Malaysia Economic Full Assignment 1

8/12/2019 Malaysia Economic Full Assignment 1

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1.0 Introduction

Government budget is a legal government document where stated the estimation of

revenue and expenses for a financial year that is often passed by the legislature, approved by the

chief executive. Malaysia yearly budget is usually presented by our nation Finance Minister on

the month of October. It is an economic and finance planning which describe the nation

economic position on the particular year and economic prospect for the following year.

Beside describe issues and challenges faced and steps taken by government to overcome

the issues, budget also describe resources nation revenue which the revenue spent for

maintenance and development purpose with the sources of financing which includes taxes and

loan within and outside the country.

Budget speech and annual economic report are complete documents which explain the

economic and finance data for that particular year and projection for coming year.

1.1 Budget

Budget is a statement of revenue and government expenditure a particular year. Revenue

and expenses are two basic elements in government budget. Revenues are obtained from taxes in

the case of the government and government expenses are included government consumption,

government investment expenditure and transfer payment. There are three type of government

budget such as balanced budget, surplus budget and deficit budget.

Balance budget is when government revenue equal to government expenditure. This

situation normally does not exist. Surplus budget is when anticipated revenue exceeds

expenditure. This situation normally happen when government reduces the expenses, increases

the tax or both. Deficit budget is anticipated expenditure greater than revenue. This situation



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normally happen when government increase the expenses or reduce the taxes or implement both

together. Deficit will financed by loan from financial institution.

1.2 Budget Policy

Budget is an annual planning which important to create economic growth and income

distribution in steady financial framework. There are objective and the importance of budget

policy presented in every year such as toward efficient economic management, controlling

expenditure, economic growth, the price stability and controlling inflation. Generally, objective

of annual budget is leads to stability and growth in economic and finance of nation.

The aim of efficient economic management is to achieve the development goal. The

important role of economic management to ensure financial position and balance of payment is

steady. Private sector and non-government association have to play role as engine of role and

government has to play role as supporter by providing good facilities in order to achieve good

economic growth.

Expenditure controlled is the main important target in budget policy. It stated that

development expenditure and maintenance expenditure are increase rapidly which unable

accommodated by revenue collected. There are many steps taken in order to reduce the

government expenditure since year 1980. Besides that, there are step taken to absorb bank excess

liquidity and stem consumer consumption expenditure.

Price stability and inflation control are important goal in annual budget. Stable economic

condition will lead to an increase in domestic demand which cause an increase in income and

accent price increase and increase forecast inflation. The effort to stem inflation is taken by

controlling price level in order to form price stability in market and encourage saving to attract

money available in the market.



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Taxation and public expenditure are two element used in fiscal policy. The aim of fiscal

policy implementation in budget is to achieve economic growth or remain the growth, increase

production capacity; controlling price level and inflation pressure and ensure equitable

distribution. Fiscal policy is implemented by restructuring tax system, update the existing tax

incentive and erect capital market.

2.0 Budget Trends

Public sector spending in Malaysia includes spending of federal government; state

government and. Public sector spending can be divided into two groups which are operating

expenditure and development expenditure. Operating expenditure consists of service goods

expenditure and transfer payments. The development expenditure is for model goods.

The total expenditure of government

Tahun Jumlah perbelanjaan (RM million)

2009 206, 582

2010 204, 415

2011 229, 010

2012 249, 549

2013 244, 127

Source : www.treasury.gov.my

The table 1.1 shows the total public sector expenditure of Malaysia from 2009-2013. From

the table we can see that the total expenditure of the government in public sector decreased

by 1.04% from year 2009 to 2010. The expenditure shows an increasing trend from the year

2010 to 2012. The increase is about 22.07 %. By the year 2013, the total public sector

expenditure decreased about 2.17%. Government allocated a amount of RM 264.2 billion for

the expenditure in public sector for the current year, 2014.



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2.1 Public Sector Spending

Operating expenditure is the expenditure of the Government or government recurrent

expenditure for management and administration. This includes expenses for salaries

(emoluments) civil servants, debt service, pensions and benefits, subsidies to producers and

consumers, and grants and transfers to the State Government and statutory bodies. Government

expenditure does not depend on the level of national income. While national income increased or

decreased, government expenditure remains the same.


