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Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : Bangunan Parlimen
Tarikh/Date : 22/04/99
Tajuk/Title : INTRODUCING THE MOTION TO TABLE
THE MID-TERM REVIEW OF THE
SEVENTH MALAYSIA PLAN IN DEWAN RAKYAT
I stand before this House to present the following
motion:
"That This House,
recognising the creditable growth of the economy and
achievement of our socio-economic objectives during the
first three years of the implementation of the Seventh
Malaysia Plan, in spite of the adverse economic
performance in 1998 due to the regional financial
crisis;
acknowledging and endorsing the continuous efforts of
the Government in the implementation of the National
Development Policy in order to achieve balanced
development based on growth with equity, and the
objectives contained in the Second Outline Perspective
Plan;
approves and endorses the Mid-Term Review of the
Seventh Malaysia Plan which seeks to implement
strategies and programmes and allocate funds designed
to achieve the objectives and commitment of the
National Development Policy as set out in Command Paper
Number 8 of 1999;
That in approving the Mid-Term Review, this House calls
upon all Malaysians to strive harder and with stronger
determination towards building a united, socially-just,
progressive, competitive and resilient nation in line
with the nation's aspirations to become a developed
nation by the year 2020."
With your permission, Mr. Speaker I now table the Mid-
Term Review of the Seventh Malaysia Plan for
deliberation by Honourable Members of this House.
2. About three years ago, I stood before this
distinguished House to present the Seventh Malaysia
Plan (Seventh Plan). The Plan which represents the
second phase in the implementation of the Second
Outline Perspective Plan (OPP2), (1990-2000) contained
the nation's development agenda for the period 1996-
2000. As Honourable Members may recall, when the
Seventh Plan was launched, the prospects for
accelerated growth were bright as the economic position
then was already favourable and a strong foundation for
a continued and sustained socioeconomic development was
already in place. The challenging task then was to
build upon and manage this success so as to ensure that
Malaysia will continue to enjoy high rates of growth as
well as increased prosperity for all Malaysians.
3. Today, as I table the Mid-Term Review of the
Seventh Malaysia Plan covering the period 1996-1998,
the economic environment has changed. The challenging
task, now, is to re-stimulate the economy, which
contracted by 6.7 per cent last year. What a difference
two years can make. The turnabout from a high growth,
flourishing economy with strong fundamentals to one
with negative growth has been to say the least,
shocking, and devastating to the national confidence.
4. Nevertheless, as in the past, the Review assesses
the extent to which we have achieved our objectives and
targets and identifies the constraints confronting our
efforts as well as evaluates the growth prospects,
policies and priorities in the nation's socio-economic
development. No crisis can be allowed to halt
Malaysia=s progress. If the country must, it will use
the crisis to make unconventional economic changes so
as to overcome the setback.
MACROECONOMIC PERFORMANCE
5. Let me recapitulate for the benefit of Honourable
Members, the performance of the Malaysian economy
during the last three years. The macroeconomic
performance during the first two years of the Plan
period was remarkable, with most economic indicators
exceeding the Plan target. The average Gross Domestic
Product (GDP) growth rate was 8.2 per cent in the 1996-
1997 period, inflation was low at 2.7 per cent and
unemployment was at 2.6 per cent. However, in 1998
following the financial crisis, the economy recorded a
negative growth rate. The target for real GDP growth
was 8.0 per cent per year, but the economy only grew by
three per cent per year between 1996-1998,
necessitating a readjustment of the targeted growth
rate to three per cent for the whole Plan period. In
essence, the effect of the crisis was to push us back a
few years in terms of development. The key economic
indicators clearly illustrate this as the per capita
income declined from RM12,051 in 1997 to RM11,835 in
1998 lower than the Plan target of RM14,788; inflation
rose from 2.7 per cent in 1997 to 5.3 per cent in 1998;
and unemployment increased slightly from 2.6 per cent
in 1997 to 3.9 per cent in 1998.
6. Economic growth during the review period was
largely external demand-driven. Although domestic
demand was the main contributor to growth during 1996
and early 1997, exports picked up towards the middle of
1997 and subsequently strengthened further as a result
of the weaker Ringgit. Real exports grew by 5.6 per
cent per annum during the period from 1996 to 1998 but
this was lower than the Plan target of 10.9 per cent.
However, due to the slower export growth and the
effects of the depreciation of the Ringgit, real
imports declined by 2.1 per cent per annum during the
review period.
