KUALA LUMPUR, March 10 - Deputy Prime Minister Datuk Seri Najib Razak said that growth in the country will be slashed to between minus one to one per cent even with the RM60 billion stimulus package announced today.
The package itself is divided into four thrusts. The first thrust is aimed at reducing unemployment which is expected to hit 4.5 per cent this year and will cost RM2 billion to implement.
The government will create 163,000 job and training opportunities with 100,000 jobs coming via collaborations with the private sector.
However, it will fill 63,000 vacancies in the civil service with 13,000 employees on short-term contracts whereby 4,000 workers with just SPM qualifications will be hired with a monthly salary of RM1,200 and 1,000 graduates will be schoolteachers earning RM2,000.
The government will also encourage the hiring of retrenched workers by offering double tax deductions on remuneration paid to employees hired from March to the end of 2010, who were retrenched after July 1, 2008.
Retrenched workers will be able to exempt compensation of up to RM10,000 per year of service from income tax to increase their disposable income. Previously, only RM6,000 per year of service was allowed.
The RM10 billion second thrust is aimed at easing the burden of the people via a social safety net.
Food subsidies will be given an additional RM674 million allocation while another RM480 million will be spent to ensure that toll rates do not go up, bringing the total amount of subsidies for 2009 to RM27.9 billion.
With RM200 million for 6,500 low-cost homes getting good response from the lower-income group, another RM200 million will be allocated.
The housing sector will also see buyers being given tax relief for interest paid on housing loans of up to RM10,000 per year for three years.
The government will also encourage the public to save via government bonds amounting to RM5 billion with a return rate of 5 per cent per annum.
Schools will also receive RM1.95 billion to improve facilities and RM1.2 billion for infrastructure projects in East Malaysia.
A total of RM350 million has also been allocated for microcredit programmes. The RM29 billion third thrust focuses on private sector assistance.
A RM5 billion working capital guarantee scheme will be set up to encourage financial institutions to provide companies with an equity of RM20 million or below a loan of up to RM10 million in working capital.
Four-fifths of this amount will be guaranteed by the scheme with financial institutions taking the remaining 20 per cent risk.
A similar RM5 billion industry restructuring loan guarantee scheme will provide similar assistance to these companies to increase productivity and value-added services including the application of green technology, with a maximum loan of RM50 million.
However, companies with more than RM20 million equity will be allowed to apply for loans under a scheme with a 50:50 guarantee ratio between the government and the financial institution applied to.
To spur the automotive industry, owners who scrap their cars which are 10 years or older will receive an RM5,000 discount to purchase a new Proton or Perodua.
The aviation industry will also be stimulated with a new low-cost carrier terminal costing RM2 billion to be completed in 2011 as well as a 50 per cent rebate on landing charges for two years effective April 1 for all airlines that operate from Malaysia.
Companies can also carry back losses of up to RM100,000 to the preceding year to improve cash flow. This is applicable for the 2009 and 2010 assessment years and will result in tax returns for companies that were profitable in preceding years.
The final RM19 billion thrust is to enhance capacity for the future.
Khazanah will increase its investments by RM10 billion to be invested over the next two years.
It will focus on strategic areas such as telecommunications, technology, tourism, agriculture, life sciences and projects related to Iskandar Malaysia in an effort to create high multiplier effects and up to 70,000 job opportunities by 2011.
A private-finance initiative worth RM2 billion will attempt to tip non-viable projects into viable ones by providing a small proportion of the investment cost.