Table 1.1 shows the governments operating expenditure from the year 2009 to 2013. The

total operating expenditure increased rapidly from year 2009 to 2013, although the expenditure

experiences fall in the year 2009 to 2010 and 2012 to 2013. Based on the table 1.1, the



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government spent more on emoluments compared to the other criteria. The trend of expenditure

on emoluments shows increase from year 2009 to 2013 with a increasing percentage of 37%.

While, the expenditure on refunds and write-offs are the lowest among other expenditure. It

shows an increasing trend from the year 2009 to 2012 and fall slightly from the year 2012 to

2013. The 2014 Budget will allocate a total of RM264.2 billion to implement programmes and

projects for the well-being of the rakyat and national development. Of this amount, RM217.7

billion is for Operating Expenditure while RM46.5 billion for Development Expenditure.

Under operating expenditure, RM63.6 billion is allocated for emoluments and RM36.6

billion for supplies and services. Meanwhile, RM114.5 billion is allocated for fixed charges and

grants, while RM1.4 billion is for the purchase of assets. The remaining RM1.5 billion is for

other expenditures.

2.2 Development Spending

Development expenses are expenses incurred to promote economic growth and social

development. Development expenses include expenses to build schools, airports, and

infrastructure. Typically, the level of government expenditure depends on the economic situation.

When the economy goes into recession, the government will increase the amount of development

expenditure to boost economic growth.



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Based on table 1.2, the total development expenditure increased from the year 2009 to

2010 by 6.61% but it show a constantly decreasing trend from the year 2010 to 2013. The

percentage in decrease from 2010 to 2013 is 20%. From the table above, we can conclude that

expenditure for economic services are higher than other service sectors.

In the budget allocation of 2014, government allocated a sum of RM46.5 billion for development

expenditure. From the Development Expenditure of RM46.5 billion, a sum of RM29 billion is

allocated to the economic sector. A sum of RM10.5 billion is allocated to the social sector for

education and training, health, welfare, housing and community development. In addition,

RM3.9 billion is allocated for the security sector. The balance of RM1.1 billion is for general

administration and RM2 billion for contingencies.



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3.0 Public Sector Revenue

3.1 Tax Revenue

The current tax system in Malaysia is called the self-Assessment system (SAS).SAS was

implemented in 2004 as a result of a tax reform aimed to streamline the tax-administration

system. The self-assessment system requires tax-payers to determine their own tax liabilities and

make payments accordingly.

The government tax revenue is collected from two sources; namely the tax revenue and the non-

tax revenue. The tax revenue can be further divided into two categories; direct tax and indirect

tax. There are five structures under the direct tax.

First is income tax. According to the tax system in Malaysia income tax is defined as “a

resident individual is subject to tax on income accruing in or derived from Malaysia and income

received in Malaysia from outside Malaysia, while a non-resident individual is subject to tax on

income accruing in or derived from Malaysia (Tax system in Malaysia, ASEAN tax system

seminar, 2010)

Section 4, income tax act 1967 (ITA 1967) classifies income that is subject to gains or profit

from a business for whatever period of time carried on, gains or profit from employment

dividends interest or discounts, rents, royalties or premiums and pensions, annuities or other

periodical payments.

Second is corporate income tax. It is defined as; a tax levied on the income of a legal

entity. In Malaysia resident companies are subject tax on income accruing in or derived from

Malaysia. Taxable incomes include gains from business dividends, interest and rentals, royalties,

premiums and other gains and profits. Third is stamp duty. Stamp duty is a tax imposed on legal

documents, usually for the transfer of assets or property. The transfer of property is only legal



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once the documents have been stamped. According to the Malaysian definition “stamp duty is

imposed on legal, commercial and financial documents that are listed in the first schedule of the

stamp Act 1949.documents subject to duties are called instruments” (Inland Revenue Board of

Malaysia).The fourth category is estate duty. Estate duty is a tax levied on a person’s assets; it

can include cash and non-cash assets. The tax is usually imposed for deceased person’s assets.

