Jilid II Hari Rahn Bil. 27 6hb Disember, 1972

PENYA TA RASMI OFFICIAL REPORT

DEWAN RAKYAT HOUSE OF REPRESENTATIVES

PARLIMEN KETIGA Third Parliament

PENGGAL PARLIMEN KEDUA Second Session

KANDUNGANNYA

RANG UNDANG-UNDANG: Rang Undaog-ondang Perbekalan, 1973 lRuangan 3543) USUL: Anggaran Pembangunan, 1973 (Roangan 3577)

MALAYSIA DEWAN RAKYAT YANG KETIGA Penyata Resmi PENGGAL YANG KEDUA

Hari Rabu, 6hb Disember, 1972

Mesyuarat dimulakan pada pukul 3.00 petang

YANG HADIR:

Yang Berhormat Tuan Yang di Pertua, TAN SRI DATUK CHIK MOHAMED YusuF BIN SHEIKH ABDUL RAHMAN, P.M.N., s.P.M.P., J.P., Datuk Bendahara Perak. Yang Amat Berhormat Perdana Menteri, Menteri Luar Negeri dan Menteri Pertahanan, TUN HAJI ABDUL RAZAK BIN DATUK HUSSEIN, S.M.N. (Pekan). Yang Amat Berhormat Timbalan Perdana Menteri dan Menteri Hal Ehwal Dalam Negeri, TUN DR ISMAIL AL-HAJ BIN DATUK HAJI ABDUL RAHMAN, s.s.M., P.M.N., s.P.M.J. ( Timor). Yang Berhormat Menteri Kewangan, TUN TAN Smw SIN, s.S.M., J.P. (Melaka Tengah). Menteri Perpaduan Negara, TUN V. T. SAMBANTHAN, s.s.M., P.M.N. (Sungei Siput). Menteri Perhubungan, TAN SRI HAn SARDON BIN HAJI JuBIR, P.M.N., s.P.M.K., s.P.M.J. (Pontian Utara). .. Menteri Perdagangan dan Perindastrian, TUAN MOHAMED KHIR JOHAR! (Kedah Tengah). Menteri Buruh dan Tenaga Rakyat, TAN SRI V. MANICKAVASAGAM, P.M.N., S.P.M.S., J.M.N., P.J.K. (Klang). Menteri Pertanian dan Perikanan, TAN SRI HAJI MOHAMED GHAZAL! BIN HAn JAWI, P.M.N., D.P.C.M., P.N.B.S. (Kuala Kangsar). Menteri Pembangunan Negara dan Luar Bandar, TUAN ABDUL GHAFAR BIN BABA (Melaka Utara). Menteri Kerja Raya dan Tenaga, DATUK HAJJ ABDUL GHANI GILONG, P.D.K., J.P. (Kinabalu). Menteri Kesihatan, TAN SRI LEE SIOK YEW, P.M.N., A.M.N., P.J.K. (Sepang). Menteri Kebudayaan, Belia dan Sukan, DATUK HAJJ HAMZAH BIN DATUK ABU SAMAH, S.M.K., D.S.R., S.I.M.P. (Raub). Menteri Kebajikan Am, TAN SRI FATIMAH BINTI HAJI HASHIM, P.M.N. (Jitra-Padang Terap). Menteri Pelajaran, DATUK HUSSEIN BIN DATUK ONN, S.P.M.J., P.I.S., M.B.E. ( Timor). -- Meqteri Penenq~an dan Menteri Tugas-tugas Khas, TAN SRI MUHAMMAD GHAZAL! BIN SHAFIE, P.M.N., D.I.M.P., P.D.K. (Lipis).

