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Malaysia looking to speed up new spending-Dep PM

By Tuesday February 24th, 2009 No Comments

KUALA LUMPUR, Feb 24 (Reuters) – Malaysia’s government is looking at possible funding sources for a planned second round of spending to boost growth in the export-led South East Asian economy but hasn’t yet agreed on a figure.

Deputy Prime Minister Najib Razak said on Tuesday that new funds in the mini-budget due on March 10 would be disbursed more quickly as the ceiling for the tender process for government contracts had been raised.

“It (the spending) has to be big enough to make an impact on the domestic market, so we are assessing the figure and the percentage of GDP (gross domestic product) and the resources for fund-raising,” Najib told reporters in parliament after a meeting on the spending plans.

The extra spending comes as Najib, the country’s deputy prime minister and finance minister, gets ready to take the premiership at the end of March and as Malaysia braces for what could be its first recession in eight years.

Most economists had forecast the package, due to be announced on March 10, would be in the region of 10-15 billion Malaysian ringgit, although a junior government minister said recently it could be as much as 30 bilion ringgit ($8.21 billion).

An existing 7 billion ringgit spending plan was widely criticised for being too small at just 1.1 percent of gross doemstic product and too slow to disburse.

Najib said on Tuesday that the spending processes would be speeded up.

“The ceiling for the tender process for government contracts will increase from 200,000 ringgit to 500,000,” he said.

That means that contracts will be processed on a quicker quotation basis rather than put out to an extensive tendering process.

Leading investment bank Citigroup said on Tuesday it now expected Malaysia’s economy to contract by 1.5 percent this year as demand for exports slides, down from a earlier projection of a 0.5 percent growth.

The sliding economy coincides with a period of political instability in Malaysia as the government that has ruled this South East Asian nation of 27 million people grapples with a surging opposition in an increasingly bitter battle of words.

Source : Reuters

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