Finally direct tax also includes Real property gains. It is defined as “a tax imposed on the

chargeable gain obtained from the sale of property”. Chargeable gain is a profit that a person

receives when he/she sells of a property”. The second tax category is indirect tax. It consists of

first Import duties. Import duties are tax’s levied on goods imported into Malaysia. Duties are

calculated based on complete shipping value. Duty rates vary between 0% and 50% and it

averages 5%.However some goods are exempted from import duties for example electronic

products and musical goods. Second is Export duties. Export duties are tax levied on goods

exported out of the country. Export duty tax (revenue) was measured in 2010 at a rate of

1.65%.Third section under indirect tax is Excise duty. According to MIDA (Malaysian

investment development authority) excise duties are levied on selected products manufactured in

Malaysia which namely cigarettes, tobacco products, alcoholic beverages, playing cards,

Mahjong tiles and motor vehicles. The last two tax categories under indirect tax are the sales tax

and service tax, both of which substantially contribute to the annual tax revenue. In Malaysia

sales tax are levied on manufacturers or importers. Licensed manufacturers are supposed to

charge 10% sales tax on the value of their manufactured products. Under sales tax certain goods

are exempted for example raw materials and machinery used in production. While the service tax

is a tax imposed on specific services called taxable services. In Malaysia it is imposed on certain

goods such as food, drinks and tobacco as well as professional and consultancy services.



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The diagram below illustrates the trend in tax revenue collection from the year 1990 to

2013.It can be observed that the tax revenue collection gradually increases every year except for

a few years which indicate negative trend. In this report the revenue collection from the years

2008-2012 will be analyzed.

In 2008 the Inland Revenue board Malaysia (IRBM) posted record revenue collections

compared to previous years. The overall tax collection increased by RM15.948 Billion in 2008

from RM 74.703 Billion collected in 2007.This indicated a 21.35% increase in tax revenue. The

increase in tax revenue was due to strong economic performance, favorable business conditions

and increasing oil price.

The IRBM collected a total of RM 90.65 billion in taxes in 2008.It is worth noting that

this was direct and indirect tax collections. The graph below illustrates the IRBM revenue

collection from 2004-2008.It can be observed that revenue collection gradually increased every

year. Tax revenue collection rose by RM 42 billion from 2004-2008.

The tax revenue for 2008 can be broken down into segments. It includes income tax

(Company, individuals, petroleum, corporation, organizational, trust bodies and withholding tax)



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and other taxes such as stamp duty, Real property gains tax (RPGT), Labuar offshore business

activity tax, and estate duty and business registrations. Furthermore the contributions of the

various taxes varied differently. The biggest contributor to the total tax was company tax which

contributed RM46.90 Billion/51.74%.Followed by petroleum tax (RM24.19 Billion/26.69%) and

then individual tax (RM 14.35 Billion/15.83%).On the other hand the real property gains tax

revenue declined by 60% from 2007 to 2008.This was because the real property gains tax (RPGT)

was no longer imposed in 2007 however in 2008 the RPGT was imposed once again. The table

below shows the revenue collection between 2007 and 2008.

Table 1: Collection of Direct Taxes in 2008 and 2007

Source: www.tresury.gov.my

In 2009 the total tax revenue received by IRBM was RM88.40 Billion.in comparison to

2008 the revenue decreased by RM2.25 Billion. This was due to the global economic crisis that

started at the end of 2008.On the other hand the revenue collection in 2009 exceeded the

government estimate of RM78.73 Billion (After tax refund).If the tax revenue is broken into

segments, Company tax still accounts for a large portion of the revenue collection (RM 40.27

Billion/ 45.55%) followed by petroleum tax (RM 27.23 Billion) and individual tax of RM 15.57

Billion. However in comparison to 2008 company tax declined substantially by around 6.19%

while petroleum tax increased by 4.11% and individual tax increases marginally by 1.79%.



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In the aftermath of the economic crisis naturally the tax revenue collected in 2010 declined. Total

gross tax revenue was RM86.50 Billion and this contributed 53.35% to total estimated

government revenue. On the other hand the net direct tax revenue (deduct tax refund fund of

RM6.96 Billion) exceeded government estimates of RM76.16 Billion).The gross tax collection

from 2008-2010 has been steadily declining while the percentage of gross collection in Federal

Government revenue has been marginally declining. If we attempt to analyze the revenue

collection by components, the company tax revenue was RM 43.80 Billion which accounts for

50.64% of total tax revenue. However it is worth noting that company tax revenue has been

declined from 2009 to 2009 and then increased substantially in 2010.Company tax decreased

from RM 46.90 Billion to RM 40.27 Billion and then increased to RM43.80 Billion.