7. One positive aspect of the economic crisis is that
the balance of payments position improved significantly
compared with the Plan target. The current account
turned into a surplus of 13.7 per cent of Gross
National Product (GNP) in 1998 from a deficit of 5.1
per cent in 1996. This positive position was
attributed largely to the high growth of merchandise
exports at 28.9 per cent in 1998, and slower growth of
merchandise imports at 2.6 per cent. However, this
improvement in merchandise surplus was offset by the
large deficit in the services account and net outflows
in the transfers account. In the capital account,
short-term capital recorded a large net outflow in the
wake of the currency turmoil in the region.
Nevertheless, there was a net inflow of long-term
capital raised by the Federal Government to finance
counter-cyclical spending. As a result, the overall
balance improved.
ISSUES AND CHALLENGES CONFRONTING THE ECONOMY
8. Although signs of recovery of the economy are
becoming evident, there are several issues which need
to be addressed in order to ensure a sustained recovery
and restore the growth momentum. An important
prerequisite will be to continuously boost public and
investor confidence. Substantially, the Mid-Term
Review poses six major challenges.
9. The first of such challenges is the need to
maintain strong macroeconomic fundamentals. Prior to
the financial crisis, the nation had enjoyed rapid
growth rates, averaging 8.5 per cent annually since
1990. This high growth rate was accompanied by low
inflation and full employment. Private investment and
exports played a key role in spearheading the growth
while the fiscal position showed considerable strength.
External reserves were at respectable levels and on
average, sufficient to finance about four months of
retained imports, while the country's exposure to
external debt was comparatively low with a healthy
external debt-service ratio of 6.2 per cent. The
national savings rate at 39.4 per cent of GNP was
comparable, if not superior, to other countries having
high savings rates. In addition, the banking system
was sound with non-performing loans (NPLs) at 3.6 per
cent and the capital adequacy ratio at about 12 per
cent at the end of June 1997, exceeding the Bank for
International Settlement (BIS) minimum standard of 8
per cent.
10. As the Honourable Members of this House are aware,
with the start of the crisis there was a massive and
rapid withdrawal of short-term capital coupled with a
sharp fall in the prices of stocks. As the crisis
deepened, the real sector of the economy also came
under pressure. The decline in output was evident in
all major sectors due to weaker demand from the
domestic and external markets. Inflation rose to 5.3
per cent mainly as a result of the depreciation of the
ringgit as well as higher cost of inputs, while the
rate of unemployment increased to 3.9 per cent. As a
result, and for the first time since 1993, the account
of the Federal Government registered an overall
deficit. Thus, very obviously, the macroeconomic
fundamentals need to be strengthened not only to
facilitate the recovery process but also to sustain the
growth momentum and to ensure the successful attainment
of our national objectives.
11. The second challenge is improving the level of
productivity. An important thrust of the Seventh Plan
was to enhance the contribution of total factor
productivity (TFP) to GDP. However, during the review
period, the economy continued to be input-driven with
growth achieved primarily through high rates of capital
accumulation. An important thrust of the Seventh Plan
was to enhance the contribution of total factor
productivity. Productivity, measured in terms of the
contribution of TFP to GDP growth, was lower in 1996-
1997 at 19.5 per cent compared with 28.7 per cent
during the Sixth Plan period. This downward trend has
to be reversed and appropriate measures undertaken, if
we want to remain competitive and achieve developed
nation status by 2020. This is critical because in the
midst of the crisis the global economy is also
changing, with increasing emphasis on greater
efficiency, effectiveness and productivity in order to
sustain growth and development. This cannot be
understated or ignored.
12. The third challenge is revitalising the private
sector. The performance of the private sector during
1996-1997 was remarkable but with the contraction of
the economy in 1998, performance of the private sector
was adversely affected. At the same time the crisis
accentuated the vulnerabilities of the corporate sector
including the banking sector. As the crisis deepened,
the corporate sector adopted a more cautious and
conservative attitude towards investment due to
increased risks and uncertainty in the economic
environment arising from exchange rate instability,
rising interest rates, inability to determine the
extent and depth of the financial crisis as well as
problems affecting the regional economies. The result
was a fall in private investment. This is inevitable
but the recovery of private investment will be an
important determinant of economic turnaround.
13. Our fourth challenge is overcoming the constraints
in the productive sectors. Although the economy as a
whole and the productive sectors in particular, have
undergone structural changes to ensure sustained
growth, the pace of structural change in certain
sectors needs to be further accelerated. The economic
downturn should not deter us from our goal to move up
to a higher level of industrial development. Despite a
more difficult period ahead, the country must push for
higher technology, higher skill, knowledge-intensive
and high value-added activities so as to provide the
means for higher revenue and wealth generating
opportunities.
