Prime Minister Datuk Seri Abdullah Ahmad Badawi (left) shakes hands as he hands over his finance minister's post to Deputy PM Datuk Seri Najib Tun Razak in Putrajaya on Monday. Najib announced plans Monday to prop up the stock market and lure more foreign investment.
Malaysia is not in financial crisis and “we should not talk ourselves into one,” said Finance Minister Datuk Najib Tun Razak.
However, Gross Domestic Product (GDP) growth for 2009 would be reviewed downwards from the projected 5.4% in the view of the worsening global financial crisis, Najib said on Monday.
"While we are confident of the resilience of our financial sector, we are mindful that the financial turmoil in markets elsewhere will bear consequences on the real economies there as well as globally.
“As a result, the Malaysian real economy will inevitable be negatively impacted,” he said during his keynote address at the Khazanah Megatrends Forum on Monday.
The Government would also inject RM5bil to double the size of ValueCap Sdn Bhd set up in 2003 to invest in undervalued companies.
Foreign Investment Committee (FIC) guidelines would also be reviewed to attract more foreign investors especially in property and commercial sectors, said Najib, giving a preview of the measures to be put in place to cushion the Malaysia from the impact of external developments.
The details of a financial stabilisation plan would be presented during the winding up speech in Parliament on Nov 4 as the global markets were still volatile and the Government and Bank Negara needed time to study the developments carefully before finalising the plan, he said.
Other measures include Bank Negara’s announcement to guarantee all deposits up to December 2010 and the strengthening of Small and Medium Enterprises and related financial institutions.
“Part of the government policy response to manage the global and financial crisis is to ensure that our global competitiveness in attracting foreign and domestic investment is in-tact.”
He said the liberalisation of the service sector, which was the main GDP contributor, would be detailed and based on a proposal by the International Trade and Industry Ministry to be proposed soon in Cabinet. Najib expressed confidence that domestic consumption would remain robust but added that short-term measures to tackle external financial turmoil, should not come at the expense the country’s long-term development imperatives and competitiveness.
“We are mindful that we have to take steps to ensure long term competitiveness whilst managing short term crisis, but we must not forget our long term position as a nation that is able to compete much more effectively,” he told reporters.