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44
THE 2003 BUDGET SPEECH
by
YAB DATO SERI DR. MAHATHIR BIN MOHAMAD
PRIME MINISTER AND
MINISTER OF FINANCE
INTRODUCING THE SUPPLY BILL (2003)
THE DEWAN RAKYAT
20 SEPTEMBER 2002
1.
I beg to move the Bill intituled "An Act to apply a sum
from the Consolidated Fund for the service of the year
2003 and to appropriate that sum for the service of that
year" be read a second time.
1. INTRODUCTION
Bismillahirrahmanirrahim
In the name of Allah, the most gracious and most
merciful.
2. Praise be to Allah, the Cherisher and Sustainer for
enabling me once again, as the Minister of Finance to
table the 2003 National Budget in this Honourable House.
3. In Bahasa Malaysia, the financial estimates for the
following year is referred to as "Belanjawan". However,
we do not only estimate expenditure but also revenue
inflows. The revenue received will determine our level
of expenditure. It is not prudent to allocate our
expenditure without taking into consideration our
revenue sources.
4. Therefore, the word "Belanjawan" may not be
appropriate as the word "Budget" in English means a plan
of revenue and expenditure for a period. As such, I
would like to use the word Budget spelt as "Bajet", as
it better reflects the nation's financial estimates
which I am tabling today.
5. A prudent budget takes into account the forecast of
revenue inflows that will determine the level of
expenditure. If it is not taken into consideration, it
could lead us to spending more than we can afford.
Subsequently, the nation may become bankrupt. Many
countries have spent more than their revenue, resulting
in financial difficulties, leading to the loss of
freedom to manage their own country as a result of
vicious grip from their lenders.
6. In Malaysia, we always remain prudent in managing
our finances; we spend according to our financial
affordability; we avoid over-borrowing and endeavour to
maintain a surplus or a balanced budget or incur only a
small deficit.
7. We have often been accused of being lavish in
undertaking the so-called mega projects. Mega is a
relative term. A small project can be mega if the nation
cannot afford to finance it. A large project which can
be financed from our own sources is not mega.
8. We recognise that Putrajaya and KLIA are large
projects but we were able to finance them from our own
domestic sources. Despite the financial crisis, we were
able to continue the implementation of almost all of our
projects. Abandoned projects are only those of the
private sector. Soon after the crisis, the Government
was able to implement new projects.
9. We should not be swayed by the foreign media which
invented the word mega. In Malaysia, we plan projects
according to our affordability, based on revenue inflows
and not just for the sake of showing off large projects.
As such, the nation's financial position remains strong.
Those who predicted the collapse of our economy and our
financial system, such as the IMF and the World Bank,
today acknowledge the strength of our economy as well as
the appropriateness of our unorthodox measures which we
implemented to address the financial crisis, which was
in the first place, caused by them.
10. We are not extravagant. Admittedly, our projects
are large but for sure, they are not mega as labelled by
them. Analysts and the foreign media who have
criticised us have never governed nations, and as such,
must not claim to be more efficient than those given
the mandate by the rakyat to govern. We have made
mistakes, but we have successfully rectified them and
were able to overcome the crisis in our country. Only
them and other Malaysians who do not have minds of their
own, are easily swayed by foreign influence. They even
alleged that the Malaysian economy would collapse.
11. Our economic recovery and the nation's development
have been achieved as a result of our policies and
strategies to stimulate domestic economic activities.
These achievements will come to naught, if our stability
is threatened by the conduct of some irresponsible
groups who are not appreciative of Government efforts to
develop the economy. Instead, they provoke and incite
hatred towards the Government without rhyme or reason.
They slander and misinterpret everything subsequently,
thrust the rakyat into a state of confusion. To
legitimise violence, dishonesty, immoral values, they
resorted to even demeaning the Almighty to be a worse
gangster, criminal and cheat than man. To them
gangsterism, crime and fraud are attributes of God.
Indeed, Muslims have been misled and driven to violence
and slander.
12. Today, there are Muslims who have become fanatical
to the extent of using violence, including bombing and
resorting to murder as well as plotting to overthrow the
Government. If they had been successful in executing
their plans, the nation will plunge into instability and
utter chaos, resulting in the deterioration of the
economy.
13. We have spared the nation from this turmoil with
the rule of law practised by the Government. The
Internal Security Act (ISA) has indeed saved the nation.
Today, the liberal West, has conceded that preventive
laws are necessary in safeguarding internal security.
14. The rule of law is paramount. Its adherence
should not be confined only to the Government but also
to other branches in the Administration. The civil
service, judiciary, police and armed forces must be
professional and abide by the laws passed by
Parliament. Should anyone disregard the rule of law and
disrespect the separation of power, democracy will
collapse and anarchy will prevail. Under anarchy, the
nation will not progress. We will become like some
Islamic and non-Islamic nations, always weak, oppressed
and manipulated by foreign powers.
15. Self-confidence is paramount to ensure success.
The nation's progress depends on our confidence in our
ability to move forward. When we imposed capital
control on outflow of investments in our stock market,
the Kuala Lumpur Composite Index (KLCI) increased from
262 points to more than 800 points.
16. Today, domestic investors' decision to invest in
the stock market is not based on economic fundamentals,
real value of companies' assets and profitability. They
are only influenced by the market behaviour of foreign
investors. However, foreign investors have their own
agenda. To them, the value and performance of Malaysian
companies are not important. What is important to them
is to only reap capital gains from the fluctuations in
share prices.
17. Generally, investors follow the herd mentality.
When the Dow Jones fell, they sold their shares, and the
KLCI fell in tandem. However, when the Dow Jones
recovered, they continued to divest and this resulted in
the KLCI further sliding. Following this, domestic
investors continued to divest, leading to further
decline in share prices. When this happened, companies
and banks encountered financial difficulties. As such,
the KLCI continued to be depressed. Foreign investors
seized this opportunity to buy back shares at low
prices. This led to a rebound in shares prices which
attracted domestic investors to enter the market, but
unfortunately at higher prices. When foreigners once
again sold to reap profits, our domestic investors were
trapped as they had bought shares at higher prices and
divestment would only result in losses.
18. The majority of Malaysian companies are financially
stronger than foreign companies. Reports indicated that
Malaysian companies had made millions in profits, with
some even exceeding 2 billion ringgit. These companies
have high value assets. As such, the real value of the
shares of these well-managed companies are higher than
their market value. However, as investors are influenced
by fluctuations of the Dow Jones and the analysis of
foreign experts, the KLCI remains subdued. The shares
of our Malaysian companies continue to be undervalued.
19. As long as Malaysian investors are influenced by
the herd mentality, the KLCI will continue not to
reflect the actual performance of our companies and our
economic fundamentals. Unfortunately, market sentiments
in the stock market influence the "feel good" mood of
Malaysians. The KLCI is not the sole indicator of our
economic performance. There are many other indicators
that reflect the actual performance of the economy.
20. The prospects of the world economy are still
uncertain. The Malaysian economy has recovered strongly
in 2000 with a growth of 8.3 percent. Our forecast then
was for the growth to further strengthen in 2001 and the
years ahead. However, the US economy, our largest
trading partner, continued to deteriorate in early 2001,
which had affected our economic performance. The US and
global economy further deteriorated in the aftermath of
the September 11 attack.
21. The performance of the US economy came under
pressure once again with the Enron and Arthur Andersen
scandal which had eroded investors' confidence in the
corporate governance of US companies. The Dow Jones
plunged, followed by other world stock markets. The
KLSE was also not spared.
22. Analysts and the international media dismissed such
accounting malpractices in the giant corporations in US
as only a few bad apples. However, when this occurred
in developing countries, they labelled it as lacking in
integrity and transparency among certain nationalities.
23. They can learn from developing countries in
addressing problems in financial and corporate sectors.
In corporate governance, Malaysia and other nations in
the region are ahead of others. We have adopted
principles of best practice that emphasise transparency
and separation of powers to ensure accountability and
safeguard the interests of shareholders. Rich and
powerful nations are akin to crabs, teaching their
offsprings to walk straight.
24. It has been a year since the world was jolted by
the September 11 incident. The international community,
especially the super powers, has declared an all-out war
against terrorism. To them, terrorism is confined
merely to physical attacks on countries and their
people. In fact, their economic onslaught on developing
countries which have brought unrest, miseries and the
downfall of Governments, is equally violent. In fact,
the remedies which they prescribed destroyed these
nations. The high interest rates, withdrawal of
subsidies and floating the exchange rate further
worsened the economy and resulted in instability. Those
who benefitted were the currency speculators. Indeed,
economic terrorists do not differ from other terrorists.
25. As a trading nation highly dependent on
international trade, Malaysia is vulnerable to the
economic performance of our major trading partners. Our
international trade is twice our GDP compared with
developed nations, such as Japan and US where their
international trade constitute 20 and 30 percent of
GDP, respectively. The growth of their economies is
generated from domestic businesses and industries.
26. Although we need to further expand our
international trade, we must also at the same time,
accelerate domestic economic activities, with the view
to increasing their contribution to the growth in GDP.
Towards this end, we must undertake a paradigm shift and
formulate new growth policies.
27. Potential areas which we can develop include the
production of components, oil refineries, various types
of machines, including cranes and machine tools as well
as construction materials. In addition, fibre and wood
products, high quality furniture, paper and other
products can also contribute to GDP. Although these
goods are not considered sophisticated and knowledge-
based, but the use of ICT will increase production,
enhance efficiency and make them more marketable.
28. The air freight sector has grown at a rapid pace.
We intend to become the regional hub for air transport.
As such, we must increase the utilisation of our air
freight services for the transportation of high value
goods. In fact, more goods can be air-freighted. If we
can transport horses by air, we can also air freight
fruits, vegetables, fish, cut flowers, food products as
well as other small and light products of high value.
