FULL TEXT OF PM'S BUDGET 2002 SPEECH
Page : . 1 . 2 . 3 .

81.   The Government is also concerned about the housing problems faced by civil servants, particularly those in the Armed and Police Forces. An allocation of 1 .08 billion ringgit is provided for the construction of quarters, which includes 710 million ringgit for the Armed Forces, 197 million ringgit for the Police Force and the balance of 173 million ringgit for civil servants.
     
82.   In line with the objective of a healthy society and a prosperous nation, the Government will continue to improve health service facilities. A sum of 6.3 billion ringgit is allocated to the Ministry of Health to continue, among others, the implementation of hospitals as well as health and rural clinic projects. Among the health and medical facilities, focus will be given to improving women and children's health, disease control, nutrition as well as providing modern equipment and facilities.
     
Women
     
83.   In recognition of women's role in economic development, the Government has set up the Ministry of Women and Family Development. With the establishment of the Ministry, issues and problems relating specifically to women, including children and families will be given a more focussed attention. In this regard, Article 8(2) of the Federal Constitution has been amended to include the word 'gender' to ensure that laws and policies do not discriminate against women. The Ministry has also launched the Women Against Violence Campaign on 23 July 2001.
     
84.   The Government is aware that the female labour force participation rate at 44.5 per cent is lower than the 60 per cent level in developed countries. Women in Malaysia are fortunate that the Government encourages and provides equal opportunities in all fields of employment, unlike in certain states, which do not encourage women to work. In fact, Saidatina Khadijah, wife of the Prophet, was a prominent and wealthy entrepreneur during her time. Another of His wife, Saidatina 'Aisyah led troops in the Battle of Jamal. Many women provided medical services to Muslim soldiers injured during the battle. We must remember that Muslims make up only 60 percent of the population, of which half is women. If women are not allowed to contribute to the development of the Muslim community, the Muslim workforce will be reduced by 30 per cent. They are already weak and will become even weaker.
     
85.   Greater focus will be given to specific programmes aimed at improving the quality of women's lives, particularly in rural areas, developing female entrepreneurs as well as eradicating the gender bias in all respects. The implementation of these measures reflects the Government's commitment in ensuring that equal opportunities are provided for women. A sum of 59 million ringgit has been allocated to finance programmes, specifically for women.
     
86.   Currently, widows receiving their late husband's pensions will lose the benefit if they re-marry. I propose that they continue to receive the pension even if they re-marry. It is hoped that there will not be many who will marry a second wife and leave their first wife because of this provision.
     
Youth and Sports
 
87.   Youths are the nation's greatest asset and have the potential to contribute towards development. In this respect, the Rakan Muda Programme will be continued with renewed features and form part of the national agenda for the development of youths. A total of 3.5 million youths will participate in more than 35,250 activities at the national, state and district levels under this programme. Participation in the National Social Service Programme for youths which aims to cultivate self-reliance and inculcate good values will be extended to 20,000 youths. The programmes will be for students awaiting their SPM examination results. The promotion and publicity for the Rakan Muda Programme will be organised on an on-going basis to attract youths to participate in activities that suit their interests. A sum of 81.8 million ringgit has been allocated for these programmes.
     
88.   The Government wishes to congratulate and record its appreciation to the national SEA Games contingent for their overwhelming success in attaining the nation's best ever SEA Games performance, with 111 gold medals. Training efforts for our national athletes will be intensified to enable them to excel in the Asian and Olympic Games.
 
89.   Sports and recreational activities will be enhanced. As sports is for people of all ages, additional activities in the form of competitions for ordinary people will be organised. In addition, new sports activities such as extreme sports and motor sports will continue to be introduced through competitions and demonstrations. In 2002, Malaysia will host an extreme sports event at the Asian level. This new sport is aimed at attracting the interests of youths as well as to spend their time constructively and productively.
     
   

< top >

     
Combating Social Ills
     
90.   We have witnessed the increase in social ills in our society. Recently, the nation has been jolted by unprecedented acts of violence. The Kampung Medan incident has marred the unity that we have so painstakingly built up. Moral decadence among youths is a serious concern. The number of drug addicts and HIV-AIDS patients has increased. Criminals have become more violent.
     