14. The fifth challenge is ensuring the continued
achievement of distributional objectives. We made
satisfactory progress with respect to poverty redressal
and restructuring of society as a result of the robust
growth of the economy, particularly during 1996-1997,
and the implementation of various Government programmes
and projects for the poor and Bumiputera. However,
even though the economic slowdown adversely affected
the poor and also restricted the potential for more
rapid employment restructuring, existing programmes to
benefit the poor and measures to create a competitive
and resilient Bumiputera Commercial and Industrial
Community will be continued and further strengthened.
Thus, the Government will continue to give top priority
to its distribution objectives based on new wealth
created through well planned economic growth policies.
15. The final challenge is to sustain the quality of
life of Malaysians. In the final analysis, development
must mean a rise in the standard of living and
improvement in the quality of life of the people. The
quality of life must improve with growth and a steady
increase in income together with the enhancement in the
quality of education, health, transportation and
communications, employment and family life. However,
the economic slowdown impedes these processes and
development, and affect the socio-economic well being
of the people. Therefore, the challenge is to overcome
such impediments so that all Malaysians will be able to
enter confidently and proudly into the next millennium.
DEVELOPMENT THRUSTS
16. We need to expedite the process of economic
recovery and set in motion a steady and continuous rate
of economic growth. Thus, we need to address those
issues and challenges I mentioned earlier. We have
always had a very pragmatic attitude towards
development. Where necessary we will modify plans,
reset priorities and change directions. In this
respect, the Government has identified eleven major
development thrusts for the remaining period of the
Seventh Malaysia Plan.
17. Strengthening macroeconomic fundamentals. In
terms of macroeconomic management during the remaining
Plan period we will focus our efforts to facilitate
economic growth, contain inflationary pressures,
improve further the external position, eliminate
resource gaps, and sustain prudent fiscal balance. In
respect of inflation management, monetary and fiscal
policies will be tailored to prevent the resurgence of
price pressures, while ensuring that growth continues
to be promoted. Efforts to strengthen the external
position will focus on increasing exports and reducing
the deficit in the services account by aggressively
promoting the subsectors of tourism, education and port
services.
18. During the remaining Plan period, the public
sector will take on a stimulative role while continuing
to maintain fiscal prudence together with corporate
governance. We will continue to undertake deficit
budgeting at a manageable level and revert to a surplus
position once the economy strengthens. Public sector
expenditure will be mainly directed to projects which
have a short gestation period, contribute towards
increasing exports and reducing imports, generate
demand for domestic goods and services as well as
encourage and support projects which are targeted at
the low-income group and poor households.
19. In this respect, the original Plan ceiling for the
Federal Government development allocation will be
increased by an additional RM22 billion, from RM67.5
billion to RM89.5 billion. This allocation will be
distributed to the respective sectors where the
economic sector will receive 48.2 per cent; social
sector 30.9 per cent; security 12.8 per cent; and
general administration 8.1 per cent. Overall, the
development allocation recommended is sustainable at
16.3 per cent of GNP in current terms and 17.6 per cent
in real terms, which is lower than that under the Sixth
Malaysia Plan reflecting our commitment to further
downsize the public sector.
20. An integral component of the continued
rationalisation of the public sector is the
privatisation programme which was launched in 1983 and
intensified during the 1996-1997 period. Despite the
initial setbacks in terms of acceptance by affected
workers and the general public, privatisation has
without doubt enabled Malaysia to sustain high growth
while enabling the nation to keep up with demands for
infrastructure arising from the rapid industrialisation
process and the need to improve the quality of life of
the people. Since the implementation of the
privatisation programme in 1983, a total of 434
projects had been privatised, of which 68 were
privatised during this review period.
21. Our nation has gained tremendously from the
privatisation programme. Through privatisation, the
Government saved RM129.1 billion in capital expenditure
besides gaining proceeds from sale of assets and equity
amounting to RM21.5 billion. In addition, more than
105,000 public sector employees were transferred to the
private sector. These employees benefited directly
through increased wages and incomes. Privatised
entities now hold 29.3 per cent of the KLSE market
capitalisation indicating a significant contribution to
the enlargement of the capital market. There are
various other direct and indirect benefits of
privatisation gained by the population through forward
and backward linkages in the economy. For instance,
since their privatisation, TNB and Telekom together
contributed RM4.7 billion in terms of corporate tax
enabling the Government to finance other development
projects. Privatisation has also enhanced Bumiputera
participation, vendor development programme, and
technology transfer and R&D. Consumers in general also
benefited from the availability of more efficient and
quality public amenities with minimal increases in
cost.