Malaysian exporters must explore the possibility of
using air services for their trade.
29. We have shifted from agriculture to manufacturing
in our efforts to develop our economy. Presently, the
agriculture industry has become more sophisticated and
lucrative. It can also contribute towards reducing our
high food imports. Hence, domestic investors must
consider investing in this industry.
30. Breeding of fresh and salt water fish and prawns
as well as rearing of cattle in oil palm estates,
livestock such as ostriches, ducks, turkeys, chicken and
birds are lucrative industries to be developed. In
addition, deep-sea tuna fishing should be exploited.
In all these areas, new technologies have been developed
to increase efficiency and quality.
31. Malaysian plantations are usually monocrop, such as
rubber or oil palm. We must venture into mixed farming
and undertake crop rotation, as practised in Europe.
Such cultivation must be undertaken on estate basis, as
we are efficient in estate management and yields are
higher compared with smallholdings. Hence, smallholdings
must consolidate into large plantations and be managed
by professionals.
32. The development in agriculture must be accompanied
by the expansion in food processing industries. We have
the capability to use sophisticated and modern
processes to produce world-class products. This will not
only contribute to reducing our food imports but also
increase exports.
33. We should also improve the sophistication and
quality of our other resource-based products. For
instance, we export low priced furniture. However, with
the same raw material, we can export products of higher
quality and value-added. Malaysia must shift from being
an exporter of cheap products to a producer and exporter
of higher quality and value-added products.
34. Malaysia continues to experience deficit in the
services account. However, in recent years, we have
been able to reduce slightly the deficit. It can be
further reduced if we provide services that are in
demand. We have been successful in accelerating the
growth of our port services through more aggressive
promotion to attract foreign vessels. Ten years ago, all
ports in Malaysia handled only one million containers.
Today, Port Klang alone handles four million containers
while the Port of Tanjung Pelepas handled two million
containers in its second year of operation. With greater
concerted efforts, our port services can be further
developed.
35. We plan to make KLIA a hub for air transport
services. Towards this end, we have developed all
facilities. The management of KLIA must be more
aggressive in their efforts to attract more airlines to
use KLIA as their regional hub. DHL has located its
global operational centre in Cyberjaya. We also intend
to attract other air transport companies to locate their
operations here.
36. Rail transport should also be expanded. With the
completion of double tracking in the Peninsular, rail
transport will be more efficient compared with road
transport which increasingly is becoming more congested.
The rail transport has the potential to generate new and
profitable businesses. Express rail services can
contribute towards the development of the transport
industry and link us with neighbouring countries.
37. Our promotional efforts in tourism have succeeded
in increasing tourist arrivals as well as foreign
exchange earnings. To further develop this industry, we
must cultivate a tourist-friendly culture to attract
foreign tourists. All it takes is a smile and courteous
service which cost us nothing. In fact, this can attract
more repeat tourists. When Malaysians are well-known for
our kindness, honesty and warm hospitality, our tourism
industry will flourish, enabling us to earn greater
foreign exchange, increasing income of those involved in
the industry, including taxi and bus drivers, hotel
waiters and tour operators. In fact, very little is
required of us, only a pleasant disposition and
courteousness to our guests.
38. We are confident that we can achieve our growth
target for the tourism industry i.e. one tourist to
every Malaysian, or 24 million tourists. All Malaysians
will benefit, including those not directly involved in
the industry when GDP increases at a faster rate than
population. Tourism is truly a service industry. As
such, give the best and reap the benefits.
39. Education is another sector that has the potential
to be developed. The demand for education has increased
significantly due to the development of the K-economy.
Knowledge workers are highly demanded, while proficiency
in English has become increasingly important.
40. Malaysia can become a centre of excellence in
computer software, contents, computer animations, 3D
simulation and others. Returns to investment in these
fields are attractive. The Government is prepared to
allow foreign lecturers and teachers in these areas to
teach in private institutions that provide education and
training for local and foreign students. The Government
will consider proposals to make Malaysia as a centre for
excellence in these areas.
41. The IT sector has immense potential to contribute
to the development of the economy. The Multimedia Super
Corridor (MSC) has succeeded beyond expectations. To
date, we have 730 MSC status companies of which 53 are
world-class, surpassing the original target of 500 and
30, respectively by 2003. Several large multinational
companies from Europe and US have relocated their global
or East Asian operational centres to Cyberjaya.
42. Small IT companies have already undertaken
production of various types of management systems in
many fields which can be marketed overseas. The Super
Computer Centre at MDC is capable of producing such
realistic 3D computer simulations, which enable viewers
to experience virtual reality and not just viewing
images on screen.
43. Computer simulation has great potential in town
planning, flood mitigation, fire prevention, warfare
and others. It can also produce images of the human
body, including blood vessels, heart, bone fractures and
others that can assist surgeons to determine the best
procedures in surgery. IT applications in entertainment
have also vast potential. The use of the Super Computer
for computer graphics is unlimited. Hence, it is
important to study the potentials of the super computer
in computer graphics in order to create applications for
the IT industry, which could be used as the foundation
for new industries. There has also been progress in E-
commerce, E-Government, telemedicine and others.
44. MSC provides the infrastructure and opportunities
for various IT-based industries to be exploited by
Malaysian entrepreneurs. The Government hopes that our
entrepreneurs will seize these opportunities. The
capital required for most IT projects is not too high.
MDC provides incubators complete with computer and
communication equipment which can assist them to further
develop their ideas. Subsequently, if these ideas are
feasible, the Government also provides venture capital
through Malaysia Venture Capital Management (MAVCAP) and
Malaysia Debt Ventures (MDV) to finance their
development.
45. We should also enhance the application of IT in
manufacturing. With the invention of sensors which can
be attached to specific parts of machinery, real-time
information on the condition of parts can be obtained.
Sensors in motorcars can relay information to mechanics
at the workshop on components that need to be replaced.
This technology has long been used by F1 cars.
Throughout the F1 race, information is relayed through
radio to the mechanics in the pit on the condition of
components attached with sensors for replacement if
required. As such, the duration of pit stops can be
reduced.
46. Sensor technology can also be used for safety
purposes. Signals are given when seatbelts are not
fastened or during accidents when airbags are activated.
There are many sensor applications that can be further
developed.
47. We were left out of the Industrial Revolution,
which began 200 years ago as we were then colonised.
However, we are fortunate to have been able to
participate in the Information Revolution from the
initial stage. Malaysians, whether Malays, Chinese,
Indians, Ibans, Kadazans and others have capabilities no
less than other nationals. We must be bold to venture
into IT and compete with others globally. In several
fields, we are already ahead of them. There is no reason
why we cannot succeed in the IT field.
48. The nation's economic growth has improved since I
tabled the 2002 Budget in this Honourable House last
year. The Gross Domestic Product (GDP) has recovered to
register a positive growth of 1.1 percent during the
first quarter and further strengthened to 3.8 percent in
the second quarter of the year. Given the negative
growth in the last two quarters of 2001, growth in the
second half of 2002 is expected to be higher. All
sectors recorded positive growth with manufacturing and
services recording the highest growth. The economy is
thus, estimated to grow by at least 4 percent in 2002.
I. CURRENT CHALLENGES DEMAND A PARADIGM SHIFT IN
ECONOMIC MANAGEMENT
49. The world is undergoing rapid transformation with
technological advancements and increased competition
from globalisation. Political conflicts are also on the
rise. All these will affect us. We have no choice but to
face these realities which demand a paradigm shift in
our approach in managing the economy. We must be brave
in formulating new policies and strategies not only to
sustain the prosperity that we have enjoyed thus far,
but also to enable us to achieve our National Vision.
Domestic Private Investment Activities Lacking Dynamism
50. For decades, our economic growth has been overly
reliant on external sector developments, foreign direct
investment (FDI) and international trade. As I have
mentioned earlier, growth must be domestic-driven and
generated by our own resources as well as greater
domestic investment activities. We must be prepared to
venture and undertake risks, even in challenging areas.
51. Domestic-driven growth demands a rapid
transformation of the economy. Only this will ensure
that our sources of growth will be diversified. To
accelerate structural transformation, several long-term
strategic plans have been formulated. The Third Outline
Perspective Plan (OPP3) sets out the growth direction
for the first decade of the new millennium. We are in
the midst of implementing the strategies and programmes
of the first phase of OPP3, that is the Eighth Malaysia
Plan. Several sectoral master plans have also been
prepared, including the Financial Sector Master Plan
aimed at establishing a competitive, resilient and
dynamic financial system and the Capital Market Master
Plan for the comprehensive development of the capital
market. The Government has recently launched the
Knowledge-Based Economy Master Plan based on knowledge,
creativity and innovation to generate stronger economic
growth without overly depending on capital and labour.
52. We should emulate China and Korea in formulating
industrial sector strategies. China has been successful
in producing high quality consumer products at
competitive prices and has been able to penetrate and
gain a footing in the international market. Korea, on
the other hand, adopted a strategy to import foreign
technology and developed it further to become a
successful producer. Currently, Kia is a well-known
brand in the automotive industry while Samsung, in
electronics.
Private Sector Remains Sluggish
53. Since the financial crisis, the public sector has
been the catalyst of economic growth. The Government has
implemented expansionary fiscal policies for five
consecutive years since 1998. As a result, total public
investment increased from nearly 32 billion ringgit in
1997 to 49 billion ringgit in 2001. In contrast,
private investment declined sharply from 90 billion
ringgit to 34.5 billion ringgit. In terms of
contribution to GDP, public sector expenditure increased
from 24 percent to 31 percent, while that of the private
sector declined significantly from 83 percent to 59
percent during the same period.
