two-year budget  preparation  and
   examination since Budget 2002. This process has enabled
   the  preparation of a rolling plan, which  incorporates
   current  and following year budgetary requirements.  It
   also  shortens the time and reduces man-hours  required
   for  budget  examination and thus, enables agencies  to
   focus on implementation.
   106.   The   adoption  of  the  two-year   budget   has
   contributed  towards expediting the  implementation  of
   development projects where agencies have lead  time  to
   undertake   project   planning.   With   the   speedier
   implementation  of development projects,  there  is  no
   shortfall in expenditure as in previous years.
   Budget Allocation 2004
   107. In line with the fiscal consolidation policy,  the
   Government  proposes an amount of  RM112.5  billion  be
   appropriated for, in the 2004 Budget. This represents a
   reduction  of  1.6%  compared with  an  expenditure  of
   RM114.3  billion in 2003. Based on an estimated revenue
   of  RM95.6  billion,  the  overall  Federal  Government
   deficit  is  expected  to be reduced  to  3.3%  of  GDP
   compared with 5.4% in 2003.
   108.  A major portion of the proposed allocation,  that
   is RM80.5 billion or 71.6% is for Operating Expenditure
   while  RM30  billion is for Development Expenditure.  A
   sum   of  RM2  billion  is  allocated  for  contingency
   109.  Under the Operating Expenditure, a sum of  RM20.9
   billion  is for Emoluments, RM17.2 billion for Services
   and  Supplies and RM39.4 billion for Fixed Payments and
   Grants,  RM0.8 billion for purchase of office equipment
   and    facilities   and   RM2.2   billion   for   other
   110. Of the proposed Development Expenditure, a sum  of
   RM13.8  billion or 43.1% is allocated for the economic,
   infrastructure and industrial sectors as well as  rural
   electricity  and  water supply  programmes.  A  sum  of
   RM11.2 billion or 34.9% is for the social sector,  that
   is  education and training, health, welfare,  community
   development, youth and sports projects. In addition,  a
   sum  of  RM2.7  billion  or  8.4%  is  for  development
   projects  in the security sector and RM4.3  billion  or
   13.6% for general services.
   Mr. Speaker Sir,
   111.  The Government will continue to give priority  to
   the  education  sector  with an  allocation  of  RM20.2
   billion or a quarter of operating expenditure in  2004.
   Among  the educational institutions, which are expected
   to commence operations are 44 primary, 43 secondary and
   3 technical schools as well as 59 hostels. As announced
   in the Package of New Strategies, 4 education promotion
   offices will be operational this year in Dubai, Ho  Chi
   Minh, Beijing and Jakarta.
   112.  Under the Development Expenditure, a sum of RM3.7
   billion  is  provided,  including  RM1.8  billion   for
   primary  and  secondary schools, hostels and  teachers'
   quarters.  A  sum  of RM637 million  is  allocated  for
   school  computerisation programmes while RM490  million
   is  for financing infrastructure requirements of public
   institutions of higher learning.
   113. Last year, the Government decided to implement the
   teaching  of  Science and Mathematics in English  using
   ICT.  This  programme involves an  expenditure  of  RM5
   billion for the 8thMP period. The Government will  also
   roll-out   smart  school  programmes  in   stages   and
   implement  the Schoolnet project to enable students  to
   gain  wider  internet access. This programme  has  been
   implemented  in almost 200 schools in remote  areas  of
   Sabah and Sarawak.
   114. In line with the Government's objective to provide
   compulsory  basic education for all children,  a  Trust
   Fund for Poor Students was launched on 23 July 2003. An
   amount  of  RM200 million is allocated to the  Fund  to
   assist poor students to continue with their education.
   115.  To enhance the quality and standard of franchised
   education programmes, the National Accreditation Board,
   will invite lecturers or experts from public or private
   institutions   of   higher  learning   to   assist   in
   undertaking validation, moderation or accreditation  of
   the  programmes. This is to ensure that the quality  of
   courses  offered  are at par with  those  from  foreign
   universities. For this purpose, the Government proposes
   that fees or honorarium received by these lecturers  or
   experts   who  assist  in  validation,  moderation   or
   accreditation, be exempted from income tax.
   116.  To  reduce the financial burden of  graduates  in
   loan  repayment to Perbadanan Tabung Pendidikan  Tinggi
   Nasional  (PTPTN), the Government will reduce the  rate
   of  interest  on  loans from 4% to  3%.  The  repayment
   schedule  will  commence on the third  year  after  the
   graduate   is  employed.  In  addition,  the  repayment
   schedule  will also be restructured to enable borrowers
   to  repay their loans at 5% of their monthly income for
   the  first  5  years  and 10% for the  balance  of  the
   repayment  period. This facility will also be  extended
   to  borrowers  under the Skills Development  Fund.  For
   students   who  wish  to  pursue  Islamic  studies   in
   institutions of higher learning abroad, they will  also
   be  able  to  borrow from PTPTN on the condition  these
   institutions are recognised by the Government and  they
   must enrol in academic subjects. They must also possess
   qualifications recognised by the Government. The amount
   of  loans should not exceed the cost of similar courses
   in  local institutions. Apart from this, the Government
   will  also  consider extending this  loan  facility  to
   students  pursuing twinning programmes abroad  for  the
   final  year of their studies in institutions of  higher
   learning  recognised by the Government and  in  courses
   encouraged by the Government.
   Skills Training
   117.  The development of technology and knowledge-based
   industries  requires more trained  manpower.  For  this
   purpose,  the Government will continue to give emphasis
   on  increasing  the  quality and  quantity  of  skilled
   manpower  by further expanding existing facilities  and
   building new skills training centres. An allocation  of
   RM319  million is provided under the Ministry of  Human
   Resources (MHR) for this purpose. With an additional 10
   new  training institutions, MHR will have the  capacity
   to  train 17,000 trainees in various skills. A  sum  of
   RM245.5 million is also allocated to provide additional
   facilities   and   build  25  National   Youth   Skills
   Institutes  that can train 11,000 trainees.  A  sum  of
   RM77.5  million  is  provided to complete  14  existing
   institutes  and  build  3  new institutes  and  RM107.3
   million  to  meet the management costs of  Mara  Skills
   118.  The  Government launched the  Skills  Development
   Fund under the Package of New Strategies with an amount
   of  RM500  million  to increase the supply  of  skilled
   manpower.  The  Fund provides loans  to  trainees  from
   skills training institutes, such as Industrial Training
   Institutes,  MARA  Skills  Institutes,  National  Youth
   Skills    Institutes   and   other   selected   private
   institutes. To manage this Fund, a special  agency  ala
   PTPTN  will  be  established. The loan condition  under
   this Fund is similar to that of PTPTN, with an interest
   rate of 3%. The monthly repayment schedule will be made
   in stages.
   119.  To  further expand technical training facilities,
   an engineering training centre for Computer Numerically
   Controlled (CNC) machines has been established  at  the
   Technology Park Malaysia. This Centre provides training
   on  the  use  and  design of CNC machines  for  various
   industries, especially components and spare parts. This
   training  will  contribute  towards  the  upgrading  of
   skills in CAD/CAM/CAE.
   120.  Community  colleges will also provide  vocational
   training. Pusat Giat MARA will be upgraded as Community
   Colleges with emphasis on vocational training with  the
   view  to  providing more skills training opportunities.
   Government-owned  companies, such as  TNB  and  Telekom
   will also provide technical and vocational training  at
   their  training centres. Participants in these training
   programmes can obtain loans from the Skills Development
   Fund.  In  addition,  to encourage  employers  to  hire
   unemployed  graduates  registered  with  the   Economic
   Planning  Unit  (EPU),  the  Government  proposes  that
   expenses  incurred  by  employers  in  employing  these
   graduates be given double tax deduction for a period of
   2 years. For unemployed graduates requiring retraining,
   they  can  obtain  financing from the  Retraining  Fund
   under the Package of New Strategies.
   Research and Development (R&D)
   Mr. Speaker Sir,
   121.  The Second National Science and Technology Policy
   was  formulated to achieve R&D expenditure of at  least
   1.5%  of  GDP by 2010. Towards this end, the Government
   has   provided   substantial  allocation   to   develop
   expertise  and expand R&D facilities. To continue  with
   these  efforts, a sum of RM183.6 million  is  allocated
   for  the Intensification of Research in Priority  Areas
   (IRPA)  programme,  specifically  for  public  research
   institutions in collaboration with the private  sector.
   In  addition, three new research institutions  will  be
   established  in the BioValley, Cyberjaya,  specifically
   in  biotechnology. The Government will encourage  large
   companies  to  locate  in  the BioValley  to  undertake
   contract  research  as part of the efforts  to  further
   develop the services industry.