91 .   The bitter experience of 1969 underscores the importance of fostering and preserving national unity. Programmes to create community awareness as well as build a sense of responsibility in addressing social issues will continue to be implemented. In this regard, a sum of 6.8 million ringgit has been allocated under the Ministry of National Unity and Community Development to carry out programmes under the Social Action Masterplan (PINT AS). This Plan incorporates measures to enhance cooperation and participation at all levels to ensure that every member of society leads a healthy and good quality life, free from social ills. An allocation of 7.7 million ringgit is provided for the National Social Service Programme under the Ministry of Youth and Sports to combat social ills among youths, particularly secondary school leavers.
 
92.   A sum of 312.4 million ringgit is allocated to eradicate drug and crime-related problems. Of this, an amount of 140.4 million ringgit is for crime prevention, mainly to combat drug smuggling and abuse, besides improving treatment for drug addicts. An allocation of 282,500 ringgit is provided for voluntary organisations, such as PEMADAM and PENGASIH. A sum of 172 million ringgit is provided to accelerate crime investigation through the use of modern techniques, such as DNA profiling to trace criminals.
     
93.   To assist voluntary non-governmental organisations to step up activities in AIDS prevention and drug abuse as well as the HOSPIS programme for treating serious cancer patients, the Government will provide a matching ringgit for ringgit grant for sums raised by these organisations, up to a maximum of 1 million ringgit. A special allocation will be provided for drug addicts affected by HIV-AIDS.
     
94.   Public awareness on the hazards of smoking is still low among the rakyat. A matter of serious concern is the spread of smoking habit among school children. Recognising this, I propose that import duty on cigarettes be increased from 180 ringgit per kilogramme to 216 ringgit per kilogramme while excise duty be increased from 40 ringgit per kilogramme to 48 ringgit per kilogram me. The Government is aware that this measure may increase smuggling activities. In this respect, a more aggressive and effective approach will be taken to ensure that smuggling activities are curbed by increasing administrative efficiency of the Customs Department and other enforcement authorities.
     
95.   The Government acknowledges and appreciates the spirit of volunteerism and commitment shown by various voluntary organisations. In this regard, an allocation for an operating grant of 22.9 million ringgit and a development grant of 6 million ringgit are provided to 375 voluntary welfare organisations. Among the new facilities, four day-care centres for the elderly managed by NGOs are expected to commence operation by 2002. A new institution, Kompleks Penyayang BAKTI Sungai Buloh has been established to provide care and protection for children, the elderly and single mothers. In addition, about 10 million ringgit is allocated for voluntary organisations to provide haemodialysis services.
     
Public Service Sector
     
96.   The Government appreciates the contribution of the civil service in spearheading development efforts. The Government is also aware that with the support and commitment of civil servants, policies and programmes for the benefit of the rakyat have been implemented effectively. I believe the excellence and professionalism of the civil service will continue to be enhanced, particularly in the light of greater difficulties in both the external and internal environment. This should not dampen our spirit, instead it should serve as a challenge for the civil service to strive harder towards achieving excellence. The nation needs the dedication of all civil servants. There is no need to resort to armed struggle. Our struggle is more of attaining economic achievements and upholding the nation's sovereignty. We should strengthen our resolve, redouble our efforts, inculcate trust and sincerity as well as promote an excellent work culture.
     
97.   As a record of appreciation for the commitment and dedication of the civil service, the Government will award a bonus of half month salary or at least 1,000 ringgit for 2001. Half of the bonus will be paid in October and the other, in November. I hope the bonus will be able to meet expenses for the coming festivals as well as for those with school-going children, when schools reopen. The Government is concerned about the income of its officers and staff. As such, if its financial position permits, the Government can consider a salary increase for the civil service. The last salary revision was implemented in 1995. The Government further increased the basic salary by 10 percent in 2000. Now, only two years after the last revision, the Government has decided to once again increase salaries in 2002, by another 10 per cent, representing an increase in income of 1.2 months a year. This increase is possible given the higher Government revenue as a result of economic growth and the Government's prudent financial management. We hope this bonus payment and the salary increase together with the abolition of the limit on bonus payment by the private sector will contribute to increasing the purchasing power of the majority of the rakyat. I also hope that this will encourage us to double our efforts towards increasing productivity and thereby, contributing to growth of the economy.
 
   

< top >

     
98.   To improve the scheme of service of Medical Officers in the public sector, the rate of Overtime Allowances will be increased from 25 to 50 per cent, effective 1 October 2001. This increase is expected to further enhance the motivation of Medical Officers burdened with additional work as well as minimise wage differentials between Government Medical Officers and those in the private sector.
     