54. The Government cannot continuously implement
expansionary fiscal policies. Although revenue is
rising, the increase in Government expenditure has been
higher, especially following the implementation of the
fiscal stimulus package in 2001. As a result, its
financial position continued to be in deficit during the
period. Although borrowings are at a manageable level,
and are largely sourced domestically, the Government is
concerned that rising fiscal deficits will further
increase borrowings beyond prudent levels. We must avoid
borrowing continuously from external sources, which if
not contained, can lead to instability and eventually,
threaten the nation's sovereignty.
55. The private sector must now resume its role as the
main driver of economic growth. The Government is
confident that the private sector is capable of
increasing investments to levels achieved during the
decade from 1988 to 1997, with an average annual growth
of 21 percent.
56. The Government undertook various measures to
revitalise the private sector, including corporate and
financial sector restructuring. The problem of non-
performing loans (NPLs) was addressed with Danamodal
injecting a sum of 7.6 billion ringgit into ten
financial institutions and Danaharta acquiring NPLs of
nearly 48 billion ringgit. As a result, the NPL ratio of
the banking system was reduced to 8 percent in August
2002. Meanwhile, the Corporate Debt Restructuring
Committee restructured corporate debts totalling 54
billion ringgit or 92 percent of total cases received.
57. The Government had also provided various tax and
non-tax incentives to banking institutions to encourage
mergers. To ensure private investors have easy access to
financing sources at reasonable costs, the Government
not only established new funds but also increased the
size of existing funds. The number of existing funds
exceeds 40 with a value of nearly 15 billion ringgit.
The Government has sacrificed billions of ringgit in
revenue losses through the reduction of corporate tax,
exemptions and tax reliefs. This enabled the private
sector to have additional resources for investments.
58. Despite the many incentives provided by the
Government, the response of domestic investors has been
lukewarm. The private sector must be aggressive and
venture into new frontiers. Do not take the easy route
to reap immediate gains. Obviously, they prefer
activities in the construction sector. Despite the large
property overhang, property developers continue to
compete to build commercial buildings and residential
properties, although high-rise buildings remain empty,
houses without occupants and shop-houses abandoned.
Financial institutions on the other hand, are reluctant
to extend loans, insist on collaterals and impose high
service charges even on interest-free funds provided by
the Government.
59. The Government's affirmative policy has provided
many opportunities to Bumiputeras. It cannot be denied
that since the implementation of the New Economic Policy
and the National Development Policy, many Bumiputeras
have benefitted, particularly those who are diligent and
possess positive attitudes. However, there are some who
regard this policy as their special rights, making them
complacent and overly dependent. In addition, they are
inclined to seek the easy way out, impatient and are
risk-averse as well as solely dependent on Government
contracts and projects. They also have the habit of
selling off what is given and keep asking for more. Must
they continue with these attitudes?
60. They must discard this dependency syndrome. They
must also realise that the support from the Government
will not be there in perpetuity. As such, do not be
overly dependent on the Government. Be self-reliant.
Global Competition Becoming Increasingly Challenging
61. In an environment of weak global economic recovery
and greater competition from globalisation as well as
rapid technological advancements, the nation's
resilience must be enhanced. Negotiations at the WTO
level have broadened to encompass investment issues in
new areas, including finance as well as information and
communications technology. The boundaries of free trade
are expanding with China's entry into WTO and the
implementation of AFTA. The emergence of new bilateral
free trade and investment areas can undermine regional
efforts and demands us to become more competitive.
62. Do not be complacent with our current level of
competitiveness as other countries are also striving to
strengthen their position. The private sector must,
therefore, adopt global competitiveness as their primary
business strategy. We must penetrate the markets of West
Asia, Central Asia, Eastern Europe and South Asia,
including India, Pakistan and Sri Lanka. China has a
huge market that can provide opportunities for our
products. In this respect, the Government and the
private sector will collaborate to establish new
exhibition centres overseas.
III. BUDGET STRATEGY 2003
63. In view of these challenges, the formulation of the
2003 Budget has taken a new approach, focusing on
domestic business and industrial activities to generate
higher growth. We recognise that our domestic market is
small. However, we can further increase the purchasing
power of our population of 24 million. Small countries
in Europe, with smaller population than ours have become
developed nations. Switzerland with a population of 3
million and Luxembourg with less than 1 million have
higher per capita income of about 44 thousand US
dollars. This means every citizen of Switzerland and
Luxembourg contributes 44 thousand US dollars to their
economy. On the other hand, each Malaysian only
contributes 4,000 US dollars to our economy. If
Malaysians can increase productivity, the nation's GDP
and our competitiveness will also be enhanced. At the
same time, our per capita income will also increase.
64. We must find ways to increase every rakyat's
contribution to the economy. The shift that we have
taken from agriculture to manufacturing has succeeded in
increasing our per capita income from 300 US dollars
when we achieved independence to 4,000 US dollars today.
By enhancing the value-add of our products, GDP and
consequently, our per capita income will also increase.
Towards this end, the 2003 Budget will focus on the
following strategies:
First: Increasing domestic investment in all
sectors with growth potentials.
Second: Identifying and venturing into niche
areas in the services, agriculture
and manufacturing sectors.
Third: Strengthening public sector finance
and enhancing efficiency of the civil
service.
Fourth: Nurturing a progressive and
harmonious society with high moral
values and ensuring the well-being of
the rakyat, especially in rural
areas.
First Strategy: Increasing Domestic Investment
65. Domestic investment will be accelerated to
stimulate growth. To encourage expansion in investment,
the Government has provided numerous incentives.
Notwithstanding this, many are still concerned that our
corporate tax rate of 28 percent is higher compared with
other countries.
66. Although our corporate tax rate appears high,
Malaysia does not impose taxes on dividends unlike
Taiwan which imposed tax on dividends of 30 percent,
Japan 30 percent and Thailand 10 percent. If this is
taken into account, their tax burden is significantly
higher, that is, Taiwan 47.5 percent, Japan 59.4
percent and Thailand 37 percent. In addition, corporate
tax should not be viewed in terms of its nominal rate
only. We must also take into account the provision of
tax incentives. If these incentives are included, our
effective tax rate for the manufacturing sector is only
8 percent.
67. Many also perceive that a low corporate tax regime
will attract more FDI. This is not necessarily true as
Malaysia has been successful in attracting FDI, even
when our corporate tax rates were higher that is at 40
percent in the 80s and 30 percent in the 90s. In
addition, countries with higher effective corporate tax
rates than Malaysia, such as Thailand, China, Korea and
Taiwan have also succeeded in attracting FDI. The
reduction in corporate tax rate does not necessarily
lessen the tax burden of foreign investors. Although
they pay lower taxes in our country, they still have to
pay taxes in their country of origin. Hence, our tax
forgone will be tax gain in their country. In fact,
other factors influence foreign investors' decisions to
invest. Of importance, are socio-political stability,
the availability of world-class infrastructure
facilities, trained and easily trainable manpower and
efficient economic management.
Further Developing Small and Medium-Scale Industries
68. However, the Government will continue to focus on
the development of small and medium scale industries
(SMIs) in an effort to further broaden linkages in all
sectors. In tandem with the policy to promote domestic
investment, especially among SMIs which have not
benefitted much from existing tax incentives, I propose
the corporate tax rate for SMIs with paid-up capital of
2.5 million ringgit and below be reduced from 28 percent
to 20 percent on chargeable income up to 100 thousand
ringgit. This measure will result in a revenue loss of
about 270 million ringgit to the Government.
69. To further stimulate domestic investment, the
corporate sector is encouraged to increase their
reinvestment activities. Under the existing
reinvestment incentive package, a Pioneer Status company
is required to complete its pioneer period to be
eligible to benefit from reinvestment incentive. In
order to accelerate reinvestment by a Pioneer Status
company, I propose the company be given an option to
qualify for Reinvestment Allowance before the completion
of its pioneer period, on condition the company
surrenders its Pioneer Status.
70. To stimulate the participation of local investors
in high technology industries as well as to accelerate
export market penetration and dominance, I propose the
cost incurred by a locally owned company in acquiring a
foreign owned company abroad be given an annual
allowance of 20 percent for 5 years.
Reducing The Cost Of Doing Business
71. The Government continues to assist companies to
reduce the cost of doing business through the various
measures introduced in the annual budgets. The following
measures will further reduce the cost of doing business
to enhance the country's competitiveness:
First: Currently, a non-resident is taxed on
income received for services rendered
overseas. I propose payments for such
services be not liable to income tax.
Second: The prevailing provisions require a
company to pay sales tax and service tax
although it has failed to collect the tax
from its clients. I propose the tax that
has not been collected be regarded as bad
debts and the company be eligible for
refund.
Third: The valuation method used in respect of
sales tax on locally manufactured goods
is not similar to that of imported goods.
This has resulted in higher tax incidence
on locally manufactured goods. I propose
the valuation method for sales tax used
on imported goods which is based on the
actual transaction value be adopted for
locally manufactured goods.
Fourth: Pioneer Status and Investment Tax
Allowance for a company providing energy
conservation services would expire by the
end of 2002. I propose the existing
incentives be extended for another three
years until 31 December 2005.
Fifth: To encourage company to invest in energy
conserving equipment for its own
consumption, I propose the write-off
period for such capital expenditure
incurred be accelerated from three years
to one year.
Sixth: Currently, payments received for services
rendered by a non-resident contractor is
subject to an advance tax of 15 percent
on the company and 5 percent on the
employee. I propose the rates be reduced
to 10 percent and 3 percent respectively.
Seventh: Presently, quality paper is subject to an
import duty of 5 percent and 10 percent
and sales tax of 10 percent. To promote
printing of books using quality paper, I
propose the import duty and sales tax on
such paper be abolished.