   122. Our R&D efforts have contributed significantly  to
   increases in yield of commodities, especially oil  palm
   and  rubber.  The yield of commodities per hectare  has
   doubled and their maturity period shortened. Apart from
   increasing  output,  research  institutions  have  also
   undertaken downstream research, such as biodiesel  from
   oil palm and rubber thermoplastic.
   123.   In  the  light  of  declining  contribution   of
   commodities  to  the  economy, it is  timely  that  R&D
   institutions  refocus  their  efforts  towards  greater
   demand and market-driven R&D that emphasise value-added
   or  value  creation,  with the view of  commercialising
   their research findings. For example, the global market
   for  healthcare and life sciences products and services
   is   expected   to   reach  4  trillion   euros   while
   pharmaceuticals 30 billion euros by 2006. In  Malaysia,
   biotechnology  is  still an infant  industry.  Although
   currently  there are about 60 biotechnology  companies,
   they  are still small and have yet to reach world-class
   124.  The  Government will restructure SIRIM to  become
   the  focal point to match R&D with market demand. SIRIM
   will  identify  the requirements for new  products  and
   technology for both the domestic and global markets. It
   will  also  study the whole R&D value chain  to  create
   value, including niche activities to be developed, such
   as logistics, packaging and marketing.
   125.  The  Government through SIRIM will also  identify
   R&D  requirements based on market demand and match them
   with   R&D   capacity  in  universities  and   research
   institutions. As this represents a long-term investment
   in  developing  our local technology  to  produce  high
   quality  Malaysian brands, the Government will  provide
   adequate  funds  for this purpose. The nation  has  the
   expertise and capacity to undertake R&D to meet  market
   demand.  For  example, we have more than  one  thousand
   doctorates, apart from adequate facilities and  funding
   for R&D.
   126.  To  promote  the  commercialisation  of  research
   findings, the Government proposes that income  received
   by   researchers  from  such  activity  be  given   tax
   exemption  of  50% for 5 years. At the same  time,  the
   Government   will   not  impose  charges   on   patents
   registered by local researchers.
   Mr. Speaker Sir
   127.  The  tourism sector, especially  hotel  and  tour
   operators, has been adversely affected by the Iraq  war
   and   the  outbreak  of  SARS.  To  assist  them,   the
   Government  had implemented prompt measures  under  the
   Package  of  New Strategies, such as the  deferment  of
   income  tax  payment  by  tour agencies,  discounts  on
   electricity bills to hotel operators and the  provision
   of the Special Relief Guarantee Facility.
   128.  To  encourage operators in the tourism  industry,
   including  hotel  operators,  to  undertake  expansion,
   modernisation  and renovation, the Government  proposes
   that a second round of Pioneer Status or Investment Tax
   Allowance be given.
   129.  Hotel operators should work together  to  set  up
   tourism   information  centres  at  all  entry  points,
   including airports as well as major railway stations to
   enable   tourists  to  make  hotel  reservations   upon
   arrival.  They  are also encouraged to provide  on-line
   reservation   facilities.   For   this   purpose,   the
   Government will develop portals and provide  access  to
   these  portals  at airports, railway and  bus  stations
   throughout the country.
   130.  The  Government will continue to  undertake  more
   effective  tourism  promotion  efforts  together   with
   Malaysia Airlines and AirAsia as well as tour agencies.
   For this purpose, the Malaysian Tourism Promotion Board
   (MTPB)  will  be  restructured  to  undertake  a   more
   systematic  and  effective marketing and communications
   programmes. In addition, promotional efforts will focus
   on  regional  markets, especially China,  Taiwan,  Hong
   Kong,  India  and ASEAN countries. Promotional  efforts
   will  also be intensified in the West Asian market  and
   new  markets  such  as  Pakistan,  Indo-China  and  New
   Zealand.  In this respect, a sum of RM215 million  will
   be allocated for promotional activities.
   131.  The Government has also established tourism funds
   amounting to RM1.1 billion, that is RM400 million under
   the  Special Tourism Fund and RM700 million  under  the
   Tourism  Infrastructure  Fund.  Both  these  funds  are
   managed  by Bank Pembangunan dan Infrastruktur Malaysia
   (BPIMB). Priority will be given to the financing of new
   tourism  products.  To increase its effectiveness,  the
   Government through the Ministry of Finance will monitor
   its   implementation  with  respect  to  approvals  and
   disbursements of the funds.
   132.  Malaysia  Truly Asia. This theme  does  not  only
   reflect the multi-ethnic and multi-cultural society but
   also the variety of Malaysian cuisine, which has become
   a  tourist  attraction. We have Bintang  Walk,  Bangsar
   Baru  and Mon't Kiara, where tourists spend their  time
   along sidewalk cafes. Such places have also become  the
   happening  place. In this regard, we must  also  ensure
   our food traders have stalls that are attractive, clean
   and  hygienic.  Towards this end,  the  Government  has
   provided  micro-credit facilities  to  enable  them  to
   replace  their  stalls  with  new  pushcarts  made   of
   stainless  steel  as  well as  colourful  canopies  and
   proper  tables  and chairs ala Bintang  Walk.  In  this
   regard,  traders will only be allowed to use stalls  or
   pushcarts approved by Local Authorities.
   Mr. Speaker Sir,
   133.  The  Government will continue to provide  quality
   medical   services  to  all  Malaysians.   Hence,   the
   Government  will  allocate a sum  of  RM9  billion,  an
   increase of 20.5% from 2003. Of this, RM6.4 billion  is
   for   operating   expenses  and   RM2.6   billion   for
   development  expenditure. This allocation  is  for  the
   provision of essential medical treatment services, such
   as  dialysis, intensive care and programmes  to  reduce
   morbidity and mortality among children. To increase the
   diagnosis  and monitoring of infectious diseases,  such
   as   SARS,   tuberculosis,  leprosy  and  dengue,   the
   Government will provide a sum of RM3 million.
   134.  The  cost  of medical treatment  is  rising.  The
   Government   subsidises  health  services   to   ensure
   Malaysians are charged at minimum rates. However,  this
   has  become  an  increasing financial  burden  for  the
   Government.  To  assist the Government to  reduce  this
   burden, the health insurance industry is encouraged  to
   widen  its coverage by providing lower premiums,  which
   are   affordable  to  a  majority  of  Malaysians.   In
   addition, companies must also bear the medical costs of
   their employees.
   135.  The  Government  has built  many  hospitals  with
   modern  and  sophisticated  equipment,  including   the
   application  of  ICT  for  the paperless  Total  Health
   Information  System  (THIS).  This  includes   Hospital
   Selayang,  Serdang and Pandan in Johor. The  Government
   is  not  able to provide high remunerations for medical
   specialists. As such, the Government has agreed to  set
   up private commercial wings in Government hospitals, to
   enable  serving  doctors to enjoy better  remunerations
   and  thereby,  continue to serve with  the  Government.
   Through  these measures, the Government also  hopes  to
   attract specialists who have left the service to return
   and  serve  in Government hospitals. In addition,  this
   will  enable those seeking better medical treatment  to
   obtain   such  treatment  at  reasonable   charges   in
   Government   hospitals.  It  will   also   enable   our
   Government  hospitals to be promoted  abroad,  in  line
   with the objective to encourage health tourism.
   136.  Healthcare is vital to ensure the  well-being  of
   the  people.  To  improve  healthcare,  the  Government
   proposes  that import duty of 10% on health supplements
   be  abolished. The Government shall also ensure  prices
   of  selected  medicines be provided at  a  discount  to
   pensioners. In this matter, Pharma Niaga will provide a
   special counter for this purpose.
   137.  At  the same time, to encourage healthy lifestyle
   among  Malaysians, the Government proposes that  import
   and  excise  duties  on cigarettes  and  other  tobacco
   products  be increased by 20%, from RM216 to RM259  per
   kilogramme  and  from  RM48  to  RM58  per  kilogramme,
   respectively.  This  increase is  in  line  with  World
   Health  Organisation's proposal to discourage  smoking.
   To  curb  smuggling  of cigarettes, the  Government  is
   implementing  the use of special stickers  or  banderol
   and security ink.
   138.  The  Government  also proposes  that  import  and
   excise  duties  on  liquor  be  increased  by  10%.  In
   addition, the Government will also implement the use of
   banderol and security ink on liquor.
   139. The Government would like to take this opportunity
   to  congratulate  and  record our appreciation  to  all
   medical staff who had sacrificed and took risks  during
   the  screening of visitors and treating SARS  patients.
   The special allowance provided is only a small token of
   the  Government's appreciation. It cannot compare  with
   their  untiring  efforts and unwavering  dedication  in
   carrying out their duties. We all should emulate them.