22. Increasing supply of knowledge and skilled
manpower. The strategic thrust for human resource
development will focus on increasing the supply of
skilled manpower to support restructuring efforts
towards capital-intensive and knowledge-based
activities. Emphasis will be placed on increasing
access to quality education and training as well as
improvements in the delivery system. In this respect,
continued investments will be made to expand the
capacities of the education and training institutes to
meet the changing requirements of the economy. Greater
private sector participation in education and skill
training will be encouraged. To improve labour market
mobility between states, occupations and skills, the
labour market information infrastructure will be
strengthened through the setting up of an electronic
labour exchange which will ensure optimal utilisation
of labour and effective matching of labour demand and
supply.
23. Reducing poverty and restructuring society. In
the social dimension, the Government will continue to
eradicate areas and groups with high incidences of
poverty. To reduce the full impact of the economic
downturn on the poor and low-income groups, the
Government will undertake necessary measures to widen
and strengthen programmes aimed at providing basic
services and amenities to the low-income and poor
households. As part of the efforts to improve the
living standard of the hardcore poor, the programme to
provide new houses or rehabilitate houses will continue
to be implemented.
24. With regard to the restructuring of society,
efforts will be focused on lessening the impact of the
economic downturn on the restructuring objectives.
Necessary adjustments will also be made to various
programmes, so as to increase their coverage and
effectiveness. This will be done through a more
rigorous implementation of existing programmes
including their expansion to areas outside the Klang
Valley. At the same time, the provision of
opportunities and assistance will continue to be given
to the Bumiputera to enable them to acquire tertiary
level educational qualifications in line with our
efforts to increase the number of Bumiputera
professionals and technical personnel.
25. In the face of a widening income inequality,
special efforts will be taken to create a bigger and
more prosperous middle-income group. In line with
this, the enlargement of Bumiputera middle-income
groups, through the development of more Bumiputera
entrepreneurs, professionals and managers, will
continue to be emphasised so as to reduce the income
imbalance between Bumiputera and non-Bumiputera.
26. Consolidating the financial sector. The financial
sector has undergone gradual restructuring over the
years in response to the changing economic and
financial environment. We will continue our efforts in
strengthening the regulatory and supervisory framework
of the banking system. Bank Negara Malaysia will
further strengthen its capacity to better monitor and
detect emerging risks in the financial system. In this
respect, an early warning system will be developed to
provide ample advance warning on the status of
individual financial institutions to enable preemptive
measures to be taken so as to avert bank failures and
contain the associated systemic risks.
27. In order to support economic recovery, banking
institutions will have to play their intermediary role
more effectively and efficiently. A comprehensive plan
for Islamic banking is also being drawn up which
includes formulating new strategies for the next
millennium. New guidelines and targets for Islamic
banking will be introduced, including the further
development of Islamic banking units in existing
banking institutions.
28. Measures to further broaden and deepen the
financial markets will continue so as to maintain
monetary and financial stability. Among these measures
will be the development of the bond market which will
provide an additional source of investment financing,
while reducing the concentration of risks in the
banking system. Efforts will also be taken to
encourage the growth of Islamic capital markets, in
particular, those in Islamic equities, private debt
securities and fund management activities.
29. In this regard, the Government has established two
institutions, that is, the National Asset Management
Company, Pengurusan Danaharta Nasional Berhad or in
short Danaharta and the special purpose vehicle called
Danamodal Nasional Berhad or Danamodal intended to
overcome banking problems due to the devaluation and
the collapse of share prices. As of 20 April 1999,
Danaharta had acquired gross NPLs amounting to RM12.6
billion as well as manage on behalf of Bank Negara
gross NPLs including interest-in-suspense of RM11.6
billion. Danamodal had injected a total of RM6.4
billion to recapitalise 10 banking institutions in the
form of Exchangeable Subordinated Capital Loans (ESCL).
30. Rehabilitating the corporate sector. A
comprehensive framework to address problems of
financial distress among corporations has been put in
place, including debt restructuring. In this respect,
the formation of a joint public and private sector
committee known as the Corporate Debt Restructuring
Committee (CDRC), will provide a framework for
voluntary debt workouts between creditors and debtors
so that they could arrive at schemes of compromise and
reorganisation without resorting to legal processes.