Eighth: Currently, courier service to
destinations abroad is subject to service
tax of 5 percent. To reduce delivery
costs to destinations overseas, I propose
the service tax on such services be
exempted.
Ninth: Currently, service tax is imposed on
professional services rendered within the
same group. I propose service tax on
such services be exempted.
Tenth: Currently, all imports through the KLIA
express cargo services valued at 200
ringgit is exempted from import duty and
sales tax. I propose this value be
increased to 500 ringgit and extended to
all international airports in Malaysia.
However, this exemption does not include
cigarettes and liquour.
Special Rewards For The Best National Exporter
72. At the same time, the promotion of Malaysian
products must be intensified. The Government has
allocated nearly 100 million ringgit for an exhibition
centre in Bahrain and will set up such exhibition
centres in other countries which have the market
potential for the country's goods. The Government will
give full support to those who intend to exhibit their
goods in these centres and in trade fairs overseas. I
propose that locally owned companies which record an
increase in exports be given income tax exemption of 30
percent on the increased exports, while those companies
which penetrate new markets be given income tax
exemption of 50 percent. I further propose for
companies which record the highest increase in exports
according to categories be given a full income tax
exemption.
73. In order to reap full benefits, traders should
deal directly with their counterparts in other
countries, without involving middlemen. Facilities to
trade directly with customers or suppliers overseas have
been provided.
Creating Progressive Bumiputera Contractors and
Entrepreneurs
74. There are Bumiputera contractors who are awarded
Government contracts but are unable to complete the
works, despite the provision of many facilities and
relaxation of conditions. There are also those who sell
the contracts to obtain quick profits. This
irresponsible action has jeopardised the Government's
efforts to create a Bumiputera Commercial and Industrial
Community. As such, the Government will be more
cautious in awarding contracts with the view to awarding
contracts only to those who are committed, responsible,
have proper organisation, adequate capital as well as
strive hard to become successful entrepreneurs in the
construction industry. Those who sell contracts and do
not actively manage the contracts will be blacklisted.
75. To provide opportunities to Bumiputera contractors
to secure larger contracts and as the present rates have
not been reviewed since the 70s, the Government will
increase the contract value of each class of contractors
as follows:
Class A : from 4 million ringgit or
more to 15 million ringgit or
more;
Class B : from 2 to 8 million
ringgit to 5 to 15 million
ringgit;
Class C : from 750 thousand to 2
million ringgit to 2 to 5
million ringgit;
Class D : from 150 thousand to 750
thousand ringgit to 500
thousand to 2 million ringgit;
Class E : from 100 thousand to 350
thousand ringgit to 200
thousand to 500 thousand
ringgit; and
Class F : from 100 thousand ringgit
or less to 200 thousand ringgit
or less.
I hope that Bumiputera contractors must enhance their
entrepreneurship and technical capacity to take
advantage of these higher rates and to ensure higher
quality of works.
76. The implementation of rural infrastructure
projects, including construction of village roads and
bridges, repair of buildings such as surau, community
hall and basic facilities will provide more
opportunities to class F Bumiputera contractors. A sum
of 963 million ringgit will be spent this year and
distributed equitably with priority given to poorer
states and those with large interior areas.
77. The Government launched the Bumiputera Entrepreneur
Project (PROSPER) in 2000 to increase the number of
Bumiputeras in the retail sector. The first phase of
this project, involving 15 million ringgit is being
implemented, where 155 companies, of which 21 that are
owned by ex-servicemen have been approved. The
Government has allocated 50 million ringgit for the
second phase of this project.
Accelerating Capital Market Development
78. In line with the Capital Market Master Plan, the
Government will implement strategic measures to develop
the capital market to ensure the private sector will
have access to financing sources. Our savings rate is
high at 34 percent of Gross National Product (GNP). A
substantial portion is from the Employees Provident
Fund, accounting for more than 190 billion ringgit, the
Pensions Trust Fund of about 25 billion ringgit and
insurance funds of about 63 billion ringgit. High
savings rates have contributed towards the significant
development of private debt securities (PDS) and
provided an attractive alternative to the private sector
to secure long-term financing. Gross PDS issuance has
increased from 17 billion ringgit in 1996 to 37 billion
ringgit in 2001. The rapid development in the PDS
market far exceeds the increase in loan growth in the
banking system of only 3.8 percent in the second quarter
of this year, compared with nearly 29 percent prior to
the financial crisis.
79. To further promote financing through private debt
securities, I propose income tax exemption on interest
earned from bonds by individuals, unit trusts and listed
closed-end funds be extended to include debentures.
80. The Government regrets the attitude of the banking
community which is interested only in seeking excessive
profits and opting for safe and non-risky investments.
They prefer to purchase Government Papers. For the first
half of this year, the banking sector recorded net
profits before tax of 4.5 billion ringgit, an increase
of 18 percent. It is not wrong in seeking profits but
not at the expense of compromising long-term benefits of
the nation. The reluctance of financial institutions to
fulfill their major responsibility as a lender, may
require the Government to find other alternatives to
ensure adequate financing for investors. The Government
may be compelled to increase the statutory reserve
ratio.
81. The Government will accelerate efforts to further
develop the Islamic capital market. Islamic PDS has
achieved rapid growth with its contribution to total PDS
issuance, more than double from 14 percent in 1996 to 36
percent in 2001. Recently, Malaysia became the first
country in the world to successfully issue a global
Islamic Bond. The issuance of Sukuk Al-Ijarah by the
Government valued at 600 million US dollars was twice
over-subscribed. It is encouraging that this bond has
attracted investors not only from West Asia but also
from Asia, Europe and US. This will provide more
opportunities for the corporate sector to access
financing through the Islamic capital market.
82. To promote issuance of Islamic PDS based on
principles of mudharabah, musyarakah and ijarah as well
as to attract investors especially from the Middle East,
I propose expenditure incurred on issuance of Islamic
PDS be allowed as a deduction for income tax purposes
for 5 years commencing from year of assessment 2003.
83. Islamic banking products require additional
agreements on sales and purchase of assets. This has
caused higher stamp duty payments compared with
conventional banking products. To streamline stamp duty
treatment on Islamic banking products, I propose stamp
duty be exempted on additional instruments for the
following financing facilities:
First: For restructuring or rescheduling of the
original financing facility, limited to
the outstanding balance.
Second: For renewal of Islamic revolving
financing facility.
Second Strategy: Identifying and Venturing into
Niche Areas in the Services,
Agriculture and Manufacturing
Sectors
84. As a measure to further diversify the economy, we
must identify new growth areas, especially in the
services and agriculture sectors with potentials to
generate economic growth.
Increasing Investments in the Services Sector
85. To ensure a steady increase in investment in the
services sector, I propose an incentive package be
granted to Approved Regional Distribution Centre:
First: Full income tax exemption for 10
years. This incentive is also
extended to Approved International
Procurement Centre;
Second: Import duty and sales tax exemption
on goods for distribution purposes;
Third: Expatriate posts be allowed
according to the requirements.
86. In an effort to attract more Operational
Headquarters companies (OHQs) and Representative Offices
to operate in Malaysia, I propose:
First: Income received by OHQ be exempted from
tax for a period of 10 years.
Second: Expatriates in OHQ and Representative
Offices be subject to income tax on the
portion of income received during their
stay in Malaysia.
Third: The condition that requires foreigners
including expatriates to be in Malaysia
on 31 December and 1 January of the
following year to be eligible to be taxed
as a resident, be waived.
87. Economic growth is also generated from export
activities which earn foreign exchange. To promote
export of services, I propose double deduction on
expenses incurred in export promotion be extended to
include professional services enterprises registered
with the Registrar of Businesses.
88. Services provided by competent and skilled customs
agents will ensure an efficient delivery system.
Towards this objective, I propose approval for customs
agent be given to those to those who have undergone
training and are successful in the required
examinations.
89. Currently, road tax on semi trailer is higher than
that of prime mover. This does not encourage companies
to own more than one semi trailer. To reduce the cost
of transportation as well as to promote the development
of the transport industry, I propose the road tax on
the prime mover and the semi trailer be rationalised.
As an example, the prime mover with a weight of 5,500
kg. and the semi trailer with a weight of 26,000 kg. is
imposed with road tax of 6,627 ringgit per year. With
this rationalisation, the total road tax will be reduced
to 4,399 ringgit per year.
90. The Government is studying the possibility of
making Labuan as a centre for the registration of
international vessels and Langkawi as a centre of
registration for yatches. This will be an addition to
the role of Labuan as an offshore financial centre, and
Langkawi as a tourist destination.
Accelerating The Transition To ICT
91. The Government will accelerate the transition to
ICT in line with efforts to achieve a new knowledge-
based economy. The implementation of the MSC has
succeeded in developing infrastructure and
infostructure, implementing flagship applications as
well as creating a world-class multimedia centre to
attract international corporations to MSC. Total sales
of MSC companies are expected to surge to nearly 5.7
billion ringgit this year compared with 3.4 billion
ringgit in 2001. In addition, a total of 18,900
employment opportunities is expected to be created by
year end, of which 85 percent are skilled workers and 88
percent local workers. An interesting development is
the relocation of global operational centers to
Cyberjaya by several giant international companies.
92. Malaysia is the first country to introduce MyKad, a
multi-purpose smart card based on chip technology and
biometrics with high security features. MyKad contains
information of the holder, including birth certificate
as well as information for dealing with Government
agencies. Additional applications such as ATM, MEPS
cash and Touch `n Go will also be incorporated. Several
new applications will be incorporated in MyKad. A
national roll-out will be implemented and all Malaysians
will possess MyKad by 2005. Towards this end, the
National Registration Department will be provided with
sufficient staff and equipment as well as mobile units
to meet the registration needs in rural areas.