   140.  Even though the SARS outbreak has ended, we  must
   continue  to  be vigilant and be prepared  in  case  of
   recurrence.  The  Government  will  continue  with  its
   efforts  to  put  in  place measures  to  prevent  such
   diseases. In this regard, the Government will  expedite
   the  establishment  of the Centre for  Disease  Control
   (CDC), as announced in the Package of New Strategies. A
   sum of RM20 million is provided for this purpose.
   Rural Development
   Mr. Speaker Sir,
   141.  Efforts to enhance the standard of living of  the
   rural  community  will be continued. A  sum  of  RM2.27
   billion  is  provided for rural development,  of  which
   RM450 million is for the construction of village roads,
   while  a sum of RM260 million for the completion of  74
   continuation  and  new projects. An amount  of  RM267.1
   million  is  provided  for  the  completion  of   rural
   142.  A  sum  of RM225.4 million and RM272  million  is
   allocated   for   the  rural  water   and   electricity
   programmes,  respectively  to  benefit  almost  140,000
   households  throughout the country.  An  allocation  of
   RM7.9 million is provided for water projects as well as
   programmes to ensure clean environment in rural  areas.
   The  coverage of potable water supply has reached 99.9%
   for Peninsular Malaysia. In addition, RM242 million  is
   allocated to provide water supply to rural schools.
   143.  To  reduce  the  financial burden  of  low-income
   groups,  the  Government proposes that  motorcycles  of
   engine capacity not exceeding 150 c.c. be exempted from
   road tax. This will also reduce the financial burden of
   youths and students in institutions of higher learning.
   The Government also proposes that road tax on buses for
   workers,  be reduced by 50%. Employers are expected  to
   pass on this benefit to their employees.
   Development of Sabah and Sarawak
   Mr. Speaker Sir,
   144.  As in previous budgets, the development of  Sabah
   and  Sarawak will continue to be given emphasis. A  sum
   of  RM5.9  billion and RM5.5 billion  is  allocated  to
   Sabah and Sarawak, respectively. These states will have
   wider  road networks connecting major towns. Presently,
   several  towns in Sabah can only be reached by  air  or
   river  transport. However, with the completion of these
   projects,  all  towns  will be connected  by  road.  In
   Sarawak,  major road networks are being constructed  to
   facilitate communications not only in Sarawak but  also
   between  Sabah and Sarawak. New bridges  will  also  be
   built  to  replace old ones to ensure  greater  safety.
   Apart  from  this,  the  implementation  of  rural  and
   village roads is being accelerated and being undertaken
   by local contractors of all classes.
   145.  Given  that Sabah and Sarawak are  large  states,
   several  air and sea transportation projects are  being
   implemented. Apart from the newly completed airports of
   Tawau,  Bintulu  and  Miri that can accommodate  Airbus
   330,  the  Kuching airport will also be  upgraded.  The
   Bintulu and Kuching ports are also being expanded.  The
   Government will also build a new port in Semalanjau  to
   cater  for the aluminium smelting plant. The plant,  an
   investment  from the Middle East, will also  utilise  a
   large  portion of electricity produced from  the  Bakun
   Hydroelectric project.
   146.  In  the education and health sectors,  Sabah  and
   Sarawak  will also be given significant allocations  to
   implement  projects, such as Phase 2 of the  Universiti
   Malaysia  Sabah  and  the construction  of  the  UNIMAS
   permanent campus in Samarahan. The Government has taken
   over  the Sabah Medical Centre from the private sector,
   which  will  be upgraded to become a major hospital  in
   Kota Kinabalu. In addition, with the view to increasing
   the  number  of  doctors  and  allied  health  services
   personnel,  the  Kuching hospital will be  upgraded  to
   become a teaching hospital for UNIMAS.
   147.  Sabah and Sarawak have not enjoyed full  coverage
   of  rural  water  supply. As an  interim  measure,  the
   Government   has   implemented   rural   water   supply
   programmes,   especially   in   schools,   using   rain
   harvesting  and tube well system. To date,  almost  700
   schools  in  Sabah and Sarawak have been identified  to
   benefit  from  these facilities, with a cost  of  RM242
   148.  The Government will continue to give emphasis  to
   further modernise the agriculture sector, in particular
   programmes  to increase food production.  Towards  this
   end,   large-scale  mixed  farming  will  be  promoted,
   including animal husbandry, intensive farming  as  well
   as  the  use  of  modern technology and management.  To
   further  promote  greater  value-added  chain  in   the
   agriculture  sector,  activities  such  as  processing,
   logistics,  packaging,  developing  brand   names   and
   securing  new markets will be supported and encouraged.
   Towards  this  end, all activities in the value  chain,
   including   delivery  system,  will  be   strengthened,
   particularly  the  provision  of  cold  storage   chain
   facilities for perishable agricultural products.
   149.  Companies  which  provide  these  facilities  and
   services   can  also  utilise  venture  capital   funds
   available  from MTDC. In addition, new companies  which
   provide   cold   chain  facilities  and  services   for
   perishable  agricultural  produce  are  given   Pioneer
   Status   or   Investment  Tax  Allowance.  To   promote
   reinvestment  in  this field, the  Government  proposes
   that  existing locally owned companies be  granted  the
   following incentives:
   i.  Pioneer  Status with tax exemption of  70%  on  the
   increased income from reinvestment for 5 years; and
   ii.  Investment Tax Allowance of 60% on the  additional
   investment for 5 years.
   150.  The  Government has already established the  Fund
   for  Food totalling RM1.3 billion under BPM to  finance
   the  production  and processing of  food  products.  To
   date, this Fund has been fully utilised. In view of the
   good   response,   the  Government  has   provided   an
   additional  RM1  billion  under  the  Package  of   New
   Strategies, bringing the total Fund to RM2.3 billion.
   151. To further stimulate rural economic activities and
   assist  small entrepreneurs in villages, the Government
   will   establish   the   Village  Micro-Credit   Scheme
   amounting to RM1 billion under BPM. To ensure efficient
   and  effective  implementation of this programme,  this
   credit  will  be  provided on group basis  through  the
   Village  Development Committee for villages, which  are
   involved in the one product one village programme.  The
   implementation of this Scheme will be supervised by the
   District  Development Committee and the  Implementation
   and Coordination Unit, Prime Minister's Department. The
   objective of the Scheme is to provide opportunities  to
   farmers  to  gainfully  utilise  their  free  time  and
   increase their income.
   152.  An  allocation of RM3.3 billion is  provided  for
   operating   and   development   expenditure   for   the
   agriculture sector. Of this, RM885 million is  for  the
   provision   of   basic  agricultural   facilities.   In
   addition, aquaculture farming will be expanded, with an
   allocation  of RM70.6 million, while RM165  million  is
   for  the construction of an Integrated Deep Sea Fishing
   Port  and a Fisheries Training Centre in Tanjung Manis,
   Increasing   Orang  Asli  Participation  in  Mainstream
   153.  The  Government continues to undertake programmes
   with  the  view  to enhancing greater participation  of
   orang  asli  in  national economic  development.  As  a
   measure  to  increase their income, the Village  Micro-
   Credit  Scheme will also be extended to enable them  to
   undertake  economic  activities, including  agriculture
   and  small businesses. In addition, they will  also  be
   provided  with hire-purchase facilities for  boats  and
   outboard  engines under the Package of New  Strategies.
   To  enable  orang  asli  to  purchase  comfortable  and
   ffordable homes, they will also be given priority under
   the SPNB low and medium-cost housing scheme as well  as
   the provision of soft loans to acquire these homes.
   154.  An allocation of RM156.5 million is provided  for
   the  implementation of programmes for orang asli. These
   include Rancangan Pengumpulan Semula, Penyusunan Semula
   Kampung, and economic development activities,  such  as
   entrepreneur  and  skills training.  In  addition,  for
   orang   asli  children,  assistance  such   as   school
   uniforms, textbooks and bus fares have been provided.
   Increasing Security
   Mr. Speaker Sir,
   155.  Recently,  there has been a spate  of  hijacking,
   piracy and gangsterism, including "tonto" activities as
   well   as  robberies  and  thefts.  To  overcome  these
   problems,  the Government will increase and  strengthen
   security and enforcement. The police force will step up
   their security surveillance throughout the country. The
   Government will review several departments of the Royal
   Malaysian  Police  with the view  to  increasing  their
   capacity  and  effectiveness through the  provision  of
   equipment  and special training. Apart from  this,  the
   Government has also established the Malaysian  Maritime
   Enforcement  Force  (APMM) in its efforts  to  increase
   surveillance  in  our waters, such as  the  Straits  of
   156.  It  is  the responsibility of the  Government  to
   provide   a   safe  environment  for  the  public   and
   businesses.   To  ensure  the  safety  of   enforcement
   officers  in  various agencies, they will  be  supplied
   with   appropriate   equipment  while   on   duty.   In
   appreciation  of  their  services,  the  benefits   and
   remunerations provided to security personnel and  their
   families  will also be extended to enforcement officers
   if they are injured or die in the line of duty.