The petroleum tax revenue which is one of Malaysia’s main export commodities was RM

18.71 Billion. The petroleum tax revenue steadily declined from 2008 to 2010 due to two reasons,

first there was a drop in crude oil and natural gas price and second, the tax assessment method

for upstream petroleum companies changed. Individual tax revenue collected in 2010 was

RM17.80 Billion. Other tax revenue collections were corporate tax (RM 0.38 Billion) and stamp

duty (RM 4.20 Billion).

The trend of low tax revenue collection changed in 2011.The IRBM posted record tax revenue

collections. The tax revenue collected was recorded at RM109.609 Billion, which was the

highest in history. The 2011 tax revenue contributed 59.11% of the total estimated federal

government revenue. Most of the tax segments recorded an increase in tax revenue compared to

2009 and 2010.The company tax revenue which is still the largest segment by revenue collection

was RM 55.08 Billion, it increased from RM43.80 Billion in 2010.Furtheromore the petroleum

tax revenue substantially increased from RM 18.71 Billion in 2010 to RM 27.75 Billion in



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2011.The individual tax revenue also increased marginally from RM 17.80 Billion in 2010 to

RM 19.38 Billion in 2011.Other tax segments that increased was Stamp duty, withholding tax

and real property gains tax.

The tax revenue collection in 2012 surprisingly exceeded that tax collection in

2011.Revenue collection was RM 124.7 Billion. This figure exceeded the government revised

estimate of RM123.8 Billion. Furthermore from 2011 the tax revenue increased by 13.8%.This

high revenue comes at an appropriate time when the government is trying to reduce its fiscal

deficits.

In conclusion the tax revenue collection (both revenue and non-tax revenue) illustrate a gradual

increase over time from 1990 to 2013.Revenue declined from 2008-2010 due to the effects of the

financial crisis, however from 2011 it has improved markedly.

3.2 Non-Tax Revenue

The other tax structure under tax revenue is the Non Tax revenue. It includes fees for

issue of licenses and payment, fees for specific services, proceeds from the sale of government

assets, rental of government property, bank interest, returns from government investments and

fines and forfeitures.

4.0 Public Sector Expenditure

4.1 Federal Government Debt

The federal government debt is defined as the total amount of money that a federal

government owes to creditors. Basically, there have two type of federal government debt which

is domestic debt and external debt. Indeed, a federal government debt exists as a result of federal

government shortfalls, or deficit budgets in which the government's expenses exceed its revenues.

However, there is a difference between deficit and debt which deficit does not mean as debt.



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In Malaysia, the Minister of Finance will present the annual budget in parliament in a

particular date to explain annual economics report and the allocation funds for public sector

expenditure and the expected revenue for next year. The annual budget presentation in Malaysia

frequently tabled at the end of the year. Indeed, if the deficit budget was implemented, one of the

financing resources that federal government will be loan. Therefore, the loans have been created

the federal government debt.

4.2 Trends of Federal Government Debt

In the early 90's, the economy of Malaysia is booming with sustainable economic growth.

In the same time, the trend of federal government debt declined from the early 90's at a level of

around 80% relative to GDP until the lowest in 1997 at 32%. Meanwhile, the federal government

debt as a percent of GDP, also known as debt-to-GDP ratio, is the amount of national debt a

country has in percentage of its Gross Domestic Product. It is one of the key indicators that used

to measure the ability of payback of a country. The graph below show the overall trends of

federal government debt in a certain period.

0

10

20

30

40

50

60

70

80

90

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

P e r c e n t o f G D P

Year



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Based on the graph above, we found that the federal government debt to GDP was decreasing

significantly started from the year 1990 until year 1997. However, the debt was slightly

increased after year 1997. This is because the Southeast Asian economic crisis was happening at

year 1997. The Southeast Asian economic crisis in 1997 induced the government debt increased

consistently since the government had to implement the deficit budget to boost the domestic

economic downturn. Therefore, the federal government debt turn back from as low as 32 %

(1997) to the level of around 53% in 2009. In addition, the most significant changes of federal

government debt to GDP was year 2009 which the changes of around 29.48% from year 2008 to

year 2009. This is due to the global financial crisis happened in year 2008.