99.   In appreciation of the contribution of volunteers in the security forces, particularly the Malaysian Armed Forces, Royal Malaysian Police and Civil Defence, the Annual Gratuity Rate for officers and personnel will be increased from 400 ringgit to 520 ringgit, representing an increase of 30 per cent, effective 1 October 2001.
     
100.   For volunteers in the Malaysian Armed Forces, the specialist grant for officers, which has not been revised since 1958, will be increased by 100 per cent from 150 ringgit to 300 ringgit annually. For those in other ranks, the increase is from 100 ringgit and 75 ringgit to 200 ringgit, effective 1 October 2001.
     
Development of Islam
     
101.   The Government continues to uphold the understanding and knowledge of true Islam and the development of the Muslim community in this country. In this connection, the Government will continue to provide adequate allocation under Jabatan Kemajuan Islam Malaysia (JAKIM) to implement various development programmes for the benefit of the Muslim community. A total of 294.3 million ringgit is allocated for the implementation of programmes for the development of family institutions and the provision of social services, greater understanding and assimilation of Islam, education programmes in religious schools and AI-Quran and Fardhu Ain classes. In addition, the Government will also continue to implement several development programmes under JAKIM. These include the building and renovation of mosques and Islamic training complexes, the building of religious schools as well as the development of an information system.
 
     
102.   In line with the desire of the Government to meet the required number of Muslims who are able to recite and memorise the AI-Quran, the capacity of Maahad Tahfiz Darul Quran in Kuala Kubu Bharu, Selangor will be increased when the second phase of the construction of the Maahad Tahfiz is completed.
     
103.   The Government also intends to implement more programmes on the understanding of the correct teachings of Islam for students in public and private higher learning institutions, among officers and personnel in Government as well as in the private sector. Towards this end, courses will be conducted on strengthening religious beliefs, spiritual development, appreciation of Islam and human development. The objective of the Government is to establish a religiously correct Muslim community. This will only be achieved if there is no deviation by those given responsibility to teach Islam. For those who propagate teachings that are against the true teachings of Islam, such as hatred for other Muslims, rejecting brotherhood of Muslims and branding other Muslims as infidels and spreading slanders, the allocation will be terminated. The allocation provided is for purposes of propagating the knowledge of Islam and not otherwise.
     
Implication of Tax Proposals
     
104.   The reduction and abolition of tax proposals will result in a loss of Government revenue totalling 1.2 billion ringgit. At the same time, the Government has increased expenditure as a measure to stimulate domestic economic activities. Thus, the Government must seek other sources of revenue to strengthen its financial position. Therefore, I propose that:
i.   the threshold for the imposition of service tax for restaurants, bars, snack bars and coffee houses, private clubs and advertising companies be reduced from an annual sales turnover of 500 thousand ringgit to 300 thousand ringgit and above; and
ii.   the threshold of 300 thousand ringgit annual sales turnover for the imposition of service tax on professional services be reduced to 150 thousand ringgit. In this respect, the Government will step up enforcement and conduct street surveys to curb tax evasion.
     
105.   In addition, the Government has provided substantial subsidies totalling 4.4 billion ringgit, of which more than half is petroleum subsidy. To reduce the financial burden of the Government, I propose that this subsidy be reduced by increasing the retail price of diesel by 10 sen per litre. In addition, the subsidy for diesel is provided only for diesel supply for the use of land transport, Government and fishing boats. In line with this increase, I also propose the retail price of petrol be increased by 10 sen per litre. These proposals are effective from 20 October 2001.
     
   

< top >

     
IV. ECONOMIC PROSPECTS FOR 2002
     
Mr. Speaker Sir,
106.   Global economic growth and world trade in 2002 are expected to remain uncertain. We are unsure whether the United States will be able to avoid an economic recession. However, we also expect that the recovery ofthe US economy will be delayed. The prospect for recovery of the Japanese economy is also not encouraging. Given the less favourable external environment, the nation's economic growth will be driven by domestic economic activities. Our economic growth is expected to increase between 4 to 5 per cent in 2002 with Gross National Product (GNP) remaining high at 370 billion ringgit. All major economic sectors will continue to record growth, mainly led by the manufacturing and services sectors. The increase in the growth of the manufacturing sector is expected to be driven by the recovery in global demand for electronics while the services sector will be supported by the continued pick-up in domestic economic activities. Domestic demand at current prices is expected to increase by 5.5 per cent, mainly on account of the growth in private sector expenditure of 6.6 per cent. The public sector, however, continues to grow, albeit, at a slower rate of 3.1 per cent.
     