31. Meanwhile, corporate governance, based on a set of
market practices, will be implemented with the
objective of realising long-term shareholder value
while taking into account the interests of other
stakeholders. In this regard, the Securities
Commission, for example, will continue its focus on
strengthening the regulatory framework and move towards
developing front-line regulation where market
institutions will self-regulate. KLSE also introduced
measures aimed at restoring market confidence by
ensuring an orderly and fair market, and improving
transparency in the stock market. The implementation
of these measures entailed strengthening of the rules,
securities laws and procedures of the KLSE, and the
Central Depository System. One of the objectives of
the measures was to protect the local stock market from
adverse effects of the trading of Malaysian shares on a
stock market which is not a recognised stock exchange.
All these measures implemented are aimed at ensuring
systemic stability, restoring market confidence,
improving market transparency and corporate governance,
and facilitating the raising of funds.
32. Revitalising the agriculture and rural sectors.
In line with the Third National Agriculture Policy, our
agricultural development priorities for the remaining
Plan period will continue to focus on revitalising the
sector. This will include strengthening domestic food
production to reduce the dependence on imports, and
accelerating modernisation towards making Malaysia a
high value-added agricultural producer. We will
promote the use of modern technology and management,
encourage large-scale and organised agriculture through
'estatisation' of food crops. As for support services,
the Government will continue to provide agricultural
credit, training and extension services to focus on
modernisation, especially for smallholdings. In this
regard, the Government has increased the Fund for Food
allocation to RM1 billion.
33. As a strategy, the Government will stress on the
intensive use of agricultural resources particularly,
land and labour, in view of the increasing shortages of
land and labour. We will emphasise on strengthening
the export sector through the promotion of greater
private sector involvement, particularly in large-scale
commercial ventures. In addition, greater focus will
be directed at promoting the adoption of modern
technological innovations in agriculture such as modern
marine fish-cage rearing and labour-saving
technologies. To realise these objectives, the
development allocation for agricultural and rural
development is RM8.3 billion.
34. Reviving the growth of the manufacturing sector.
Considering that a strong revival of industrial growth
is a prerequisite for a more permanent economic
recovery, manufacturing will be given greater
attention. In order to sustain the level of investment
in the manufacturing sector, the Government will
introduce measures and incentives that would help to
boost investor confidence, further promote reinvestment
and encourage export diversification. Greater
industrial expansion and diversification will assume a
heightened role not only to make up for the negative
GDP growth and low domestic capital formation in 1998
but more importantly as a source of new wealth
creation, through new growth industries and advanced
technologies.
35. An important thrust of the industrialisation
policy will be to accord greater importance to resource-
based export-oriented industries that display
potentials in terms of enlarging domestic value-added
activities and increasing trade balance and linkages.
Special focus will be given to increasing productivity
and intensifying downstream activities with particular
attention given to the production of new and improved
products in the resource-based industries. These will
be extensively promoted so as to be the new sources of
growth for the sector. At the same time, efforts will
continue to be made to accelerate the strategic shift
towards high technology and knowledge-based industries
with emphasis on the production of high value-added
products with export potential.
36. Productivity improvements will be the key in
increasing the country's international competitiveness
to promote exports. New and existing industries will
be encouraged to be more efficient in terms of
upgrading their technologies and processes to produce
higher-end products, quality parts and components as
well as improving their reliability of supply. In
this regard, industries are encouraged to adopt the
ISO9000 and the Environment Management Standards or the
ISO14001 series. The Government will continue to
assist the private sector by providing a range of
support services to enable local manufacturers to adapt
to the changing needs of the highly competitive export
market. The EXIM or the Export-Import Bank of
Malaysia, with its RM4 billion funding facilities, will
be the major vehicle in providing trade financing for
the manufacturing sector.
37. Another principal thrust of the industrialisation
programme is the development of a modern, competitive
and technologically innovative Small and Medium
Industry (SMIs) sector. To further strengthen this
sector, SMIs will be encouraged to integrate or merge
activities to attain economies of scale, diversify
their market base and penetrate the global market.
Various funds are made available for SMIs, such as the
RM1.5 billion SMI Fund and the RM750 million SMI
Rehabilitation Fund. The Government will facilitate
and expedite the greater involvement of SMIs in the
export market through MATRADE and SMIDEC.
38. Enhancing the development of the services sector.
The Government will intensify efforts to achieve the
target of creating a modern and outward-oriented
services sector to strengthen and broaden the economic
base of the nation. This will contribute significantly
towards improving the services account of the balance
of payments. The impetus to the growth of the services
sector will be air and sea transportation, ports,
insurance, finance, tourism, education, health and
consultancy services subsectors.
39. Malaysia will be developed into a regional hub for
transportation. Port Klang will be promoted as a
transhipment and load centre while the state-of-the-art
KL International Airport as a regional hub airport.