Basically, the federal government will borrow the domestic loan compare to external loan.

In additional, both of the domestic debt and external or foreign debt also exists short-term debt

and medium and long-term debt. Generally, the short term debt is defined as the debt which had

one year period and the medium and long-term debt is involve more than one year. The table 2.1

below shows the total of federal government debt for a certain latest years.



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Table 2.1 Total of Federal Government Debt 2008 – 2013

Central Government Debt Unit

Description 2008 2009 2010 2011 2012 2013

Current liabilities, total RM million 306,437 362,386 407,101 456,128 501,617 539,858

Short-term debt RM million 4,320 4,320 4,320 4,320 4,320 4,320

Medium and long-term debt RM million 302,117 358,066 402,781 451,808 497,297 535,538

Domestic debt RM million 286,121 348,600 390,356 438,025 484,769 523,095

Short-term debt RM million 4,320 4,320 4,320 4,320 4,320 4,320


Foreign debt RM million 20,316 13,787 16,746 18,105 16,848 16,763

Short-term debt RM million 0 0 0 0 0 0


Foreign debt by currency

USD RM million 12,726 7,072 10,156 11,157 10,782 11,120

Yen RM million 7,070 6,586 6,500 6,874 6,013 5,193

Other RM million 520 129 90 74 52 450

Debt guaranteed by Federal Government RM million 69,236 84,315 96,907 117,108 143,109 156,808

(Source: Bank Negara Malaysia)

According to the table, the total of federal government debt from year 2008 to year 2013

shows a positive increasing trend. The total debt for year 2008 is RM 306,437 million and

increased to RM 539,858 million in year 2013. Generally, up to fourth quarter of year 2013, the

federal government debt in total has reached around RM 540 billion or approximately 54.8% of

nominal GDP. With the constants trend of short-term debt, we found that the increasing of total

federal government debt is due to loan of medium and long-term debt. Besides that, we also

found that the domestic debt which is primarily denominated in ringgit, accounts for over 90% of

total debt for every years. The ratio of foreign holdings of federal government debt has been



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rising steadily since 2005, but it is still at a fairly low level. Meanwhile the federal government

external debt will not significantly affect the whole economy of Malaysia.

According to the Malaysia Economic Report 2013/2014, the government will ensure that

the debt level remains sustainable through sound macroeconomic policies, prudent debt

management strategies as well as strict adherence to fiscal rules and regulation. Although the

debt level has remained high, especially since the 2008 global financial crisis, debt servicing

capacity is within the prudent limits.

In additional, the second thrust of 2014 Malaysia Budget presentation is to strengthen the

fiscal management. To enhance the budget management, the Government established the Fiscal

Policy Committee (FPC). Meanwhile, the role of Fiscal Policy Committee (FPC) is to strengthen

the Government’s financial position, ensure fiscal sustainability and long-term macroeconomic

stability with the aim of achieving a balanced budget by 2020. Besides that, the Government will

also ensure that Federal debt level will remain low and not exceed the debt ceiling of 55% of

GDP as mentioned in Budget 2013.

4.3 Loan Resource

Loan resources differ according to the types of internal and external loan. Internal loan

resources normally get by issue government bonds or securities or borrow from others loan

resources in country. The federal government can get loan by issued government securities,

treasury bills or investment certificates. Government security is an agreement contract between

government and borrowers. It is a long-term loan with maturity period more than one year.

Government securities issued with face value and interest is paid for every securities holder.

For Malaysia, the main loan resource is Employees Provident Fund (EPF) who contributes

almost 51% of national debt. Treasury bills are short-term loan with maturity period less than





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From the Economic Report 2013/2014, we can see that loan from treasury bills is almost

the same for 2009 to 2013 which is RM4320million. While for the investment certificates, it is

increasing sharply from 2009 to 2013, which is increase about 185% from RM56000million to

RM159500million. Government securities also increase from RM242270million in 2009 to

RM294931million in 2013. Domestic borrowings increase from 2009 to 2011 but started to drop

from RM45992million in 2011 to RM44799million in 2012 until RM44100 in 2013.