   157.  A  sum of RM4.4 billion for operating expenditure
   is  provided for internal security while RM6.5  billion
   is  allocated to the Ministry of Defence for 2004.  For
   development expenditure, allocations of RM750.5 million
   and  RM2.1 billion have been provided, respectively  to
   equip and modernise the defence and security systems of
   the nation.
   Third Strategy:
   Monetary  Policy  to  Support Private  Consumption  and
   Mr. Speaker Sir,
   158. Accommodative monetary policy will continue to  be
   implemented   to   promote  domestic   activities,   in
   particular  consumption and investment. The  Government
   will continue to maintain this policy, especially given
   the low interest rate regime in the world. In addition,
   there  exists high liquidity in the system that can  be
   mobilised  to finance domestic economic activities.  As
   such, measures to manage this liquidity will be put  in
   place  so  as  to  ensure  it  will  be  utilised  more
   efficiently   to  stimulate  domestic  investment   and
   Easier Access to Financing for SMIs
   159.  Small  and medium industries (SMIs)  need  to  be
   further   promoted   to   generate   greater   domestic
   investment  activities.  To  further  strengthen  their
   role,  it  is imperative for financial institutions  to
   provide greater access to finance and credit facilities
   to  the  SMIs.  In  addition  to  financial  facilities
   provided  by  the Government under the Package  of  New
   Strategies, banking institutions must be pro-active  in
   providing   loans,  especially  to  small  and   medium
   160.  Given the good response from small businesses  to
   the  Micro-Credit Scheme of BPM and BSN, the Government
   will provide an additional RM1 billion to the Scheme.
   161.  The  Government is also concerned over small  and
   medium  businesses,  which are facing  difficulties  in
   servicing  their  loans  with  financial  institutions.
   Under  the  Package  of  New  Strategies,  Bank  Negara
   Malaysia has established the Scheme to Restructure  and
   Reschedule  Loans  for all types of  loans  and  credit
   facilities by borrowers in the tourism sector. To date,
   loans amounting to RM3 billion have benefitted from the
   162.  In  addition to this Scheme, the Government  will
   also  assist SMIs to address their non-performing loans
   with  financial  institutions, using  a  mechanism  ala
   CDRC. Towards this end, BNM will establish the SMI Debt
   Restructuring  Committee. It is the  Government's  hope
   that  this mechanism will help to resolve the debts  of
   Issuance of Merdeka Bonds
   163.  The Government is aware of the impact of the  low
   interest rates regime on groups whose income depend  on
   savings  in  financial institutions, that is pensioners
   aged 55 years and above who do not have permanent jobs.
   To  ensure that they receive higher returns,  BNM  will
   issue  serial  bonds  for this group  with  a  maturity
   period  of 2 years and a return of 5% per year,  higher
   than  the  interest  rates on savings.  The  Government
   proposes  that the returns from these bonds be exempted
   from  income  tax. In appreciation of the services  and
   sacrifices of uniformed personnel, this bond will  also
   be  extended  to  those  who  have  gone  on  mandatory
   Expanding the Capital Market
   164.  The capital market continues to play an important
   role  in financing economic development, especially  in
   terms  of  raising funds from the market.  Since  2001,
   more  than  RM99  billion have been  sourced  from  the
   capital  market  through  the  issuance  of  bonds  and
   equities. In addition, 13 asset-backed securities (ABS)
   valued  at  more  than RM7 billion have been  approved.
   This encouraging performance has been the result of the
   implementation of initiatives under the Capital  Market
   Master  Plan as well as the 10 new measures  introduced
   by  the Government in March this year to strengthen the
   capital market.
   165.  Currently,  there  is  no  specific  income   tax
   provision  for  ABS. As a measure to promote  financing
   through  the  issuance of ABS, the Government  proposes
   that   ABS  be  given  equal  tax  treatment  as  other
   conventional   securities.  At  the  same   time,   the
   Government  proposes  that  expenses  incurred  in  the
   issuance of ABS be granted tax deduction for 5 years.
   166.  One  of the 10 measures implemented to strengthen
   the  capital market is to encourage large companies  to
   be listed on the KLSE. Towards this end, FELDA which is
   not  only the largest plantation company in this region
   but also in the world, will also be listed on the KLSE.
   FELDA  shares are expected to become one  of  the  blue
   chips  on  the KLSE and FELDA has the potential  to  be
   promoted  as an international brand. With the  listing,
   FELDA will be able to tap funds from the capital market
   and  therefore, will no longer depend on the Government
   for  its financial requirements. At the same time,  the
   Government  will  be  able to reap  returns  from  this
   listing,  while the FELDA Group of companies, settlers,
   cooperatives as well as state governments,  which  have
   provided  land  to  be developed as FELDA  plantations,
   will  also  benefit.  FELDA  settlers  will  have   the
   opportunity  to  hold equity in the listed  company  as
   members of the cooperative and as settlers.
   167. The proposal is in line with the objective of  the
   NEP  to  enable Bumiputera to own at least 30%  of  the
   equity  in  the  corporate sector.  It  is  hoped  that
   Bumiputera will not divest their shares.
   168.  After  46  years of independence,  we  must  take
   cognisance   of   our  weaknesses  and   work   towards
   rectifying  them.  As  a  measure  to  further   expand
   investment    opportunities   through   trust    funds,
   especially for Bumiputera, a Second Unit Trust Fund  or
   Dana  Harapan (HARAPAN) will be established. This  Fund
   will   be   managed  by  professional  and  experienced
   managers to mobilise Bumiputera savings and capital.
   169.  The Government has significant high-value assets,
   which   have  not  been  fully  utilised.  To  optimise
   returns, the Government will undertake to unlock  these
   assets so as to enhance its financial position. It will
   also provide investment opportunities for investors  to
   utilize these assets to generate returns and contribute
   to economic growth.
   Expanding the Islamic Financial System
   170.  Since  its  introduction  in  Malaysia  in  1983,
   Islamic banking has brought a new facet to the nation's
   financial  system. Malaysia is one of the nations  that
   has  a comprehensive Islamic financial system. We began
   with  the  establishment of Bank Islam and now Malaysia
   has   two  Islamic  banks  and  33  conventional  banks
   offering  Islamic  banking  services.  The  growth   of
   Islamic banking also serves as a catalyst to the  rapid
   expansion  of the Islamic financial system,  comprising
   banking, insurance and the capital market. Total assets
   of  the  Islamic banking system increased almost  four-
   fold  to  RM68 billion in 2002 from RM17.9  billion  in
   171.  Islamic insurance or takaful industry has emerged
   as   another  Islamic  financial  product,  which   has
   expanded  rapidly since its introduction in 1986,  with
   total  assets  increasing from  RM200  million  to  RM4
   billion  this  year.  Islamic private  debt  securities
   (PDS)  have  also  received encouraging  response  with
   issuance  exceeding RM34 billion since  2001.  The  net
   asset  value  of Islamic funds has also increased  more
   than two-fold to RM4.3 billion.
   172. At the international level, Malaysia was the first
   country to issue global Islamic bonds, Sukuk Al-Ijarah.
   The  US$600  million  bond was  twice  over-subscribed.
   Another  significant achievement was the  establishment
   of the Islamic Financial Services Board in Kuala Lumpur
   to  ensure stability and strengthen the global  Islamic
   financial  industry. With these achievements,  Malaysia
   has  now become a model in the expansion of the Islamic
   financial system among Islamic countries.
   173.  As  a  measure to increase financing through  the
   issuance of Islamic securities, the Government proposes
   that  a  more  comprehensive tax treatment be  provided
   similar   to  conventional  securities.  In   addition,
   deductions  will be given on expenses incurred  in  the
   issuance  of Islamic securities based on the  principle
   of   Istisna'   for  5  years,  where  property   under
   construction can also be used to back such bonds.
   174.  To encourage companies and financial institutions
   which  practice Syariah principles to invest in Labuan,
   the  Government proposes that Labuan offshore companies
   be given tax rebate equivalent to the total zakat paid,
   not exceeding RM20,000 or 3% of net profit.
   Fourth Strategy:
   Enhancing the Nation's Competitiveness
   Mr. Speaker Sir,
   175.  Measures undertaken by the Government as well  as
   initiatives by the private sector to enhance efficiency
   and   productivity  have  contributed  towards  further
   strengthening  the nation's competitiveness.  Based  on
   the   2003   World   Competitiveness  Yearbook,   among
   countries   with  20  million  and  above   population,
   Malaysia  is  ranked  fourth after the  United  States,
   Australia  and  Canada. This placing is an  improvement
   compared  with the sixth position in 2002 and tenth  in
   2001. This improvement reflects the nation's ability to
   compete  in  the international market, attributable  to
   the  concerted efforts made by the Government  and  the
   private sector since two decades ago.