------3535 6 DISEMBER 1972 3536 Yang Berhormat Menteri Teknoloji, Penyelidikan dan Kerajaan Tempatan, DATUK , P.N.B.S. (Bandar ). Menteri Perusahaan Utama, TUAN HAn ABDUL TAIB BIN MAHMUD, P.G.D.K. (Samarahan). Timbalan Menteri Kewangan, TUAN ALI BIN HAJI AHMAD (Pontian Selatan). Timbalan Menteri Pertanian dan Perikanan. DATUK ABDUL SAMAD BIN IDRIS, J.M.N., A.M.N., P.J.K. (Kuala Pilah). Timbalan Menteri Buruh dan Tenaga Rakyat, TUAN , · - K.M.N. (Segamat Selatan). \ Timbalan Menteri Jabatan Perdana Menteri dan Timbalan Menteri Pertahanan, Y.M. TENGKU AHMAD RITHAUDDEEN AL-HAJ BIN TENGKU ISMAIL, P.M.K. (Kota Bharu Hilir). Timbalan Menteri Hal Ehwal Dalam Negeri, TUAN HAJI MOHAMED BIN YAACOB, P.M.K., S.M.T. (Tanah Merah). Setiausaha Parlimen kepada Perdana Menteri, DATUK WAN ABDUL " KADIR BIN ISMAIL, D.P.M.T., P.P.T. (Kuala Trengganu Utara). .. Setiausaha Parlimen kepada Menteri Penerangan dan Menteri Dengan Tugas-tugas Khas, TuAN SHARIFF BIN AHMAD (Langat). .. Setiausaha Parlimen kepada Menteri Pelajaran, TUAN MOHAMED BIN UJANG, A.M.N., P.J.K. (Jelebu-Jempol). Setiausaha Parliament kepada Menteri Pelajaran, TuAN MOHAMED BIN RAHMAT, K.M.N. (Johor Bahru Barat). Setiausaha Parlimen kepada Menteri Buruh dan Tenaga Rakyat, TUAN HAJI RAMLI BIN OMAR, K.M.N., P.M.P. (Krian Darat). .. Setiausaha Parlimen kepala Menteri Kebudayaan, Belia dan Sukan• TUAN MOKHTAR BIN HASHIM (Rembau-Tampin). .. NIK ABDUL Aziz BIN NIK MAT, J.P. (Kelantan Hilir) . .. DATUK DR HAJI ABDUL AZIZ BIN OMAR, D.J.M.K .• J.M.N., J.M.K .• S.M.K . (Tumpat). TUAN HAJI ABDUL wAHAB BIN YUNUS (Dungun). .. PENGHULU ABIT ANAK ANGKIN, P.P.N. (Kapit) . .. TUAN ABU BAKAR BIN UMAR (Kubang Pasu Barat) . TUAN HAJI AHMAD BIN ARSHAD, A.M.N. (Muar Utara). .. TUAN AHMAD BIN HAJI ITHNIN (Melaka Selatan) . PENGIRAN AHMAD BIN PENGIRAN INDAR (Kinabatangan). .. TuAN HAJI AHMAD BIN SAID, J.P. (Seberang Utara). TuAN HAJI AHMAD DAMANHURI BIN HAJI ABDUL WAHAB, P.M.P., P.J.1::. (Hilir Perak). TAN SRI HAn NIK AHMED KAMIL, D.K .• P.M.N., S.P.M.K., S.J.M.K . •• (Ulu Kelantan). PuAN BIBI AISHAH BINTI HAMID DoN, A.M.N., P.UC. (Kulim Utara). .. TUAN AJAD BIN 0. T. OYONG (Labuk-Sugut) . .. DR AWANG BIN HASSAN, S.M.J. (Muar Selatan). 3537 6 DISEMBER 1972 3538

