[ET]

M'sia injects $4.2b

KUALA LUMPUR - MALAYSIA'S government unveiled plans Thursday to inject RM10 billion (S$4.2 billion) to stimulate the sagging economy and avert a recession.

This will bring the total stimulus spending to RM17 billion after a RM7 billion package announced in November. But some economists warned it may be insufficient to keep recession at bay.

The proposed second stimulus plan was tabled in Parliament by Deputy Finance Minister Kong Cho Ha for debates before it is approved by lawmakers.

Mr Kong said RM5 billion will be used for development and the rest for operational expenses. He said the government may increase the amount later but didn't give further details.

Many economists have predicted Malaysia's trade-driven economy may plunge into a recession this year, its first since 1998.

The economy grew a dismal 0.1 per cent in the fourth quarter of last year, bringing full-year growth to 4.6 per cent, falling short of the official target of 5 per cent.

The central bank has slashed interest rates three times since November and the government has indicated it may cut its 2009 growth forecast of 3.5 per cent amid the protracted turmoil in the global economy.

AmResearch in a recent report estimated the government needs at least RM40 billion in increased spending, or five percent of gross domestic product, to prevent the economy from contracting this year.

It said the manufacturing slump would continue until September.

AmResearch urged the government to consider making 2008 a tax-free year to ease the public's burden and give cash or introduce a cash-bonus system for middle and low-income workers, families with school-going children, and farmers. -- AP

source: Msia injects $4.2b