External loan resources usually come from external market loans. Loan is collected by

selling government securities in the international financial markets such as Tokyo, London and

New York. Syndicated loan from international market especially from developed country such as

United States, Japan and Germany is also a kind of loan resources. A syndicated loan is one that

is provided by a group of lenders and is structured, arranged, and administered by one or several

commercial banks or investment banks known as arrangers. External loan resources can also be

get through external project loan. External project loan is a loan given purposely to support

particular development projects that require large amount of expenditures. Asia Development

Bank and World Bank are the two main resources for external project loan.

4.4 Nation Debt

National debt is the sum of public sector’s external debt (included of federal external debt

and NFPEs) and private sector’s external debt. Non-Financial Public Enterprises (NFPEs) are

resident non-financial corporations or quasi corporations that are government owned or

controlled. In Malaysia, external debt is a part of the total debt that is owed to creditors outside

the country. Federal external debt is either long-term or medium-term funds borrowed from

foreign lenders. This can include private sources, other countries, and the International Monetary

Fund (IMF). External debt is created by fulfilling public sector funding included federal



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government, development agencies, and also Non-Financial Public Enterprises (NFPEs). A big

portion of national debt was purposed for public sector funding, including federal government

and NFPEs who always took away big percentage from national debt. Private sector funding had

also increase the external debt. Increasing in private sector funding reflects the increasing of

development projects launched by private sector. Dependency on external funding had worsened

Malaysia’s national debt. Until 3rd quarter of 2013, Malaysia’s national debt had reached

RM306632million.

Source: Economic Report 2013/2014



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From the external debt part from Economic Report 2013/2014, seems like United States

is Malaysia’s only external market loans resources since there are no statistic numbers for Japan

and United Kingdom. Loans from US had increased from 2009 to 2011 but then decreased from

2011 to 2013 which is RM10403million to RM9882million. While for the external project loans,

it began to decline and it reached RM6571million in 2013.From Budget 2014, we can clearly see

that borrowings made up 14.5% which is about RM38011million from the RM262151million of

total revenue of Malaysia

5.0 Public Sector and Privatization

Privatization is the opening up of an industry that has been reserved for the public sector

to the private sector including governmental functions like revenue collection and law

enforcement. Privatization can be explained by transfer of ownership from the public to private

sector, transfer of management of an enterprise from the public to private sector and withdrawal

of state from an industry or sector partially or fully.

The aim of privatization is to achieve higher micro-economic efficiency and foster economic

growth, as well as reduce public sector borrowing requirement through the elimination of

unnecessary subsidies. Reasons for privatization include reducing the burden on government;

strengthen competition, to improve public finances, to find infrastructure growth, accountability

to shareholders, to reduce unnecessary interference and more disciplined labor force.

Privatization in Malaysia

The wave of privatization in Malaysia began in 1983, when Prime Minister Mahathir

Mohamad publicity government's intention to initiate the privatization policy. This was followed

by the publication of Privatization Guidelines by the Economic Planning Unit (EPU) of the



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Prime Minister's Department in 1985. These guidelines are the official document on privatization.

In February 1991, the Privatization Master Plan (PMP) has been announced.

This plan set out the country's privatization policies. Privatization continues to be an

important part of the overall strategy of economic development. During the Seventh Malaysia

Plan period, the privatization programme contributed towards the growth and development of the

economy, in line with the private sector-led growth strategy and the Malaysia Incorporated

Policy. At the same time, the programme contributed towards promoting bumiputera

participation in business and commerce. In implementing this programme, emphasis was placed

on expanding capacities to develop the necessary infrastructure required to effectively promote

the development of industries and services and provide better comfort and access to users. In

formulating its privatization policy, the government aimed to achieve the following objectives

such as to relieve the financial and administrative burden of the government, to improve

efficiency and increase productivity, to facilitate economic growth, to reduce the size and

presence of the public sector in the economy and to assist in meeting the national development

policy targets

The privatization program continued during the Eighth Malaysia Plan as it has

contributed to increasing the efficiency and productivity of the privatized entities and,

consequently, to benefit the public and spur economic development. Emphasis will be given to

projects that have a viable high multiplier effect and at the same time, meet social objectives.

Steps will be taken to strengthen and streamline the implementation process as well as the

regulatory framework, to ensure the effectiveness of the privatization program.

