KUALA LUMPUR: Malaysia will inject $4.6 billion to bolster its stock market and will spend millions more dollars on infrastructure projects, Prime Minister Najib Razak said Monday, announcing a fresh bid to stimulate the slowing economy.
Najib, who is also finance minister, said 20 billion ringgit ($4.6 billion) would be parked under the dormant equity investment firm, ValueCap, which was set up in 2002 to invest in undervalued Malaysian firms.
The country has seen a 9.0 percent plunge in its stock market this year.
“To protect the economy from the risk [of global uncertainty and concerns over China’s economy], the government will implement the various measures to maintain the growth momentum,” he said.
Malaysia’s economy grew at its slowest pace in nearly two years in the second quarter, amid a plummeting currency and political turmoil.
Najib said the ringgit had declined 26.3 percent against the dollar compared to a year earlier.
The currency has declined partly due to political uncertainty stemming from allegations of financial impropriety involving the prime minister, which he has denied.
The second-quarter growth was 4.9 percent, down from 6.5 percent in the same period last year, as both exports and private consumption weakened.
Future growth prospects for Southeast Asia’s third-largest economy — which is heavily reliant on energy exports — have been clouded by the slump in world oil prices of up to 52 percent.
Najib, however, said Malaysia would not impose capital controls because the economy was stronger compared to the Asian financial crisis of 1997/98.
The government “has no intention to introduce capital controls”, he told reporters.
Najib also announced that the industrial sector would be exempted from import duties on items like spare parts and equipment used for research and development.
An extra 80 million ringgit would be allocated to promote the country to bolster the tourism industry, an important foreign exchange earner.
Chinese tour groups arriving between October 2015 and March 2016 would not need visas.
To strengthen domestic economic activity, Najib said 1.1 billion ringgit would be used to upgrade infrastructure at popular tourist sites in Kuala Lumpur such as Lake Gardens.
Another 4.5 billion ringgit would be spent to build resorts including water theme parks in the southern state of Johor bordering Singapore, Najib said, giving no timelines.
In an attempt to counter the rising cost of living especially among poorer people, more food discount shops would be opened.
The economy was expected to post growth of 4.5 percent to 5.5 percent this year, he said.