   176.  The  use  of  IT has become an integral  part  of
   business,  particularly high-speed internet  access  to
   enable  the  nation  to  become  more  competitive.  In
   addition  more  Malaysians, in particular  the  younger
   generation   are  surfing  the  internet   to   acquire
   knowledge  and  obtain current information.  To  ensure
   wider  access  to  the internet at  low  cost,  Telekom
   Malaysia  will reduce the internet access  charges.  In
   addition,   this  reduction  will  promote   e-commerce
   through wider and cheaper access to broadband internet.
   Telekom   Malaysia  will  provide  50%   discount   for
   industrial  and corporate package, beginning  with  30%
   for  phase  1 and a further 20% for phase 2. For  other
   users,  a  30%  reduction will be  given  for  consumer
   broadband internet charges.
   177.  To  ensure  wider  and  more  efficient  internet
   services,   JARING  will  be  merged  with  TMNet.   As
   Cyberjaya  will  become the hub for selected  services,
   accessibility and quality of broadband services will be
   improved  while  the cost will be  reduced  to  a  more
   competitive level compared with other countries.
   178.  In  our  efforts to further improve the  nation's
   competitiveness,  the private sector must  continue  to
   reduce  the costs of doing business to enable  them  to
   compete   with  lower  cost  manufacturers   in   other
   countries.   For  this  purpose,  the  Government   has
   provided  various  incentives,  particularly   in   the
   Package  of New Strategies. As a continuous  effort  to
   achieve this, the Government proposes the following:
   i.  allowing  full deduction on entertainment  expenses
   incurred  in sales promotions and deduction of  50%  on
   other entertainment expenses;
   ii.  abolishing the limit on the exemption  period  for
   import duty and sales tax on spares and consumables for
   the manufacturing and services sectors, which is due to
   expire on 31 December 2003;
   iii.  extending deduction on incorporation expenses  to
   companies with authorised capital up to RM2.5  million,
   currently  enjoyed by those with authorised capital  up
   to RM250,000 only;
   iv.  reducing or abolishing import duties  on  selected
   goods  such  as computer batteries, wooden and  plastic
   goods, from the current rates of between 5% and 30%  to
   between 0% and 20%; and
   v.  reducing  or  abolishing export duties  on  several
   agricultural  produce and commodities,  such  as  fish,
   fruits and certain minerals, from the present rates  of
   between 2.5% and 10% to between 0% and 5%.
   179.  The  mass media industry has become an  important
   sector  to  create a knowledge society. It is  proposed
   that  local publishing and printing companies be  given
   exemption of anti-dumping duty on imported newsprint on
   the quantity that cannot be supplied by local producer.
   This  exemption will render the cost in the  publishing
   and printing industry to be more competitive.
   Fifth Strategy:
   Strengthening Social Agenda And Caring Society
   Mr. Speaker Sir,
   180. Recently, almost every day, we read and hear about
   incidences of social ills in the mass media,  including
   the militant groups, cold-blooded murders, kidnappings,
   secret   societies,  merciless  acts  of  loan  sharks,
   incest,  drugs  and  HIV/AIDS. Of greater  concern  are
   moral  decadence and incidence of crimes among  youths,
   particularly school children. We also hear  of  murders
   committed   by  under-aged  children,  runaways   among
   teenagers,  extortion,  truancy and  gangsterism  among
   181.  Previously, we see such incidents only  happening
   abroad,  through TV and newspapers. But  they  are  now
   happening  before our own eyes, in our  country.  These
   are   social   ills  resulting  from  the  unrestrained
   influence   of   television  and  the  internet.   Such
   influence has adversely affected some segments  of  the
   Malaysian  society  as well as destroyed  our  cultural
   values.    Modern   technology   has   been    misused,
   particularly  by illegal VCD producers,  who  are  only
   interested  in reaping profits without any  regard  for
   the negative influence on society.
   182. The Government is determined to step up efforts to
   curb   social  ills,  particularly  among  the  youths.
   Towards  this end, the National Social Policy has  been
   launched,   with   the  objective  to  promote   social
   development  based on noble values and  self-enrichment
   to  achieve unity and stability, national resilience as
   well  as the well-being of Malaysian society. To enable
   a more integrated, strategic and comprehensive approach
   to   address  social  problems,  the  Government   will
   establish  50 community service centres in  areas  with
   high  incidence  of  crimes and  social  problems.  The
   Government  urges NGOs and members of local communities
   to    work    together   to   ensure   the   successful
   implementation of the Policy.
   Harmonious Families Basis for High Moral Values
   183.  We  must  intensify our efforts to combat  social
   ills,  particularly  among the  youths,  the  potential
   leaders  of the future. Efforts in building a Malaysian
   society  with  high  moral  values  are  not  the  sole
   responsibility   of   the   Government.   The   family,
   particularly  parents and the society must  share  this
   responsibility in moulding youths with good  behaviour,
   practise   healthy  lifestyle,  are   disciplined   and
   knowledgeable as well as the assimilation of  religious
   values.  These  values provide a strong  foundation  to
   curb  social problems and build a society that is truly
   successful in all aspects of life.
   Recognising the Role of Women
   Mr. Speaker Sir,
   184.  The role of women in moulding happy families  and
   their  contribution  in national  economic  and  social
   development has always been recognised. The success  of
   women in balancing this dual role cannot be denied  and
   is  indeed  admirable. The responsibility of  women  in
   nurturing  families based on My Home My Heaven,  begins
   from  the birth of a child till adulthood. Mothers play
   the key role in moulding and inculcating good values in
   children  so as to become knowledgeable and devoted  to
   family and willing to serve for the betterment of race,
   religion  and country. Youths imbued with  high  morals
   and  strong resilience will stand the challenges of our
   time  and  prevent  them from being  dragged  into  the
   miseries  of  social ills. It is their generation  that
   will continue with our aspirations and strive to uphold
   the   nation's  dignity.  Parents  must  give   greater
   attention  to  their  role in nurturing  a  responsible
   185.  Unfortunately, there are some who  undermine  the
   status  and  dignity of women. There are some  husbands
   who  divorce  their wives through SMS.  Marriage  is  a
   noble  event  involving all family members,  especially
   parents  of the bride and groom, kadi and witnesses  as
   well  as  close friends. Although Islam allows husbands
   to  divorce their wives by mere utterance of the words,
   divorce  should  not  be taken lightly.  It  should  be
   carefully  thought  through as  children  often  become
   victims.  Using  SMS does not reflect respect  for  the
   sanctity of marriage and family institutions, including
   children. In addition, SMS is not secure as anybody can
   use  it  to send divorce messages without the knowledge
   of  the husband. The resultant social problems will not
   reflect the true character of Islam.
   186.  There are also some who restrict the contribution
   of women in development by only allowing them to become
   teachers and welfare officers and preventing them  from
   becoming  judges, Government administrators or  joining
   the   security   forces.  For  the   Barisan   Nasional
   Government,  women  stand  equal  with   men   in   the
   mainstream   of   development.  Female  workforce   has
   increased  to more than 45%. In the history  of  Islam,
   women  had  fought alongside Prophet Muhammad  in  war,
   while  in business, Saidatina Khadijah was involved  in
   cross-border trade. Remember, heaven lies  beneath  the
   mother's feet. Behind every successful man is  a  wife.
   The hand that rocks the cradle shakes the world.
   187.   In   the   light  of  fewer  male  students   in
   institutions of higher learning, restricting  the  role
   of  females  will  only result in  reducing  the  human
   resources  of  Muslims  by more  than  half.  As  such,
   Muslims  in Malaysia will have to depend on others  for
   everything.  Do not be disappointed when this  happens.
   Do  not  blame the women if men are unable  to  control
   their  desires. Islam does not place the responsibility
   of restraining desires solely on women.
   188. Programmes for the development of women and family
   institution  will  be further enhanced  and  a  sum  of
   RM105.4  million  has  been  allocated.  This  includes
   training,  guidance and counseling  to  instil  greater
   confidence   and  encouragement  to  women,  especially
   single mothers, the elderly and the disabled.
   189.  To  enable  single  mothers  in  rural  areas  to
   increase their income from their businesses, a  sum  of
   RM100 million from the Village Micro-Credit Scheme will
   be  set  aside  to  provide loans  to  those  with  own
   businesses. Single mothers in the low-income group will
   also  be given priority to purchase low and medium-cost
   houses from SPNB with a 20% price discount.