Yang Berhormat TUAN AzAHARI BIN Mo. TAIB, J.s.M., A.M.N., s.M.K., J.P. (Sungei Patani). DATUK PENGARAH BANYANG ANAK ]ANTING, Q.M.C., P.N.B.S., P.B.S. (Julau). CHEGU BAUDI BIN UNGGUT (Bandau). TUAN BOJENG BIN ANDOT (Simunjan). TUAN BUJA BIN GUMBILAI (Tuaran). TUAN AWANG BUNGSU BIN ABDULLAH (-Lawas). TUAN HAJJ A.WANG WAL BIN A.WANG ABU (Santubong). TUAN CHAN Fu KING (Telok Anson). TUAN CHAN SIANG SuN, A.M.N., P.J.K .• J.P. (Bentong). TUAN CHAN YOON ONN (Ulu Kinta). TUAN CHEN Ko MING, A.M.N., P.B.S. (Sarikei). DR ( Timor). TUAN MICHAEL CHEN WING SUM (Ulu Selangor). DR CHU CHEE PENG ( Selatan). TUAN v ALENTINE CoTTER alias JOSEPH v ALENTINE CoTTER (Bau-Lundu). TUAN PETER PAUL DASON (Pulau Pinang Utara). TUAN v. DAVID (Dato Kramat). TUAN EDWIN ANAK TANGKUN, A.B.S. (Batang Lupar). " TUAN FAN YEW TENG (Kampar). " DATIN HAJJAH FATIMAH BINTI HAJI ABDUL MAJID, J.M.N., P.I.S. " (Batu Pahat Dalam). TUAN THOMAS SELVARAJ GABRIEL (Pulau Pinang Selatan). TUAN GOH HOCK GUAN (Bungsar). TUAN HANAFIAH HUSSAIN, A.M.N. (Jerai). TUAN HASHIM BIN GERA (Parit). .. TUAN UNG HUN (Sitiawan) . TUAN HoR CHEOK FooN (Damansara). TUAN HUSSAIN BIN HAJJ SULAIMAN (Besut). " TAN SRI SYED JAAFAR BIN HASAN ALBAR, P.M.N. (Johor Tenggara). DATUK KHoo PENG LOONG, P.N.B.s., o.B.E. (Bandar Sibu). TuAN LATIP BIN HAJI Dlus (Mukah). TUAN LEE SECK FUN, ·K.M.N. (Tanjong Malim). TUAN LIM CHO HOCK (Batu Gajah). .. TUAN LIM KIT STANG (Bandar Melaka). TuAN LIM PEE HUNG, PJ.K. (Alor Star). TuAN LOH JEE MEE (Batang Padang). TUAN wALTER LOH PoH KHAN (Setapak). DATUK PETER Lo Su YIN, P.G.D.K. (Sandakan). TUAN LUHAT WAN (Baram\ TUAN ANDREW MARA ANAK WALTER UNJAH (Betong). 3539 6 DISEMBER 1972 3540