93. In the national roll-out, the Government proposes
to include additional information, such as marital
status and voting constituency. With this information,
the enforcement authority will not mistakenly apprehend
people for close proximity and certain parties will not
be able to transfer voters. As MyKad is an important
document, the Government has decided to issue it free of
charge for Government applications, except for renewals.
Hence, there is no reason for anyone not to convert
their identity card to MyKad. Malaysians are given up to
end of 2005 to make this change.
94. In tandem with the Government's intention to widen
the use of ICT, all new born babies will be provided
with MyKad, a lifelong identification document and a
personal database. This will reduce the hassle of
filling up forms when dealing with Government agencies
and the private sector. This programme will commence on
1 January 2003.
95. To reduce the digital divide, the Ministry of
Energy, Telecommunications and Multimedia is
implementing the connectivity programme, aimed at
providing internet access to the interiors of Sabah and
Sarawak. For the first phase, a total of 250 schools
will receive this facility, which can be shared with
local communities.
96. The e-procurement services launched to date
encompasses registration of suppliers, central contract
and direct purchase. By 2003, two more will be launched,
that is, procurement by tender and price quotation.
With this, Malaysia will be the first country in the
world to successfully undertake the whole process of
procurement through electronic means, including payment
via electronic fund transfer.
97. Venture capital is the impetus for the rapid growth
of knowledge-based and high technology industries. In
accordance with the commitment to develop a resilient
and dynamic venture capital community, the Government
has established the Malaysia Venture Capital Management
Berhad (MAVCAP) and the Malaysia Debt Ventures Berhad
(MDV), with funds totalling 2.1 billion ringgit. MAVCAP
has channelled equity financing to four local venture
capital companies in ICT, i.e. telecommunications and
photonics sectors as well as biotechnology and life
sciences. MAVCAP has also implemented several intensive
programmes to develop local technopreneurs and foster
cooperation between the venture capital community and
local research institutions to commercialise the
findings of R&D. MDV began operations on 30 August this
year to provide an alternative source of financing for
knowledge-based and technology-intensive industries.
98. To encourage venture capital entrepreneurs to be
involved in non-ICT fields, the Government will
establish a new fund of one billion ringgit. With the
establishment of this fund, non-ICT companies will also
have access to venture capital and soft loans.
Fully Exploiting Tourism Potentials
99. We have achieved significant success in attracting
tourists with tourist arrivals exceeding one million a
month. Total tourist arrivals are expected to further
increase to reach more than 15 million in 2003.
100. Towards this objective, tourism promotional
efforts will be intensified, including the Malaysia
Truly Asia campaign. These efforts will focus mainly on
Europe, China, Australia, Japan, India, Middle East and
regional markets. Continuous efforts will be undertaken
to promote Malaysia as a safe and tourist-friendly
destination, with emphasis on quality services and
promotion of attractive events, such as Mega Sales
Carnival and Colours of Malaysia month. In addition,
sports tourism will be promoted apart from existing
annual events such as Formula One Sepang, Le Tour De
Langkawi and the recent Formula One Powerboat.
101. Malaysia is emerging as a health tourist
centre. In 2001, a total of 75 thousand health tourists
received medical treatment in the country, generating
foreign exchange earnings of 28 million ringgit. Given
the potential of health tourism as a foreign exchange
earner, the Government will continue to focus and
provide incentives to further develop the sector.
102. In line with the Government's efforts to
promote Malaysia, Kuala Lumpur will be popularised as a
tourist and shopping destination. The City of Kuala
Lumpur will be lighted with street and flood lights and
beautified with landscaping and the planting of flowers.
103. The Government increased the Special Tourism
Fund from 200 million ringgit to 400 million ringgit to
promote the tourism industry. To further accelerate
efforts to develop the industry, the Government has also
approved a Tourism Infrastructure Fund totalling 200
million ringgit. Both funds are managed by the
Infrastructure and Development Bank which offers loans
at attractive costs.
Making Agriculture As The Third Engine Of Growth
104. For the agriculture sector, the Government
will continue to increase investment in large-scale and
commercial agricultural activity. In this respect, as a
measure to promote the consolidation of management of
smallholdings and idle land, I propose:
First: A company that invests in a subsidiary
involved in the consolidation of the
management of smallholders or idle land
be given tax deduction equivalent to the
amount of investment.
Second: A subsidiary which undertakes such
management be exempted from service tax.
105. To ensure a regular supply of rubber wood to
the furniture industry, I propose capital expenses
incurred by a non-rubber plantation company in the
preparation of land, planting and maintenance of rubber
wood cultivation be written-off in 1 year. This
incentive is given on condition that the company plants
at least 10 percent of its plantation with rubber wood
trees.
106. Currently, a company that invests in a food
production company is given tax deduction on its
investment, whilst the company engaged in such
production is given income tax exemption for 10 years.
Since deep sea fishing has potential to increase food
production, I propose this activity be granted the same
incentives.
107. In addition, the food processing industry can
be further developed by local investors. In this
respect, I propose a locally owned company which
reinvests be granted another round of income tax
exemption of 70 percent for 5 years or Investment Tax
Allowance of 60 percent for 5 years.
108. To modernise the agriculture sector as well as
to be more environment friendly, I propose the chicken
and ducks rearing enterprises which shift from an opened
to a closed house rearing system be granted Reinvestment
Allowance for 15 years.
Encouraging High Value Activities in the Manufacturing
Sector
109. To further increase investment and to enhance
value added activities in the manufacturing sector,
several industries are being developed to face intense
competition in an era of globalisation and
liberalisation. Local manufacturers need to strive
harder to enhance their capability to design, develop
and produce high quality products. In an effort to
promote such activities, I propose a company which
designs, develops and produces automative component
modules or systems be granted Pioneer Status or
Investment Tax Allowance under the high technology
incentive package.
110. In addition, to promote the development of
machinery and equipment industry, I propose that several
categories of machines such as specialised machinery,
process machinery for specific industry, packaging
industry and plastic extrusion machinery be included in
the list of products eligible for Pioneer Status with
100 percent income tax exemption for 10 years or
Investment Tax Allowance of 100 percent for 5 years.
111. To encourage companies to move towards
knowledge-based activities, I propose a company that has
obtained strategic k-based status be granted Pioneer
Status or Investment Tax Allowance under the high
technology industry incentive package. In addition,
expenses incurred by the company to prepare the
Knowledge Based Master Plan be allowed as a deduction
for income tax purposes.
Third Strategy : Strengthening Public Sector Finance
and Increasing the Effectiveness of
the Civil Service
112. Since the financial crisis of 1997, the
Government has led domestic economic growth through
fiscal stimulus. With the recovery in confidence of the
private sector to spur economic growth, the Government
will now assume a supportive role. This will help the
Government to further strengthen its financial position
to achieve a balanced budget by the end of the Eighth
Malaysia Plan period.
Budget Allocation 2003
113. I propose an amount of 109.8 billion ringgit
be appropriated for, in the 2003 Budget. This represents
an increase of 9.2 percent compared with the original
allocation in 2002. Of this, 66.3 percent or 72.84
billion ringgit is for Operating Expenditure and 36.96
billion ringgit for Development Expenditure. With
revenue estimated at 89.79 billion ringgit, the Federal
Government overall account is expected to register a
deficit of 3.9 percent of GDP, lower than the 4.7
percent in 2002.
114. Of the Operating Expenditure, a sum of 34.51
billion ringgit is allocated for Grants and Fixed
Payments. A sum of 19.73 billion ringgit is for
Emoluments, 14.25 billion for Services and Supplies,
1.61 billion ringgit for the purchase of office
equipment and facilities and 2.73 billion ringgit for
other expenditures.
115. Of the proposed total Development
Expenditure, a sum of 12.69 billion ringgit or 34.4
percent is allocated for the economic, infrastructure
and industrial sectors as well as rural electricity and
water supply. A sum of 16.13 billion ringgit or 43.6
percent is allocated to the social sector for education
and training, health, welfare, community development,
youth and sports projects. Further, a sum of 3.06
billion ringgit or 8.3 percent is allocated for
development projects in the security sector and 3.08
billion ringgit or 8.3 percent for general services. The
balance of two billion ringgit is for contingency
reserve.
Two-year Budget
116. The Government announced the two-year Budget
preparation to ensure the smooth implementation of
development projects. This is aimed at giving
implementing agencies lead time to plan and carry out
projects. Implementing agencies can proceed with
preliminary works, such as acquisition of sites,
environmental impact assessment, soil investigation and
design. For this purpose, an allocation of 985 million
ringgit is provided to various ministries to commence
preliminary works this year and undertake physical
implementation in 2004.
117. To accelerate the implementation of Government
projects, I urge the state governments to also play
their role in simplifying and expediting the acquisition
process of project sites. Local authorities should also
expedite the approval of design plans and licences.
Achieving Excellence in Education
118. Children receive their early formal education
in schools, where character building and inculcation of
positive attitudes begin. The moulding of knowledgeable,
skilled and intelligent rakyat, imbued with values, such
as responsibility, tolerance and friendship as well as
patriotism and love for the nation, begins from schools.
It is not a place to indoctrinate young children to
become narrow-minded and misled by deviant beliefs. As
children have to be nurtured from young, not only in
academics, but also in noble values as well as
inculcated with racial tolerance, the Government will
give more focus to education programmes at the pre-
school and primary levels.
119. Towards this end, two vision schools have
begun operation, while four more are under construction.
The Government is also implementing integrated schools
where students are given the flexibility to select their
combination of subjects in line with their interests,
ambitions and socio-cultural background. The students in
these schools are offered a choice of subjects from
three streams, namely, Pure Sciences, Technology and
Islamic Studies.