Malaysia will also strive to be a regional educational
centre of excellence providing opportunities for our
students as well as reducing expenditure on education
abroad. With more foreign students enrolled in
Malaysian institutions, visits by parents will also
increase and contribute to the inflow of tourist
revenue. At the same time, we are also promoting
health-tourism through private medical centres which
are capable of providing state-of-the-art facilities
and world class specialist services.
40. Malaysia will continue to be promoted as an
attractive and competitive tourist destination in this
region. The coordinated efforts of all the
participants of the industry such as hotels, airlines,
and tour operators as well as the Malaysia Tourism
Promotion Board are vital to boost tourism in the
country. We will encourage investments in special-
interest products such as eco-tourism, sports and
adventure tourism. Malaysia will also be promoted as a
centre for international conferences, conventions and
exhibitions, as well as sporting events, facilitated by
the Bukit Jalil Sports Complex, golfing facilities and
the Sepang Formula-1 Circuit. We will implement
measures to increase domestic tourism, particularly
through innovative holiday packages at affordable
prices. To complement the efforts of the private
sector, the development and maintenance of tourism
infrastructure such as transport and recreational
facilities will continue to be supported.
41. Harnessing Information Technology. The thrust of
Information Technology will be the cutting-edge of
economic development in terms of improving efficiency,
productivity and competitiveness. Our efforts to
transform the country into a knowledge and information
based economy or moving towards the "Third Wave"
economy will be pursued. Our nation is fast becoming a
part of the Information Age where IT and multimedia
will be the strategic enabling tools for the creation
of a knowledge-based society. The thrust of IT will be
to develop and expand the requisite IT infrastructure
that will contribute to the creation of IT-based
industries as well as instil an IT-culture among the
people to be more receptive to new living and working
lifestyles emanating from an information-rich society.
42. The Government has formulated NITA, the National
Information Technology Agenda, to provide a backbone
for the balanced development of three strategic
elements of human resource, infostructure and IT-based
applications. A Strategic Agenda covering five thrust
areas of E-Economy, E-Public Services, E-Learning, E-
Community, and E-Sovereignty will be examined to
adequately prepare Malaysia to meet the demands of a
knowledge-based economy.
43. The Multimedia Super Corridor (MSC), will
continue to spearhead the development of IT. In this
regard, I am glad to mention to this Dewan that the
development of Cyberjaya is proceeding at a rapid pace
and is set to be the first "intelligent city" in
Malaysia. In line with the development of MSC, the
implementation of the flagship applications of
electronic government, multipurpose card, telemedicine,
smart schools, R&D cluster, worldwide manufacturing web
and borderless marketing will provide the catalyst for
the spawning of new IT industries and services.
Efforts will also be taken to encourage the SME or the
small- and medium-enterprises to collaborate with
larger firms in expanding the value chain of IT and
multimedia industry. In addition, R&D in IT in
priority areas will be intensified to further provide
support to the development of the industry.
44. The rapid growth in telecommunications
networking, particularly the use of internet throughout
the world, will accelerate the application of e-
commerce to serve an enlarged market. I am glad to
note that within the next three years, we will have a
strong customer base for e-commerce when we achieve one
million Internet users. With the fast changing IT and
multimedia technology, e-commerce will generate a wide
array of innovative business practices in the
production and delivery of goods and services. While e-
commerce creates new opportunities, it also presents
challenges to domestic businesses particularly, in the
services sector. In this regard, the Government will
formulate a masterplan to ensure an orderly development
of e-commerce.
45. As part of our efforts to develop an IT-literate
workforce, education and training curricula will be
continuously adapted to be in line with the demands of
the IT industry. Meanwhile, the Government has also
launched a study to provide a framework for matching
the supply and demand of IT workforce in the economy.
46. In developing IT, our efforts will also be
directed at providing a conducive legal environment to
further accelerate the use of IT and multimedia.
Towards this end, IT-related laws and legislation will
be reviewed to keep pace with the rapid advancements in
IT and multimedia technology. To support IT
development, a sum of RM4 billion will be allocated to
ministries and agencies to invest in IT-related
programmes and projects.
47. Strengthening science and technology. The role
of science and technology (S&T) is critical for
development especially in the light of the current
emphasis on the creation of a high technology and
knowledge-based economy. The economic slowdown has
heightened the need to improve the competitiveness of
exports and this has necessitated a greater role for
S&T, in particular R&D, which will help revitalise the
industrial and agriculture sectors as well as further
develop the services sector. We will also promote and
upgrade indigenous capacity and competence in
scientific and technological innovations. The
Government has increased the allocation for R&D to
RM1.1 billion. In this respect, I would like to draw
the attention of the private sector that their
participation and investment in R&D will become more
important as they will have to ensure an adequate
supply of commercially viable and suitable technologies
to meet the growing needs of the economy.