In the Ninth Malaysia Plan, the Government and the private sector need to work closely

together to ensure continued economic growth. The implementation of the privatization program



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over the past two decades has provided a solid foundation for cooperation between the

Government and the private sector. The privatization program also contributed to the increase in

private sector participation in the economy and in turn makes the private sector the engine of

growth of the economy. However, there are some aspects of the privatization program will be

streamlined and improved to make it more effective.

In the Tenth Malaysia Plan, new wave of privatization with 52 projects worth at about

62.7 billion. Company under the Ministry of Finance Inc such as Percetakan Nasional Bhd,

CTRM Aero composites, Nine Bio Sdn. Bhd will be privatized. Under the budget 2014, the

government will continue to provide a conductive environment to attract more domestic and

foreign investment. The government’s efforts have led to an increase in privatization investment.

For example, the share of private investment to GDP has grown from 12.4% in 2010 to 16.7%

currently (Budget 2014). Private investment is expected to increase further to RM189 billion or

17.9% of GDP, particularly in oil and gas, textile industry, transport equipment and real estate

development.



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Reference

Bajet . Retrieved from http://www.treasury.gov.my/

Bank Negara Malaysia. (2014, April 30). Central Government Debt . Retrieved from Economic and Financial Data

for Malaysia.

Chamhuri Siwar, Suratman Kastin, & Norshamliza Chamhuri 2005, Ekonomi Malaysia, Edisi keenam,

Longman.P.Jaya.International Monetary Fund. (2011). General government gross debt (Percent of GDP). Retrieved from World

Economic Outlook Database.

Ministry of Finance Malaysia. (2013). Public Sector Finance. Retrieved from. Economic Report 2013/2014.

Unit, E. P. (2010). Rancangan malaysia kesepuluh (rmke-10). Economic Planning Unit .



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Appendix 1

khir tempoh

Hutang luar negeri yang belum dijelaskan / External debt outstanding

Jumlah

Nisbah

khidmat

bayaran6 (%)

Hutang jangka sederhana dan panjang1 / Medium and long-term

debt1

Hutang jangka pendek2 / Short-term debt2

Jumlah

Kerajaan Persekutuan /

Federal Government

PABK3 Sektor

swasta4 Jumlah

Sektor

perbankan5

Sektor bukan

bank6

End period

Jumlah

Nisbah

khidmat

bayaran7 (%)

Total

External debt

service ratio6

(%)

Total Total

External debt

service ratio7

(%)

NFPEs3 Private

sector 4 Total

Banking

sector 5

Non-bank

sector 6

2010 1Q 219,191 8.1 147,129 12,737 0.4 72,259 62,133 72,061 64,061 8,001

2Q 222,158 7.2 149,919 17,092 0.0 72,342 60,485 72,239 64,610 7,629

3Q 227,414 8.6 146,689 16,364 0.2 71,536 58,788 80,726 70,639 10,087

4Q 227,072 6.7 147,653 16,746 0.1 70,383 60,524 79,420 67,982 11,438

2011 1Q 233,476 10.1 142,352 15,935 0.3 65,015 61,402 91,124 78,905 12,220

2Q 241,533 8.4 149,265 16,167 0.0 67,373 65,726 92,267 81,070 11,197

3Q 263,283 12.4 157,898 18,089 2.8 70,457 69,352 105,385 93,317 12,068

4Q 257,364 10.3 153,611 18,105 0.0 69,647 65,859 103,753 92,302 11,451

2012 1Q 249,377 8.4 148,320 16,863 0.2 67,357 64,101 101,057 90,002 11,055

2Q 270,447 12.2 160,316 17,911 0.2 69,405 73,000 110,131 98,938 11,193

3Q 259,648 10.0 159,127 17,252 0.1 67,571 74,304 100,521 88,767 11,755

4Q 252,752 9.8 159,788 16,848 0.2 66,034 76,906 92,964 80,488 12,475

2013 1Q 264,437 10.4 163,195 16,142 0.3 65,619 81,434 101,243 89,118 12,125

2Q 284,683 11.1 170,256 16,453 0.2 65,766 88,036 114,428 101,954 12,474

3Q 306,632 10.4 186,330 16,929 0.1 75,906 93,494 120,302 106,866 13,436

Source: Treasury and Bank Negara Malaysia



Appendix 2

Source: www.treasury.gov.my

Documents

Malaysia Economic Full Assignment 1