120. To enhance computer learning and ICT, smart
schools will continue to emphasise the use of software
for the teaching and learning of Mathematics, Science,
Bahasa Malaysia and English. To date, eight schools have
begun operations, while three more will be completed in
2003. All schools will be equipped with computer
laboratories. Phases 1 and 2 of the programme involved
the construction of 4,400 laboratories, of which 1,058
have been completed. Phase 3, covering the remaining
schools nationwide has already begun. The construction
of these laboratories are undertaken by local class F
Bumiputera contractors.
121. The Government will allocate a sum of 850
million ringgit to implement single-session schools so
that students will have more time not only for academic
lessons but also for co-curriculum activities. Hence,
our children will spend more time in schools, thereby
preventing them from becoming involved in unhealthy
activities. The Government also hopes that parents will
spend quality time with their children. For this
purpose, a total of 91 primary and 81 secondary single-
session schools is already operational in 2002, while
129 primary and 138 secondary schools will be ready in
2003. The construction of 43 new single-session primary
schools and 51 secondary schools will be undertaken. An
allocation of 14,294 million ringgit will be provided
for primary and secondary education, while 8,685 million
ringgit for higher education.
122. The Government has decided to implement the
teaching of Science and Mathematics in English in
schools. For this purpose, the Government will provide
allocation amounting to nearly 5 billion ringgit for a
period of seven years from 2002 to 2008. A large portion
of this allocation is for training of teachers,
providing a launching grant for schools as well as
teaching and educational aids, apart from basic
facilities and physical infrastructure, including ICT.
123. To ensure that the teaching of Science and
Mathematics in English will be implemented effectively,
teachers will be supplied with notebook computers, LCD
projectors and other related equipment. For this
purpose, a sum of 978.7 million ringgit will be spent
this year and in 2003.
124. For school leavers who do not have the
opportunity to continue their education in institutions
of higher learning, a skills enhancement programme is
being implemented through the Community Colleges to be
built in every Parliamentary constituency. A total of 17
Community Colleges has commenced operations this year,
with an additional 50 being planned. A sum of 408
million ringgit is allocated for this purpose.
125. The Government continues to give priority to
education with 27 percent of the total Budget 2003 being
allocated to this sector. In spite of substantial
allocations for education, the amount appropriated for
the Higher Education Loan Fund is still insufficient.
To date, a sum of 4.5 billion ringgit has been
disbursed, benefiting nearly 380 thousand students. The
programme requires an additional sum of 3.5 billion
ringgit for the period up to 2005. The Government may
not be able to continue this programme through the
provision of grants. Therefore, a loan programme will be
created through financial institutions to provide loans
for students. The financial institutions will be
required to channel a portion of their loan portfolio
for higher education, in line with the Government's
aspiration to develop human resources.
126. To reduce the burden on parents in meeting
future educational expenses of children, I propose that
an Education Savings Fund be established to finance
higher education. For this purpose, the Government will
provide a matching grant for every ringgit saved by
children from low-income families. An initial amount of
one biIlion ringgit will be allocated. I hope this
programme will cultivate a savings culture among
children.
Developing Human Resources For The New Economy
127. The nation is shifting to a knowledge-based
economy. To ensure a smooth transition, the nation
requires more skilled manpower. The Government will
continue to emphasise measures to increase the number
and enhance the quality of skilled manpower. A sum of
1.62 billion ringgit is allocated to the Ministry of
Human Resources, Ministry of Youth and Sports and the
Ministry of Entrepreneur Development to implement
various skills training programmes, including the
provision of infrastructure facilities and to finance
management expenses.
128. A sum of 621 million ringgit is allocated to
the Ministry of Human Resources to implement and manage
29 Industrial Training Institutes and Skills Training
Centres with a capacity of 18,200 trainees. Apart from
this, a sum of 410 million ringgit is allocated to the
Ministry of Youth and Sports to implement and improve
the facilities of 25 Institut Kemahiran Belia Negara
(IKBN). The institutes will have the capacity to train
a total of 12,600 trainees with the completion of 8 new
IKBNs. The Ministry of Entrepreneur Development is
allocated a sum of 355 million ringgit to establish 33
Institut Kemahiran MARA to train 49,600 trainees at
various skill levels.
129. In line with the Government's intention to
create more skilled manpower in R&D, a Training Grant of
100 million ringgit will be established. This will be
channelled to private companies for financing the
training of their R&D personnel.
Healthy Rakyat Ensures A Prosperous Nation
130. Healthy rakyat will ensure the continued
success of development programmes. In this regard, the
Government will provide and improve health service
facilities. For 2003, a sum of 7.55 billion ringgit is
allocated, an increase of nearly 20 percent compared
with 2002, to continue upgrading the standard and
quality of medical services and public health. Of this,
5.76 billion ringgit is for operating expenditure and
1.79 billion ringgit for development expenditure.
131. Several new projects will be implemented,
including the construction of 25 new hospitals and the
upgrading of 47 hospitals, 383 rural clinics and 81
health clinics. Among the hospitals under construction
include Hospital Serdang, Alor Setar, Sungai Buloh,
Ampang, Sungai Petani and Lahad Datu. Attention will be
given to public health services to improve the health of
women, children, youths, the aged and disabled, as well
as to control infectious diseases and non-infectious
diseases, such as diabetes, heart diseases and cancer.
132. The close cooperation between the Government
and Non-Governmental Organisations (NGOs) in prevention
and treatment as well as support programmes will
continue to be enhanced. For 2003, a sum of 24 million
ringgit is allocated to NGOs, such as HOSPIS, National
Kidney Foundation and others. In addition, the
Government will continue to provide matching grants for
NGOs which are sincere in helping the country.
Increasing The Efficiency Of The Civil Service
133. An efficient, fast and client-friendly
delivery system of the civil service ensures the smooth
and effective implementation of national development
policies and strategies. In this regard, the civil
service must reduce bureaucracy and review all
regulations and procedures to expedite dealings with the
public. This will facilitate businessmen in their
dealings with the Government and reduce the cost of
doing business, thereby enhancing the nation's
competitiveness. In this regard, all civil servants
will be reorientated and inculcated with excellent work
culture which emphasises efficiency, discipline,
trustworthiness and commitment as well as a pro-business
attitude in implementing Government policies.
134. The prevailing custom procedures and
regulations should be simplified and standardised to
ensure investors receive the best treatment while
handling the import and export of goods. I propose:
First: Movement of taxable goods between free
zones or for export be exempted from bank
guarantee;
Second: Movement of taxable goods require only a
single form;
Third: To save time and cost, the Customs
Department will not reexamine goods that
have been inspected by other agencies
such as Ministry of Health or Ministry of
Agriculture;
Fourth: To prevent the smuggling of cigarettes,
the Government will introduce special
stickers or codes to be affixed on each
packet of cigarettes to indicate that tax
has been paid. Similarly, the Government
will also introduce stickers on other
items such as liquor and medicines, not
only to ensure taxes have been paid but
also to protect customers from purchasing
counterfeit goods.
135. The Government is concerned with the welfare
of civil servants and is sensitive to their problems.
Therefore, the Government recently agreed to implement
Sistem Saraan Malaysia (SSM). SSM is based on increased
competency and in-depth knowledge of a civil servant.
Although the implementation of SSM will involve an
additional expenditure of more than 300 million ringgit
this year, its implementation will undoubtedly benefit
civil servants and the nation.
136. To enable civil servants to carry out their
duties effectively, the Government will ensure they
remain healthy and productive. Under the current
regulations, officers in the management and professional
category, 40 years and above are encouraged to undergo
medical examinations from time to time. This facility
is now extended to all civil servants in the support
group.
137. The Government has developed Putrajaya
Administration Centre to be the centre of excellence in
public administration. For those who have shifted and
will be shifting to Putrajaya, must regard the shift
not only as a physical migration but also as a migration
in attitude and mind, to achieve excellence in the civil
service.
Fourth Strategy: Nurturing A Progressive And
Harmonious Society With High Moral
Values And Ensuring The Well-Being
Of The Rakyat
138. The success and prosperity that we have
achieved must be enjoyed and shared by all, irrespective
of race and not confined to certain groups. The
Government is always firm in implementing measures to
ensure a more equitable distribution of the nation's
wealth. Government efforts will not only focus on
increasing wealth but also enhancing moral values,
enriching the mind, inculcating religious values as well
as fostering unity and understanding with the view to
creating a progressive and harmonious Malaysian society
with high moral values.
Strengthening the Rural Development Agenda
139. The primary agenda of the Government is to
enhance the standard of living of rakyat in rural areas.
The allocation for rural development has been increased
in every Budget, particularly for infrastructure
facilities. This included programmes to build and
upgrade major roads, village roads and bridges and
provide basic facilities, such as electricity and water
supply, health, education and housing as well as
telecommunications facilities to narrow the digital
divide. For 2003, a sum of 2.56 billion ringgit is
allocated, representing an increase of 36 percent
compared with 2002.
140. A sum of 270 million ringgit is allocated for
rural roads to complete 111 continuation projects as
well as implement 289 new projects, covering
approximately 673 kilometres. For village roads, a sum
of 600 million ringgit is allocated to implement
approximately 6,000 projects covering 6,000 kilometres.
In addition, a sum of 30 million ringgit is allocated
for repairing nearly 1,400 kilometres of village roads.
141. For electricity supply, a sum of 300 million
ringgit is allocated to implement 720 projects
nationwide, benefiting 103,000 households. With regard
to rural water supply, a sum of 250 million ringgit is
provided to implement 700 projects which will benefit
approximately 84,000 households. In addition, a sum of
10.3 million ringgit is provided under the BAKAS
programme for water supply and rural environmental
cleanliness. With this, 90 percent and 80 percent of
rural areas are expected to enjoy electricity and water
supply respectively.