48. Improving the quality of life. The Government is
faced with an even greater challenge during the
remaining Plan period to continue focusing development
on the social dimension as well as creating a united
and resilient society with strong values, greater self-
discipline and appreciation. In this regard, emphasis
on the provision of social infrastructure facilities in
education and training, housing, health, youth, women,
family and community development will be stepped up.
49. Access to basic education especially in the rural
areas and the quality of education will be improved
while tertiary education will be expanded to meet the
growing demand. Due to its importance, the Government
has increased the allocation for education and training
to RM16 billion from the original allocation of RM10
billion. The Government has also increased the
National Higher Education Fund from RM605 million to
RM1.5 billion. This Fund will benefit an additional
40,000 students at the tertiary level, especially in
providing financial assistance to the low-income group
and thus, facilitate their accessibility to higher
education in the public and private institutions. In
addition, the Government will set up the Skill Training
Loan Fund with an initial allocation of RM500 million
to improve the accessibility, especially of the low-
income group, to training opportunities at all levels.
50. The Government will give priority to providing
housing for the low-income families and the poor to
enable them to have greater access to affordable and
quality housing. In this regard, the Government
together with the support of the State Governments will
ensure more low-cost houses be built for sale or rent.
For the Federal Territory of Kuala Lumpur, the
Government will build a total of 35,000 units of low-
cost houses, to be launched this year and partially
completed in the year 2000. This will be a part of our
strategy to resettle squatters in the Federal Territory
of Kuala Lumpur which totalled 42,000 households in
1998. Under the Mid-Term Review of the Seventh Plan,
the Government has increased the allocation for housing
to RM3.5 billion.
51. The Government will continue its efforts to
improve further, the health status of the population.
The current battle with the JE and Nipah viruses is a
lesson which we cannot ignore. The Government can only
do so much, the rest must be taken care of by all
Malaysians. This is in line with concept of the caring
society. We will continue to expand and improve the
provision of health services. In this regard, work on
the construction of 20 new hospitals has started
throughout Peninsular Malaysia, Sabah and Sarawak. The
health sector will expand its IT network and implement
the Total Hospital Information System to facilitate an
efficient delivery and administration of health care.
As an example, the new Selayang Hospital, will be the
first IT-based specialist hospital in the public
sector. To ensure wider access to hospital allied
health personnel training, the Government will build
allied health sciences training facilities in Selangor,
Kelantan, Sabah and Sarawak. Overall, we will be
increasing the allocation for health sector to RM3.4
billion.
52. Other social services provided by local
authorities will also be emphasised, particularly to
improve urban services, social amenities, cleanliness
and beautification as well as drainage and flood
mitigation. Efforts aimed at improving the provision
of quality social services to enhance the welfare of
the people will be continued in line with the objective
of creating a caring society. The focus will continue
to be on specific groups such as the low-income, women,
children, elderly and the disabled. The Government
will continue to enhance the role, position and
contribution of women to the socio-economic development
of the country. More educational and training
opportunities will be provided to encourage and to
enable women to participate more effectively in the
labour market. Allocation for this subsector will be
increased from RM3.3 billion to RM4.0 billion.
53. Another challenge in the present economic
situation is to address environmental and resource
issues without compromising economic productivity and
growth. We will take action to ensure that the
conditions necessary for achieving sustainable
development are not undermined nor will such measures
incur additional burden. Emphasis will be placed on
applying an economic approach in addressing
environmental issues.
54. The Government will also continue with the agenda
to inculcate positive values and good work ethics,
promote the tenets of corporate governance and
encourage a high regard for civic responsibility at all
levels of society. This good value system can only be
evolved through constant emphasis on religion,
traditions and civics especially through the education
system. Intrinsic values of society, such as loyalty,
good citizenship, respect for the rights of citizen,
social justice and tolerance of others, which
constitute the core of effective democracy will be
continuously enhanced. I am confident that such a
system of positive values will expedite the moulding of
Bangsa Malaysia.
IMPLEMENTATION AND COORDINATION MACHINERY
55. The effective implementation of policies aimed at
ensuring the sustained recovery of the Malaysian
economy necessitates efficient planning and
implementation at all levels of Government. As such,
the Government will strengthen the capacity, efficiency
and effectiveness of the Government agencies to enable
them to effectively meet the challenges and implement
projects according to schedule and prevent delays that
will invariably affect the recovery process and the
attainment of national development objectives. In this
regard, duplication of work, and wastage will be
reduced while procedures streamlined and barriers that
inhibit expeditious project implementation removed.