   190. The Government has provided several tax incentives
   to  employers  to establish childcare  centres  at  the
   workplace. However, the response from private employers
   has   not   been  encouraging.  In  this  regard,   the
   Government  may  consider  the  establishment  of  such
   facility  as  a condition in the development  order  of
   Local Authorities.
   191.  The  Government is aware of the rising  costs  of
   bringing  up and educating children. To assist  parents
   in  reducing the burden of expenditure on children, the
   Government  proposes an increase  in  tax  relief  from
   RM800 to RM1,000 per child.
   Youths as Future Generation
   Achieving Excellence in Sports
   Mr. Speaker Sir,
   192.  The  youths, who represent the future generation,
   that  will  continue to strive to develop  the  nation,
   must  be  imbued  with strong self-resilience.  Towards
   this  end,  the Government will implement the  National
   Service  Programme involving some 100,000 youths.  This
   programme will include basic military training,  civics
   education,  character  building  and  social  services,
   aimed  at nurturing the spirit of cooperation, national
   unity and integration as well as healthy lifestyle.  An
   allocation  of  RM300  million  is  provided  for  this
   193.  The  Government is proud of the  success  of  our
   national  athletes who have brought fame and  glory  to
   the  nation at the international level. The most recent
   accomplishment is our national marathon swimmer who has
   become  the  first from South-East Asia to successfully
   swim  across  the English Channel. Physical  resilience
   and  mental strength as well as endurance have  enabled
   him  to  swim against waves as high as 3 meters and  to
   withstand  the  icy cold waters. Our badminton  players
   have  also succeeded to become the All England Champion
   as  well  as the first runner up in the World Badminton
   Championship. Let these spur us to greater  heights  in
   sports.  This achievement is not merely another success
   of our national heroes, but shows that with discipline,
   dedication and strong determination, Malaysians too can
   attain success in all fields. These achievements should
   inspire  and  strengthen our determination  to  achieve
   excellence in sports.
   194.  The  Government values the contribution  of  all,
   including state governments, corporate sector and  NGOs
   in  rewarding our sports champions. I hope our athletes
   will  not  be distracted by these rewards, but continue
   to  improve their performance. In appreciation  of  our
   athletes who have brought fame and glory to the  nation
   and  enabled  Malaysians to walk tall,  the  Government
   will  provide scholarships for those athletes who  wish
   to  further their studies locally or abroad  to  become
   coaches or managers in the sports of their choice.
   195.  Our young men are the nation's hope and our young
   women  the  nation's pillar. Healthy  bodies  make  for
   active  minds. A sum of RM657.9 million is provided  to
   the  Ministry  of  Youth and Sports for  2004.  We  are
   actively  training our athletes for their participation
   in  the  28th  Olympic  Games  in  Athens,  Greece.  In
   addition,  Malaysia will once again  host  the  Extreme
   Sports for the third year.
   196. To provide greater recreational facilities to  the
   public, especially the youths, the Government will make
   the  provision of such facilities a prerequisite in new
   housing  development projects. In addition,  all  local
   authorities must provide facilities, such as parks  and
   playgrounds   as   well  as  recreational   areas   for
   activities,  including jogging. For this  purpose,  the
   Government will provide an initial sum of RM50 million.
   Providing Support to the Disabled
   Mr. Speaker Sir,
   197. The Government is concerned with the well-being of
   the  disabled  and  will ensure that they  continue  to
   benefit  as  well as participate in the  mainstream  of
   development. Several financial assistance have  already
   been  provided  for them, including  financial  aid  of
   between RM80 to RM350 a month. As of mid-2003, a  total
   of 122,543 disabled persons has registered and received
   financial aid, amounting to RM88.5 million.
   198.  To encourage the disabled to continue working  to
   support  themselves  and  their  families,  a  Disabled
   Worker  Allowance of RM200 per month has been  provided
   if  their monthly income ceiling does not exceed RM500.
   The  assistance  is  provided  to  meet  the  cost   of
   transport  to the workplace as well as other  expenses.
   To enable more disabled workers to enjoy this financial
   aid,  the Government proposes that their income ceiling
   be raised from RM500 to RM750 a month.
   199. As a measure to ensure that the disabled also have
   access   to  job  opportunities,  the  Government   has
   allocated  1% of public service posts for the disabled.
   In  addition, a special unit will be established at the
   Ministry  of Human Resources to assist the disabled  in
   getting jobs.
   200.   The   Government  sympathises  with  the   heavy
   responsibility  of parents with disabled  children  and
   the  high  cost of sending them to special schools.  To
   help  these  parents and their children, the Government
   proposes that a monthly allowance of RM25 per person be
   given  to  disabled students in primary  and  secondary
   schools to encourage them to receive education. For the
   disabled  in  institutions  of  higher  learning,   the
   Government proposes that the present monthly  allowance
   of  RM300  per person for those with impaired  hearing,
   also be extended to them.
   201.   For   civil  service  employees  with   disabled
   children,  the Government will allow them  to  work  on
   flexi-hours  to  facilitate them in  caring  for  their
   children. The Government also proposes that the private
   sector provides similar facility.
   202. In the 2003 Budget, the Government had announced a
   fund  of  RM100 million to finance treatment  of  those
   suffering  from  chronic diseases. The  Government  now
   proposes  that  a  special  fund  of  RM10  million  be
   established  for  the disabled suffering  from  chronic
   203.  Job opportunities for the visually impaired, such
   as  typists, stenographers and telephone operators  are
   declining.  As  such,  they need to  be  provided  with
   skills  in  new  areas, such as IT,  physiotherapy  and
   others.  In this regard, the Association for the  Blind
   is encouraged to establish a network of Franchise Shops
   to   provide   opportunities   for   them   to   become
   entrepreneurs as well as create more job opportunities.
   They  can  also obtain financing from the  Government's
   Micro-Credit   Scheme  and  will  be   given   suitable
   locations to establish a network of Franchise Shops. In
   addition,  the  Government  will  also  bear  the  full
   expenses  for the purchase of white canes  and  Braille
   machines for the visually impaired.
   204.  The Government will also ensure that the disabled
   can  own  comfortable and affordable  homes.  For  this
   purpose, the disabled in the low-income group  will  be
   given  priority to purchase low and medium-cost  houses
   from SPNB, with a price discount of 20%.
   205.  To  help  reduce the cost of  transport  for  the
   disabled, Syarikat Prasarana Negara Berhad will give  a
   50%   discount  on  travel  fares.  Private   transport
   companies  are encouraged to extend the same  facility.
   In  addition, the Government proposes that road tax  be
   exempted   on  locally  manufactured  cars,  vans   and
   motorcycles owned by the disabled.
   206.  To ensure the disabled also benefit from the  use
   of   ICT,  a  Pioneer  ICT  Resource  Centre  will   be
   established  in Sungai Buloh to train the visually  and
   hearing  impaired  in ICT skills. The  Government  will
   also provide ICT enabler to facilitate them to use  ICT
   as   a   communications  tool,  particularly  at  zebra
   crossings  and  during emergencies, especially  on  the
   highways. In addition, all Government buildings will be
   provided  with  appropriate  facilities  to  help   the
   disabled in their dealings with Government departments,
   including facilities in lifts. The Government hopes the
   private  sector  will also provide such facilities  for
   Meeting the Need for Low and Medium-Cost Housing
   Mr. Speaker Sir,
   207.  The  Government  is sensitive  to  the  need  for
   housing,  particularly  for the low  and  medium-income
   group.   Based  on  the  national  population  profile,
   especially  those in the age group of 20 to  24  years,
   the  demand for low and medium-cost houses is  expected
   to  increase by 500,000 units in the next 5  years.  To
   ensure  this  group  will have the opportunity  to  own
   houses,  the Government will take over the construction
   of  low  and  medium-cost houses, particularly  through
   Syarikat Perumahan Negara Berhad (SPNB).
   208.   To   reduce   the  burden  of  private   housing
   developers,  they  will be given the choice  of  either
   implementing the construction of 30% of low-cost houses
   or   allowing   SPNB  to  undertake  its  construction.
   However,  they  are required to pay a  contribution  in
   return.  EPF contributors who purchase low-cost  houses
   built by SPNB will be provided with end financing  from
   MBSB. This will ease their financial burden as well  as
   reduce   the  administrative  red  tape  in   obtaining
   financing  from commercial banks. As the  provision  of
   low-cost  housing  is  a social responsibility  of  the
   Government, state governments are requested  to  exempt
   land  premiums for the construction of low-cost houses.
   All  utility  companies providing facilities,  such  as
   electricity, water and telephone will also be requested
   to charge only basic costs.