142. For rural health services, a sum of 289.7
million ringgit is provided for the construction of 76
rural clinics, including upgrading and repairing of
existing facilities. Several new facilities will also
be fully operational, including eight hospitals, 13
health clinics, 60 rural clinics and two training
schools for nurses.
143. Apart from providing infrastructure
facilities, the Government will endeavour to develop
rural community that is capable of earning income no
less than that of the urban population. Traditional
farmers and fishermen are unlikely to earn lucrative
income as they do not work full-time. Factory workers
work eight hours a day, six days a week, while the
working hours of farmers and fisherman are less than
half of that of factory workers. Increasing the prices
of their products is not the way to increase their
income as it will only increase the cost of living or
inflation. The provision of subsidy will also not
overcome the problem of low income.
144. The best solution is to engage them in other
jobs during their free time. The Government will
introduce the One Village One Industry, involving the
development of small industries which require between 10
to 100 workers. In these small factories work discipline
during specific and orderly working hours will ensure
the production of quality and marketable products.
Farmers and fishermen can earn salaries as well as
invest and own these industries, which will be
professionally managed. A new initiative is being
undertaken in Kedah to establish well-planned villages
with conducive environment. These houses will be sold
at reasonable prices to the locals to enable them to
enjoy a standard of living similar to the urban
population.
145. The re-planning of villages, complete with
retail and coffee shops and other facilities as well as
small factories to produce marketable product will
increase the income of farmers and fishermen.
Developing land ala Felda scheme is no longer possible.
Ensuring The Well-Being Of The Rakyat
146. Special attention will be given to safeguard
the interests of the poor. Programmes that will be
continued include Development of Mindset, Balanced Diet,
Increasing Income, Development Of Urban Society,
Rehabilitation of Houses, In-situ Community Development
and Bumiputera Unit Trust Fund. A sum of 190.9 million
ringgit is allocated for these programmes, benefitting
67,200 people.
147. The low and medium-cost housing programme will
continue to be implemented to ensure that the lower
income group can afford comfortable accommodation.
Nearly one billion ringgit is allocated for various
public low-cost housing projects. In tandem with the
Government's objective of achieving zero squatters by
2005, the Housing Programme for the People which
provides houses for rental to squatters in the Federal
Territory of Kuala Lumpur and major towns will be
continued. For this purpose, a sum of 700.6 million
ringgit is allocated to implement 51 continuation
projects and 13 new projects, involving 65,778 housing
units. Under the house ownership programme, an amount
of 202 million ringgit is allocated for the construction
of 6,000 housing units.
148. The Ministry of Housing and Local Government
will determine the needs for low-cost housing, identify
sites and acquire land besides calling for tenders and
constructing houses for sale. Proceeds from the sales
will be ploughed into a revolving fund, while end-
financing for house buyers will be provided by
identified financial institutions. With the
implementation of this new strategy, the construction of
public low-cost housing will be accelerated, hence
providing more opportunities for the low-income groups
to own quality and affordable houses. In addition, an
amount of 83.6 million ringgit is also provided as loans
to state governments for the construction of 15,700
housing units under the existing Public Low-Cost Housing
project.
149. To further improve the housing programme for
the hardcore poor, the Government intends to expand the
Housing For Fishermen Families programme launched
recently in Terengganu to other states through a special
fund. Poor families who own land can participate in
this programme using the Special Loan Fund, set up under
Syarikat Perumahan Negara Berhad (SPNB). Interest-free
loans will be provided to finance the construction cost
apart from the grant by the Government for the Housing
Programme for the Hardcore Poor.
150. For children from poor families, the
Government will spend an amount of 470 ringgit a year
for each primary school pupil under the programme to
supply food supplement and textbooks loan as well as
school uniforms and others. To reduce the burden of
poor families, the Government proposes to provide a one-
off allocation of 120 ringgit a year in cash to every
student from poor families to buy uniforms and school
paraphernalia. This involves an annual expenditure of
87.8 million ringgit and will benefit 730 thousand
students. Apart from these facilities, the Government
is considering to provide tuition vouchers to these
children to enable them to get tuition from teachers
willing to give special classes outside school hours.
With this, not only students will benefit but diligent
teachers will be able to earn additional income.
151. We are often touched by pleas for financial
assistance from those who are unable to afford the
treatment of chronic illnesses. The treatment costs are
usually high and cannot be borne by those in the low
income group while public donations are insufficient.
On humanitarian grounds, the Government will provide a
dollar for dollar matching grant. For this purpose, the
Government will set up a fund with an initial amount of
100 million ringgit, specifically for those in the lower
income group or for children whose parents earn less
than 600 ringgit a month.
152. The population of aging citizens in our
country is increasing. Thus, care centres for senior
citizens must be increased to address the problems of
inadequate care from their close families. As such, I
propose expenses incurred in the construction or the
purchase of buildings to be used as care centres for
senior citizens be granted special building allowance of
10 percent for 10 years.
153. The Government is always concerned on the
welfare of workers especially those who have been
retrenched or accepted the Voluntary Separation Scheme.
In order to assist them to meet the rising cost of
living, I propose the income tax exemption on
refrenchment benefits received by these workers be
increased from 4 thousand ringgit to 6 thousand ringgit
for each year of service.
Environmental Preservation
154. Quality environment is an invaluable asset.
As the community becomes affluent, the demand for
quality environment is greater. A clean environment is
the responsibility of everyone. The Government
encourages the use of bio diesel in an effort to
increase utilisation of renewable sources of energy
which is environment-friendly. Towards this, the
Government will grant subsidies to bio diesel as
currently given to diesel.
155. In addition, Pioneer Status and Investment Tax
Allowance incentives which have been granted for the
production of energy utilising biomass as a renewable
source of energy, has attracted investments amounting to
331 million ringgit. In this respect, I propose these
incentives be extended for another 3 years until 31
December 2005. Apart from this, I also propose that
these incentives be extended to include the usage of
hydro electric power of not more than 10 megawatts as
well as to solar energy.
Elevating The Role Of Women
156. The Government recognises the role of women
in national economic and social development. In line
with this, the Ministry of Women and Family Development
is allocated a sum of 99.1 million ringgit in 2003, an
increase of 68 percent over 2002. The Ministry is in
the process of introducing gender-based budget analysis
to study the implications of the national budget on
women and men to ensure economic resources are
efficiently allocated.
157. In appreciation of the role of women as the
backbone of family development, the Family First
Programme: Bring Your Heart Home, was launched to enable
Government agencies, the private sector and NGOs to
collaborate and foster awareness on the importance of
giving priority to their family. Under the family
development programme of the National Population and
Family Development Board, ten KASIH Keluarga Complexes
will be built in 2003.
158. The Government has granted various reliefs and
rebates to individual tax payers not only to meet their
personal expenses but also that of their dependents such
as relief for education and medical insurance, books and
medical expenses for parents. To foster family values,
expenses incurred by a company in sponsoring Family Day
are allowed as tax deductions. Apart from this, free
leave passage benefit enjoyed by the employee and his
family is currently not taxed.
159. Currently, many of us complain on payments of
stamp duties on transfer of properties to loved ones.
In an effort to reduce the financial burden on transfer
of property among family members, I propose instruments
of transfer between husband and wife, parents and
children on the basis of love and affection be exempted
from 50 percent of the stamp duty.
160. The Government will implement programmes,
specially for the welfare of single mothers, currently
estimated at nearly 130 thousand or 1.2 percent of the
female population. Priority will be given to single
mothers with a monthly income of less than 600 ringgit
to own low-cost houses so as to enable them to be
located within the same vicinity. This will facilitate
the provision of facilities such as childcare, education
and health.
161. Currently, male civil servants are given
paternity leave to assist their wives and children in
household chores. In line with the "family first"
values, the Government will increase the paternity leave
from three to seven days. In addition, to enable civil
servants to take care of family matters during the
demise of their immediate family, they will be given
three days of unrecorded leave.
Preparing Youths As The Future Generation
162. Youths represent the future generation who
will continue the struggle to uphold the dignity and
sovereignty of the nation. Today's youths are the post-
Independence children, who only know how to shout
"Merdeka", but are unable to fathom the true meaning of
the word "Merdeka". This is because they did not
experience the bitterness and pain of living under
colonial rule and the struggle to gain independence. If
they are not made aware and instilled with the spirit of
patriotism and love for the nation, we are afraid the
prosperity and solidarity which we have painstakingly
built upon, will be destroyed and the country may be re-
colonised.
163. Youths will be instilled with the spirit of
nation building and equipped with skills and knowledge
to enable them to assume a major role in national
development. Programmes such as leadership training,
spiritual enhancement and self-reliance will be
undertaken, apart from skills and knowledge enhancement
to enable them to participate in the knowledge-based
economy.
164. We are concerned with the worsening social
ills among youths. To inculcate positive values among
youths, Program Rakan Muda will be enhanced with a new
approach to increase its effectiveness and participation
of youths. A sum of 12.3 million ringgit is allocated
for this programme.
165. The young entrepreneur development programme
will be stepped-up to increase the participation of
youths in business and create a youth industrial and
trading community. The computer entrepreneur programme
will be implemented to produce one hundred small-scale
entrepreneurs in the computer business in 2003. For this
purpose, an allocation of 500 thousand ringgit is
provided. Meanwhile, under the Tabung Ekonomi Belia,
loan facilities amounting to 50 thousand ringgit per
person will also be extended. Young entrepreneurs will
be encouraged to offer computer courses to youths in
rural areas. About 20 thousand youths are estimated to
benefit from this programme.