Effective implementation will be the clarion call for
all Government agencies especially during the remaining
Plan period.
56. The role of the NEAC will continue to be
paramount as a consultative body to the Cabinet to deal
with the economic problems and restore the economy. At
the state level, the State Economic Action Councils
will execute the decisions of the NEAC, provide
feedback on the progress as well as design and
implement state-specific projects to achieve economic
recovery. Various Cabinet Committees have been
strengthened to closely monitor the implementation of
Government policies and programmes.
57. Fundamental to effective implementation of
policies, programmes and projects is the close
cooperation between the different tiers of Government
and the different agencies involved. Cooperation will
be facilitated by better and enhanced coordination
between the agencies involved as it will eliminate
delays in project implementation. In this context,
channels of communication will be further strengthened
and information technology fully utilised to ensure
effective implementation and coordination to realise
the objectives of national development as contained in
this Mid-Term Review.
58. The private sector, an important partner in
development will continue to spearhead economic growth,
in close cooperation with the public sector. This is
in line with the Malaysia Incorporated concept.
Towards this end, more dialogue sessions will be held
at the ministry, department, state and district levels.
Such feedback from these dialogues will enable the
public sector to further improve its operational
efficiency and in the provision of quality service in
line with the demands of the private sector.
CONCLUSION
59. As I have said in my opening remarks, this Mid-
Term Review is made during very trying circumstances.
When I presented the Seventh Plan in this House, the
economic fundamentals were very strong and vibrant, and
we were confident of maintaining the eight per cent
growth targeted. However, our intentions to achieve
the targets were marred by external factors, which
adversely affected our financial sector, the growth of
the real economy and the standard of living of the
people. Malaysia was, however, able to avoid the
extreme effects of the crisis due to its strong initial
conditions, particularly with respect to macroeconomic
fundamentals as well as the swift and pragmatic
measures introduced by the Government to address the
crisis. Since mid-1998, policies have focused on
preventing a further contraction of the economy and
reactivating economic growth mainly by relaxing both
fiscal and monetary policies. These measures have been
effective and initial signs of recovery have become
evident in terms of private consumption and private
investment indicators as well as exports.
60. The prospects for the remaining Plan period will
greatly hinge on the effective implementation of the
measures which I have alluded to. The restoration of
investor and public confidence as well as development
taking place in the global economy are also vital.
Barring major economic catastrophe, Insya-Allah, real
GDP growth is expected to be on a positive uptrend with
one per cent growth for 1999 followed by a stronger
growth of five per cent in the year 2000. This
optimistic scenario is based on positive development
shown in the aggregate demand, expected growth in the
sectoral output, surplus in the balance of payments and
sufficient aggregate savings to meet investment
requirements. In addition, the prospects for the world
economy is expected to be favourable with an average
growth of 2.3 per cent for the 1999-2000 period.
61. The focus of this Mid-Term Review is on
expediting economic recovery and bringing the economy
back to a sustainable growth path so that the
underpinning objectives of balanced development and
becoming a developed nation by 2020 are realised. This
will require, among others, strengthening macroeconomic
fundamentals and the financial sector, restoring public
and investor confidence, promoting potential sectors of
the economy including manufacturing, agriculture and
the services sectors, and pursuing socio-economic
objectives, as well as reducing the incidence of
poverty and improving the quality of life of
Malaysians. All these measures to achieve the nation's
aspirations can only be realised if each and every one
of us give his or her best to the role that each must
play. This is also a golden opportunity for us to
prove to the world, particularly to our detractors and
sceptics, that we as a united group of people can do
it, in the spirit of 'Malaysia Boleh'.
62. The current world situation and our ability to
cope with new challenges give us grounds to be
optimistic regarding the economic prospects of
Malaysia. Looking ahead to future prospects, I see the
road towards economic recovery very clearly, taking
into account all factors. The decisive non-
conventional policies instituted have shown good result
but need time to deliver the full results. The country
will, I am sure once again, experience healthy growth
with low inflation and the people will enjoy a steadily
improving quality of life, Insya-Allah.
63. We pray to Allah Subhanahu wa Ta'ala to always
give us the strength and resolve to face and overcome
problems, to strive for economic recovery and greater
prosperity and to sustain our national dignity. I
believe, with Allah's Blessings, we will be back on the
fast track of building a Bangsa Malaysia that is
united, progressive, prosperous and self-reliant, and
respected by all.
64. I beg to move.
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