   209.  A  pilot project based on a new concept  will  be
   implemented as a showcase on 1,000 acres of land  owned
   by  the Rubber Research Institute of Malaysia (RRIM) in
   the  Klang Valley for the construction of 10,000  units
   of  affordable homes. The project will also be provided
   with  public  transport facilities, religious  centres,
   commercial facilities, shopping centres, retail  shops,
   recreation  facilities, such as parks  and  playgrounds
   and community halls as well as other facilities.
   210.  For  2004, the Government will provide a  sum  of
   RM558.8  million  for several low-cost  public  housing
   projects.   Of   this,  RM484  million   is   for   the
   construction  of 62,672 units of low-cost houses  under
   Programme  Perumahan Rakyat and will be rented  out  to
   squatters in the Federal Territory of Kuala Lumpur  and
   major towns. The balance of RM74.5 million is allocated
   as   loans   to  state  governments  to  continue   the
   construction of 28,541 low-cost houses.
   211. For the armed forces, a sum of RM418.1 million  is
   provided to continue the construction of 2,500 units of
   houses, while RM251 million is provided to complete  44
   housing  projects for the police force. A sum  of  RM38
   million is provided for the construction of common  use
   quarters in the KLIA area and Kuala Lumpur.
   212.   To   solve  the  problem  of  abandoned  housing
   projects,  the  Government will undertake  measures  to
   expedite   the   rehabilitation   of   such   projects.
   Currently,  there are 204 abandoned projects throughout
   the  country  involving nearly 66,000 units  valued  at
   RM5.6 billion. The rehabilitation of more than half  of
   these  projects involving 36,000 units valued at  RM3.4
   billion  is  being undertaken by SPNB. To overcome  the
   delay   resulting  from  problems  between   creditors,
   developers  and banks, Danaharta will manage  the  non-
   performing loans of the relevant financial institutions
   and  task  SPNB to complete the projects. In  addition,
   SPNB  will  also take over and manage housing  projects
   under  Tabung  Pusingan Perumahan Kos  Rendah  (TPPKR),
   which is currently under TPPT Sdn Bhd.
   213.  The Real Estate Investment Trust and the Property
   Trust   Fund  will  be  established  to  enable   small
   investors  to invest in the real property  sector.  The
   funds  will  be  managed  by professional  managers  to
   generate  more  attractive returns.  To  encourage  the
   development of these funds, the Government proposes:
   i.  exempting the real property gains tax on gains from
   disposal of property by individual or company to  these
   funds; and
   ii. exempting stamp duty on instruments of transfer  of
   real  property  from  individual or  company  to  these
   Clean Environment Makes Healthy Citizens
   Mr. Speaker Sir,
   214.  A  clean  environment is paramount in  preventing
   infectious  diseases, such as SARS which  had  recently
   affected  the  country. The Government  is  serious  in
   preventing contagious diseases that can be fatal. As  a
   measure  to  ensure cleanliness in our environment,  an
   appropriate  waste  disposal  system,  particularly  in
   towns  is  essential. For this purpose, the  Government
   proposes  to  build a modern and safe waste incinerator
   plant.  The  plant,  which is expected  to  cost  RM1.5
   billion,  is better than most waste incinerator  plants
   even  in developed countries. In these countries, waste
   incinerator  plants have been built  in  industrial  or
   housing areas without any opposition from residents.
   215.  To  ensure  the  environment  remains  clean,  an
   allocation  of RM1.9 billion is provided under  several
   ministries and agencies. Of the amount, a sum of  RM680
   million  is  provided  for flood mitigation  programme,
   particularly  in overcoming flash floods,  which  often
   occur  in  Kuala Lumpur. In addition, a  sum  of  RM462
   million  is provided for the management of solid  waste
   and RM422 million for sewerage projects.
   Non-governmental Organisations (NGOs)
   Mr. Speaker Sir,
   216.  The  Government acknowledges the contribution  of
   NGOs  in  carrying out welfare activities  as  well  as
   appreciates their spirit of volunteerism, even  risking
   their own safety in undertaking their missions. We have
   witnessed the courage and bravery of MERCY during their
   peace missions to provide assistance to war victims  in
   Afghanistan  and Iraq. In addition, several  NGOs  have
   supported  and  worked together with the Government  in
   dealing  with social problems, such as drug  addiction,
   HIV/AIDS as well as caring for the less fortunate, such
   as  the  elderly  and  destitute,  disabled  and  those
   suffering from chronic diseases.
   217. NGOs must strengthen understanding and cooperation
   through  smart partnership with the Government  towards
   building  a  responsible and caring Malaysian  society.
   Towards this end, they must set standards in evaluating
   their performance, especially with respect to effective
   leadership  as  well as their activities and  financial
   management.  This  will  enable  them  to  become  more
   ethical, efficient and accountable in discharging their
   duties as NGOs.
   218.  The  Government will continue to provide  support
   and contribution to NGOs to undertake their activities.
   A  sum  of  RM96.4 million has been provided, including
   RM6 million for AIDS prevention, RM20 million for women
   and  family  development,  RM20.8  million  for  health
   programmes and RM26.6 million for the disabled.
   Fostering Arts and Culture
   219. Arts and culture depict the identity of a society.
   In  this regard, local works of art and culture must be
   nurtured to enable them to thrive and flourish  and  to
   further cultivate the interests of art enthusiasts. The
   lack  of  quality works of art and culture has resulted
   in  promoters bringing in performances from abroad. The
   Government  has  provided several facilities,  such  as
   Istana  Budaya, Philharmonic Hall in KLCC, Kuala Lumpur
   City  Hall Auditorium and several experimental theatres
   as  well  as the National Arts Academy training centre.
   To  achieve  excellence in arts as well as promote  the
   teaching of arts, the Government has allocated a sum of
   RM80.3 million, especially for the training of arts and
   220. The Government has provided several tax incentives
   to  encourage  arts and cultural activities,  including
   exemptions on entertainment duty on stage performances,
   income  of music composers as well as contributions  by
   private sector for the sponsorship of arts and culture.
   To  encourage  production of arts  and  cultural  shows
   involving local artistes, the Government proposes  that
   deduction   on  contributions  by  private  sector   be
   increased from RM200,000 to RM300,000. This increase is
   specifically to sponsor performances by local artistes.
   221.  To  encourage  the  local production  of  quality
   films,  producers can access loans and venture  capital
   from  MTDC. With this, the Government hopes that  there
   will  be  better  quality  films  produced  locally  to
   substitute  imported  films to  be  screened  in  local
   cinemas and TV channels.
   Promoting Excellence in the Civil Service
   Mr. Speaker Sir,
   222.  The public sector delivery system has often  been
   raised  in  budget  dialogues.  In  this  regard,   the
   Government continues to improve its delivery system  to
   ensure  the  efficient and effective implementation  of
   national  development  policies  and  strategies.   The
   process of approval as well as the issuance of permits,
   licences  and  CFOs will be streamlined and  expedited.
   The  Government will promote the use of ICT through the
   implementation  of  e-Government. In  the  Ministry  of
   Finance,  services such as e-perolehan, e-SPKB  and  e-
   stamping  have  been  implemented.  In  addition,   the
   issuance of patents and copyrights will be expedited by
   increasing the number of highly skilled personnel.
   223.   The  Government  appreciates  the  support   and
   commitment  of the civil service for their efforts  and
   services   in   ensuring   efficient,   effective   and
   successful  implementation  of  development   policies,
   strategies  and  programmes. For the  security  forces,
   including  the Police and Armed Forces, the  Government
   values their contribution and sacrifices in maintaining
   national security and public order. In appreciation  of
   their services in defending the country, the Government
   will  extend free medical treatment facilities  to  ex-
   Sarawak Ranger personnel and wives as well as the wives
   of  ex-personnel of Force 136 and the British Army. The
   Government  will  also extend to them the  benefits  of
   hospital ward charges currently provided to families of
   ex-reserve personnel of Malaysian Armed Forces.
   224.  The  Government  is  also  concerned  with  civil
   servants  without immediate beneficiaries,  to  benefit
   from  pension upon death prior to retirement. To ensure
   that  the beneficiaries also enjoy similar benefits  of
   pensioners with immediate beneficiaries, the Government
   will extend the derivative pension benefits, apart from
   gratuity to either one of their parents.
   225.  The  Government is confident civil servants  will
   strive  to  provide excellent services  and  are  fully
   committed  in  their  work  and  responsibilities.   In
   appreciation of the increase in their productivity  and
   services  and  after  taking  into  consideration   the
   improved economic conditions, the Government has agreed
   to pay an additional half-month bonus, making the bonus
   payment for the whole year to one-month salary.