107.   The economic prospects remain encouraging given the nation's strong economic fundamentals. External reserves has stabilised at a higher level of 113.7 billion ringgit or 29.9 billion US dollars as at 15 October, sufficient to finance 4.7 months of retained imports. The external trade balance recorded a surplus for 46 consecutive months since November 1997 through August this year. Gross National Savings is still at a high level at one-third of GDP. The banking system continues to strengthen with the risk- weighted capital ratio at 12.6 per cent, which is above the international standard of 8 per cent. The level of short-term debt is low at 5.2 per cent of GDP, while the debt service ratio remains sustainable.
     
108.   With higher GDP growth, per capita income is expected to increase by 4.7 per cent to 13,962 ringgit in 2002 compared to 13,333 ringgit in 2001. With inflation at a low level, per capita income in terms of purchasing power parity will increase by 5.1 per cent to 9,403 US dollars in 2002 from 8,944 dollars in 2001, reflecting the higher purchasing power of the rakyat.
     
109.   The Government will continue to implement unconventional measures based on our own approach which have proven to be successful and effective in managing the economy. In this regard, the ringgit peg will be maintained. However, the Government will continue to monitor domestic and external developments to ensure
that the value of the ringgit is consistent with the nation's macroeconomic fundamentals. Given the volatility in foreign exchange markets, the Government will ensure that the ringgit exchange rate remains stable.
     
110.   The growing difficulties in the global economy occurred at a time when the nation is just into the first year of the Third Outline Perspective Plan and the Eighth Malaysia Plan. To achieve the long-term objective of Vision 2020 for Malaysia to become a developed nation, both Plans envisaged an average annual growth rate of 7.5 per cent. Since economic growth for 2001 and 2002 are expected to be lower, we have to redouble our efforts to accelerate growth for the remaining years of the Plans.
     
111.   With the nation's economic fundamentals remaining strong, we are confident of achieving our growth targets. However, we must redouble our efforts towards realising this objective. Our experience during the recent financial crisis has shown that we can successfully overcome the worst recession, when economic growth contracted by 7.4 per cent in 1998. The economy was able to rebound quickly in the following years, enabling us to achieve the average growth target of 7 per cent under the Second Outline Perspective Plan.
     
CONCLUSION
     
Mr. Speaker Sir,
     
112.   This year's Budget is tabled amidst an extremely challenging time with increasing volatility in the external environment. While our economic fundamentals remain strong, there exists several constraints in the domestic economy that have to be overcome. We also face problems of social ills and threats to national unity. Peace and stability are the cornerstone of economic progress. Good planning and excellent development plans will come to nought, if there is no peace and harmony. Extremism has no place in our society. We have a truly democratic process. Every rakyat has the right to elect the government through the ballot box without resorting to violence or force of arms or creating chaos. Extremism is against the principles of all religions, more so in Islam, which promotes peace and prosperity, Islam abhors those who create chaos as in verse 77 surah AI-Qasas as follows: "and do thou good, as Allah has been good to thee, and seek not mischief in the land, for Allah loves not those who do mischief', It is not mentioned in the verse that we should do good only to Muslims. As long as others are not our foes, we should do good and be fair to them.
     
Mr. Speaker Sir,
     
113.   During the past four decades, the nation has achieved excellent economic progress and has been a model to the world. The progress that we have achieved has not come easy. It is also not solely attributable to our abundant natural resources. Our success has been accomplished through our planning, our policies and strategies, our efficient administration untarnished by widespread corruption, our peace and stability as well as our upholding of religious values. Of utmost importance is the rakyat's unwavering support and untiring efforts as well as their sacrifice. Keranamu Malaysia.
     
114.   Social cohesion builds a strong nation. A society which is self-reliant, upholds noble values and practises good ethics, tolerant, caring and just as well as equipped with knowledge will propel the nation towards greater progress and achievements.
     
115.   We pray to the Almighty to bless us with strength, resolve and perseverance to face all adversities, bestow us with courage and determination to strive for prosperity and uphold our nation's sovereignty. With the Almighty's blessings, we will be able to build a peaceful, progressive, harmonious nation, free from foreign pressure and well respected by all.
     
Mr. Speaker Sir,
     
    I beg to propose.
     
   

< top >

 
 


A service brought to you by MIR Communications Sdn Bhd in cooperation with
Deloitte KassimChan Tax Services Sdn Bhd and Deloitte Touche Tohmatsu Tax Services Sdn Bhd.
© October 2001