166. The National Social Service Programme will be
continued, involving about 20,000 school leavers who are
awaiting the SPM results. This programme is specially
formulated to create a generation of multi-skilled and
patriotic youths besides occupying their free time with
beneficial activities. A sum of 11 million ringgit is
allocated for this purpose.
Towards Excellence In Sports
167. The Government is proud of the success
achieved by the national sports contingent in the
Commonwealth Games in Manchester which brought back
seven gold medals. Even though we are still able to
perform well in some sports, we lag behind in others.
The nation had at one time attained glory in football
and was well-known in the Asian region, even defeating
the Japanese and South Korean teams who have now emerged
as world-class football giants. What happened to our
players?
168. The Government urges all parties, especially
the sports associations to make a diagnosis and
undertake urgent measures to overcome existing
weaknesses rather than indulge in internal squabbles. We
must be more confident and toughen our spirits to regain
the glory of national sports. Treat the forthcoming 14th
Asian Games in Busan, South Korea as a challenge to
prove that we have the capability to attain greater
success. As for the national contingent, prove that
Malaysia Boleh.
169. The Government will continue to expand and
encourage sports programmes and activities not just as
an effort to cultivate a healthy lifestyle but also to
attract more international sports enthusiasts to
participate in the nation's sports activities. Among the
new activities being promoted are extreme and motor
sports, speed boat race and yatching. To ensure the
success of these programmes, a sum of 227.5 million
ringgit is allocated to the Ministry of Youth and
Sports.
Towards Active Participation of Non-Governmental
Organisations
170. Currently, there are many NGOs which were
formerly known as voluntary bodies undertaking welfare
works. Although many NGOs are more interested in
politics and in finding faults of others, there are
still some with positive attitudes and work hard to help
the less fortunate. To them, the Government will
continue to provide assistance and contribution to
enable to undertake activities in line with Government
policies. A sum of 102.1 million ringgit is allocated to
eight ministries for this purpose. A sum of 20 million
ringgit is allocated to NGOs to undertake activities
specifically relating to women and family development.
Apart from this, four million ringgit is allocated to
the Malaysia AIDS Council to carry out preventive
activities and five million ringgit for treating drug
addicts. The Government does not forget the disabled and
for them, a sum of 19 million ringgit is allocated.
171. The Government will provide a grant of two
million ringgit to the Association for the Blind ICT
Fund to assist its members to acquire special computers
and other ICT equipments. With the establishment of
this Fund, they will not be marginalised from the
mainstream of ICT development and enhance their
employment opportunities.
Appreciating The True Teachings Of Islam
172. As an Islamic nation which practices the
Islamic teaching, particularly Islamic fundamentals, it
is our responsibility to preserve the sanctity of Islam.
For this, the Government will continue to implement
programmes on the true understanding of Islam for all
levels of society, encompassing school children,
students of higher learning institutions as well as
public and private sector personnel. For this purpose,
a sum of 203.1 million ringgit is allocated to Jabatan
Kemajuan Islam Malaysia to implement among others,
Islamic Education and Training Programme, Dakwah, Social
Development, Research and Information Dissemination as
well as the enforcement of law. The Government will
also allocate a sum of 113.9 million ringgit for the
implementation of several development projects,
including the construction of mosques, training
complexes, religious schools and the development of an
information system. However, not all requests in the
name of Islam can be met simultaneously. Islam teaches
us to be patient.
IV. ECONOMIC PROSPECTS FOR 2003
173. The Government is confident that with the
strategies and measures proposed in this Budget as well
as the stronger recovery of the private sector in
generating economic activities, the nation will achieve
a higher economic growth in 2003.
174. GDP is estimated to grow between 6 and 6.5
percent. The impetus for growth emanates from domestic
economic activities in line with the Budget strategy
which emphasises domestic-led growth. The services
sector is expected to be the largest contributor to the
increase in GDP, while the manufacturing sector is
expected to record the highest growth. On the demand
side, private sector expenditure is expected to recover
strongly with private investment increasing by 16.5
percent and consumption by 10 percent. The public sector
will continue to play a supportive role towards growth
of the private sector. Public investment is estimated to
increase marginally by 2.4 percent while public
consumption by 10.1 percent.
175. In line with the Government's intention to
strengthen the financial position of the Federal
Government, the overall deficit is estimated to further
narrow to 3.9 percent of GDP, compared with 4.7 percent
this year. The better performance is the result of
higher Government revenue which is expected to grow by
almost 8 percent compared with 5 percent this year.
176. The Government will continue to maintain its
accommodative monetary policy to further strengthen
domestic economic activities. In an environment of low
inflation, we have the flexibility to maintain low
interest rates to encourage increased bank lending to
support economic growth. This policy will be maintained,
with the Government always having the flexibility to
manage macroeconomic policies even in a less encouraging
external environment.
177. Our economic fundamentals will further
strengthen. International reserves increased to 130
billion ringgit or 34.2 billion US dollars at end-August
2002. Total reserves is 5.1 times the short-term foreign
liabilities and able to finance 5.6 months of retained
imports. Foreign trade balance continues to record a
surplus for 57 consecutive months since November 1997.
The gross national savings rate is maintained at a high
level of about 33 percent of GNP. The banking system
remains strong with the risk-weighted capital ratio at
13.1 percent, exceeding the 8 percent international
standard. Short-term foreign debt liabilities remain low
at 7.6 percent of GDP, while the debt service ratio
remains at a low level of 5.8.
178. In line with the strong economic growth, the
purchasing power of the rakyat is also expected to be
higher with per capita income increasing by 5.5 percent
to 14,100 ringgit, compared with 13,400 ringgit in 2002.
In terms of purchasing power parity, our per capita
income will increase by 5.4 percent to 8,800 US
dollars, compared with 8,400 US dollars in 2002. The
unemployment rate continues to decline to 3.4 percent,
which is still within the level of full employment. The
unemployment rate takes into account approximately 700
thousand foreign workers working in the country. The
incidence of poverty has been reduced from 8.7 percent
in 1995 to less than 6 percent in 2002.
179. Strong economic fundamentals will ensure that
higher growth can be achieved and sustained in the long-
term. To ensure the economy continues to achieve
sustainable growth and withstand external shocks,
policies and strategies to generate domestic growth will
be further strengthened. Efforts to diversify sources of
domestic growth will be intensified to reduce our
dependence on the external sector. Currently, the
manufacturing sector is not only the main source of
growth, accounting for one-third of GDP but also
contributing almost 90 percent of the nation's exports.
The contribution of other sectors to GDP must be also be
increased.
180. Up to now, I have only proposed measures that
will reduce Government revenue. Indeed, I do not intend
to propose any increase in taxes neither introduce new
ones. However, to ensure that Government will have
adequate financial resources to finance its expenditure,
efforts will be intensified to enhance tax compliance.
In this regard, agencies entrusted to collect taxes,
such as the Inland Revenue Board and Customs Department
will intensify enforcement. As such, all parties
concerned must give full cooperation to these agencies.
181. I have tabled various strategies and measures
in Budget 2003, which to me, are people-friendly. Let
there not be those who regard this an Election Budget.
The Barisan Nasional Government still has ample time to
continue to govern the nation.
182. I would like to take this opportunity to
convey the Government's highest gratitude to all
Malaysians who have continuously given their undivided
support and stood firmly behind the Government through
good and bad times. The Government wishes to record its
deepest appreciation to all private sector workers who
have worked relentlessly and contributed to the nation's
economic growth. They have not resorted to industrial
action, even though their salaries were not commensurate
with their demands and in some circumstances, they were
retrenched. This is our uniqueness, reflecting the
spirit of Malaysia Inc. To the public sector employees,
including the armed forces and police, the nation is
indebted for their contributions and sacrifices.
Without their professionalism and efficient
adminstration, we will not have benefitted from higher
economic growth. As a token of appreciation to all
members of the civil service, the Government has agreed
to give a one-month bonus or a minimum of 1,200 ringgit.
I hope this will reduce the burden, especially of the
lower income group to meet expenses for the coming
festivals as well as preparation for their children's
schooling.
V. CONCLUSION
183. The nation has enjoyed the fruits of
independence for nearly five decades. The progress
achieved is the result of peace, solidarity and staunch
support of the rakyat for the Government and our
effective development policies. Our success was,
however, affected by the regional financial crisis and
the September 11 incident which had worsened global
economic recovery. We had managed to survive the crisis
and are now on a stronger foundation. However, the
increasingly challenging domestic and external
environment demands sacrifices and courage to undertake
a shift in our macroeconomic management policies.
Development policies and strategies in this 2003 Budget
is the first step towards implementing this new
approach.
184. In this recovery process, we must be agile to
act fast and respond to changes in our environment.
Only with courage to implement measures although
unorthodox, can we safeguard the nation and overcome
all challenges.
185. Love for the nation and solidarity as well as
the willingness to sacrifice for the country are the
pillars of our sovereignty and independence. This is the
uniqueness of our national heritage. We must not engage
in squabbles, be divided and sow discord and hatred. If
we do, we may lose our independence, not savour the
wealth that we have painstakingly acquired and
jeopardise the nation's dignity. Is this what we want?
Is this the legacy we leave behind? Definitely not! No
one will defend us if not ourselves. Let us stand
united, work together, fortify our spirit and strengthen
our determination to build a prosperous, united and
sovereign nation.
186. The task to develop our nation is far from
complete. The path that we need to tread is long and
winding. Indeed, this is not easy. Upholding our status
and dignity demands our perseverance, resilience,
determination, diligence, integrity, sincerity and
sacrifice by all, from those in villages and in cities,
young and old as well as the haves and the have-nots.
Indeed,
"Our Struggles Are Not Over,
Only Those Who Persevere And Are Resilient
Can Reach the Pinnacle
And Be A Successful Nation"
Keranamu Malaysia
I beg to propose.
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