   Appreciating the True Teachings of Islam
   Mr. Speaker Sir,
   226.   Presently,   Islam  has  been  associated   with
   backwardness  and  poverty.  Since  the  11   September
   incident,   Islam   has  also  been   associated   with
   terrorism.  In  reality, Islam  has  high  regards  and
   respects  for  its followers who are diligent,  possess
   skills and capable of achieving progress and prosperity
   in  line  with  the principles of Islam. Indeed,  Islam
   emphasises  on  civilization  or  Islam  hadari,  which
   propagates  excellence as a way  of  life.  Islam  also
   promotes peace, stability and prosperity and is against
   terrorism,  aggression and brutality. The international
   community  should get to the root causes  of  terrorism
   and not accuse Islam and labelling them as terrorists.
   227.  Islam as ad-din or a way of life encompasses  all
   aspects of life. If we stay with the basic teachings of
   Islam  as  in  Al-Quran  and  Hadith  sahih,  and   not
   influenced   by   certain   ulamas   with   their   own
   interpretations  and teachings, which are  against  the
   true  teachings  of Islam, there is no reason  for  the
   Islamic community to be weak, demeaned and oppressed by
   others.  Allah commands, as in surah Ar-Ra'd  verse  1:
   "Verily  never,  will God change  the  condition  of  a
   people  until  they  change it themselves."  To  uplift
   oneself   requires  diligence,  knowledge  and  special
   skills.  As such, we in Malaysia do not only  pray  for
   help  from  the  Almighty but also seek  knowledge  and
   skills  as well as implement our development plans  and
   defence  to  ensure security for the  nation.  In  this
   regard,  many  leaders and ulamas including  Sheikh  Al
   Azhar  have  openly proclaimed Malaysia as  an  Islamic
   country  that  should  be  emulated  by  other  Islamic
   228.  The perception that Islamic nations must be poor,
   backward,  with a government that is always asking  for
   aid  and  weak, as in states governed by those who  are
   not  competent  in  administration,  indeed  humiliates
   Islam.  These states cannot become the model of Islamic
   nations  capable  of bringing back the  past  glory  of
   Islamic civilization.
   229. The Government will continue to emphasise measures
   to instil the true teachings of Islam to ensure Muslims
   are  imbued  with noble values and not be misguided  by
   wrong  teachings  by those who have  worldly  political
   interests.  Towards  this end, Jabatan  Kemajuan  Islam
   Malaysia  (JAKIM) will implement additional  programmes
   to   enhance  understanding  and  appreciation  of  the
   teachings  of  Islam. A sum of RM228  million  will  be
   allocated  for  these programmes. The  Government  also
   provides RM105 million to undertake the construction of
   training complexes, religious schools, mosques as  well
   as the development of an Islamic information system.
   230.  As an Islamic nation, the Government is concerned
   with  the rising costs of performing the Haj. As  such,
   the Government is committed to ensure that such cost is
   contained.  Otherwise,  we are concerned  that  in  the
   future,  many Malaysians in rural and urban areas  will
   be unable to perform the Haj.
   231. A major portion of the costs in performing the Haj
   is  for  air  travel  and accommodation  in  Mekah  and
   Madinah.  As  such, Syarikat Penerbangan  Malaysia  Bhd
   (PMB)  will  acquire two aircrafts  with  the  view  to
   reducing  the  high  lease  cost  to  Tabung  Haji.  In
   addition,  Tabung  Haji will increase the  construction
   and  acquisition of accommodation in Mekah and  Madinah
   to  contain  the increase in the cost of accommodation.
   The Government is pleased to announce that the cost  of
   performing  the Haj through muasasah in  2004  will  be
   reduced by 5%.
   Mr. Speaker Sir,
   232.  The  external environment is expected to  further
   improve  in  2004,  particularly for several  developed
   countries.  This  is  attributed  to  the  expansionary
   fiscal  policy, low interest rate regime, wealth effect
   from  the  bouyant  stock  markets  as  well  as  lower
   petroleum  prices.  In  addition,  consumer  confidence
   remains  strong  while  private investments  have  also
   233.  The  economic prospects for the region  are  also
   expected to strengthen following the end of the  spread
   of  SARS as well as the increase in private consumption
   and  regional trade. China is expected to  continue  to
   record  high growth, with Korea, Taiwan and  Hong  Kong
   also registering stronger growth in GDP.
   234.  The  Malaysian economic performance  in  2004  is
   projected  to continue to expand strongly supported  by
   robust  domestic economic activities  as  well  as  the
   recovery  in  external economies.  In  line  with  this
   development and the positive impact of the  Package  of
   New  Strategies,  GDP  is forecast  to  further  expand
   between 5.5%-6% in 2004. The private sector is expected
   to  spearhead  economic growth with private  investment
   expanding  strongly  by 9.9%. Private  consumption  has
   also responded positively to the stimulus measures  and
   is projected to expand at a higher rate of 7.7%.
   235.  The manufacturing sector will continue to be  the
   main  contributor of growth and is expected to increase
   by  7.2%,  while the services sector by 5.5%. With  the
   policy  emphasis  and  strategies  on  the  agriculture
   sector as well as high commodity prices, the sector  is
   expected to expand steadily by 3%. The mining sector is
   also  expected to grow by 3.5%, following the  increase
   in the production of LNG and natural gas.
   236.  In  line  with fiscal consolidation  policy,  the
   Federal  Government financial position is  expected  to
   improve with the budget deficit declining from 5.4%  to
   3.3% of the GDP. If global recovery is stronger in  the
   near term, the objective of attaining a balanced budget
   is  expected  to  be  achieved in  2006.  Higher  world
   economic  growth will contribute towards  strengthening
   the  public  sector  account,  which  is  expected   to
   register  a surplus of 0.4% of the GDP in 2004 compared
   with a deficit of 1.5% in 2003.
   237.  Consistent with GDP growth, the per capita income
   is   expected  to  increase  to  RM14,954   while   the
   purchasing  power  parity of Malaysians  will  rise  to
   almost  US$10,000. Prices are expected to  remain  low,
   with the Consumer Price Index forecast at 1.3%.
   Mr. Speaker Sir,
   238.   Since   Independence,  the  nation  has   gained
   considerable success and achieved significant progress.
   In  a  span of almost half a century, we have been able
   to  sustain prosperity in an environment of  peace  and
   harmony as well as unity among Malaysians. We have also
   succeeded   in  maintaining  political  stability,   on
   account   of  the  strong  solidarity  of  the  Barisan
   Nasional  Government, which upholds the  principles  of
   equitable  collaboration, sincerity in our  efforts  as
   well  as willingness to sacrifice for the nation.  This
   has  been our tradition. This is the uniqueness of  our
   political  collaboration  that  has  strengthened   and
   fostered unity among all races under one nation.
   239.  However,  we  cannot be complacent  of  continued
   success.  The external environment continues to  remain
   difficult, with increasing threats and intimidations as
   well  as  aggression and oppression. The peace that  we
   hope for is still far away, while the acts of terrorism
   that  we  abhor, still have not subsided.  As  a  small
   nation  in the global community, we are not spared  the
   impact of the difficult external environment.
   240. We must be brave to face all these challenges.  We
   must  be prepared to undertake strategic shifts in  our
   drive  to  safeguard  and  sustain  the  progress   and
   prosperity that we have painstakingly worked for. I had
   urged all Malaysians to make this paradigm shift when I
   tabled  the  Budget 2003. We must undertake this  shift
   with greater vigour, determination and perseverance. We
   cannot  be  complacent, neither can  we  waver  in  our
   efforts  to  effect changes. We must be courageous  and
   steadfast  to  face all obstacles and  constraints.  We
   must  be  willing  to sacrifice, set  aside  our  self-
   interests and avoid discord and conflicts among us.  We
   must  be  more tolerant, reinforce our cooperation  and
   foster   unity   towards  building  a  prosperous   and
   harmonious Malaysian society.
   241.  I  pray  to the Almighty that our beloved  nation
   will  continue  to  be  bestowed  with  prosperity  and
   dignity.  God willing, I am confident that this  nation
   will  continue  to  progress, that Malaysians  will  be
   blessed  with  continued prosperity and  well-being  as
   well as respected by the world community.
   Because of you Malaysia
   We uphold the nation, unite the people
   We set a thousand steps forward
   Together we strive in darkness, riding the waves
   Seeking for the light, reaching for the dream
   Defying a million obstacles
   Though we may fall
   We shall persevere to achieve our vision
   Peaceful is my country
   Blessed with success, bestowed with prosperity
   United we stand, resolute in determination
   Glow the spirit of patriotism
   The world has acknowledged
   Our dignity has been upheld
   No more aggression
   No more humiliation
   Our independence enshrined
   Peaceful is my country.... Malaysia
   Mr. Speaker Sir,
   I beg to move.

   Sumber : Pejabat Perdana Menteri