Yang Berhormat TUAN HAJI MAWARDI BIN LEBAI TEH (Kota Star Utara). DR MOHAMED BIN T AIB, P.M.K., P.J.K. (Kuantan). TUAN MOHD. ARIF BIN SALLEH, A.D.K. ( Dalam). DATUK HAJI MOHD. ASRI BIN HAJI MuoA, S.P.M.K. (Kota Bharu Hulu). TUAN MOHD. DAUD BIN ABDUL SAMAD (Kuala Trengganu Selatan). TUAN MOHD. NOR BIN Mo. DAHAN, A.M.N., J.P. (Ulu Perak). " TAN SRI HAJI MOHAMMAD SAID BIN KERUAK, P.M.N., S.P.D.K. " (Kota Belud). TUAN MOHD. SALLEH BIN DATUK PANGLIMA ABDULLAH (Darvel). TUAN MOHD. TAHIR BIN HAii ABDUL MAJID, S.M.S., P.J.K. (Kuala Langat). TUAN MOHD. TAHIR BIN HAJJ ABDUL MANAN (Kapar). " TUAN HAJr MOHAMAD YusoF BIN MAHMUD, A.M.N. (Temerloh). TUAN HAJI MOHD. ZAIN BIN ABDULLAH (Bachok). DATUK ENGKU MUHSEIN BIN ENGKU ABDUL KADIR, D.P.M.T., J.M.N. (Trengganu Tengah). WAN MOKHTAR BIN AHMAD, P.J.K. (Kemaman). TUAN HAJJ MoKHTAR BIN HAJJ ISMAIL, J.S.M. (Perlis Selatan). TUAN MUSA BIN HITAM (Segamat Utara). DATUK HAJ1 MusTAPHA BIN HAJI ABDUL JABAR, o.P.M.S., J.M.N., J.P. (Sabak Bernam). TUAN MUSTAPHA BIN HUSSAIN (Seberang Tengah). TUAN JoNATHAN NARWIN ANAK JINGGONG (Lubok Antu). " TAN SRI SYED NASIR BIN ISMAIL, P.M.N., D.P.M.J., J.M.N., P.I.S. (Muar Dalam). TUAN NG HoE HuN (Larut Selatan). RAJA NoNG CHIK BIN RAJA ISHAK, P.J.K. (Kuala Selangor). TUAN OTHMAN BIN ABDULLAH, A.M.N. (Perlis Utara\ PENGARAH RAHUN ANAK DEBAK (Serian). TUAN R. c. M. RAYAN alias R. C. MAHADEVA RAYAN (lpoh). TUAN SEAH TENG NGIAB, S.M.J., P.I.s. (Muar Pantai). DR s. SEEVARATNAM, P.J.K. (Seremban Barat). TUAN HAJJ SHAFIE BIN ABD~LLAH, A.M.N., B.C.K. (Baling). TUAN SoH AH TECK, A.M.N. (Batu Pahat). DR A. SooRIAN (Port Dickson). TUAN Su LIANG Yu (Bruas). TUAN SuLAIMAN BIN BULON, P.J.K. (Bagan Datoh). w AN SULAIMAN BIN HAJI IBRAHIM, S.M.K. (Pasir Puteh). TUAN SuLAIMAN BIN HAii T AIB (Krian Laut). PENGIRAN TAHIR BIN PENGIRAN PATERA (Kinamis). TuAN TAI KUAN YANG, A.M.N., P.J.K. (Kulim-Bandar Bharu). 3541 6 DISEMBER 1972 3542

Yang Berhormat DATUK TAJUDDIN BIN Au, D.P.M.P., P.J.K. (Larut Utara). DR (Batu). TUAN TAN CHENG BEE, A.M.N., J.P. (Bagan). TUAN TIAH ENG BEE, P.I.S. (Kluang Utara). TUAN JAMES STEPHEN TIBOK, A.D.K. (Penampang). TUAN TIBUOH ANAK RANTAI (Rajang). TUAN TING MING KIONG (). TUAN JOSEPH UNTING ANAK UMANG (Kanowit). TUAN v. VEERAPPEN (Seberang Selatan). TUAN YEH PAO Tzu, A.M.N. (Tawau). TUAN YEOH TECK CHYE (Bukit Bintang). TUAN HAJI Yusop BIN HAJJ ABDULLAH alias HAJ1 YusoF RAWA (Kota Star Selatan). TENGKU ZAID BIN TENGKU AHMAD, D.P.M.K., J.M.K., S.M.K. (Pasir Mas Hulu).

YANG TIADA HADIR: Yang Berhormat Menteri Hal Ehwal , TAN SRI TEMENGGONG JUGAH ANAK BARIENG, P.M.N., P.D.K., P.N.B.S., O.B.E., Q.M.C. (Ulu Rajang). Y.A.M. TUNKU ABDULLAH IBNI ALMARHUM TuANKU ABDUL RAHMAN, P.P.T. (Rawang). Y.T.M. TUNKU ABDUL RAHMAN PUTRA AL-HAJ, D.M.N., K.O.M., C.H. (Kuala Kedah). .. DATUK HAii ABDUL RAHMAN BIN YA'KUB, P.N.B.S. (Payang) . TUAN HAJI ABDUL RASHID BIN HAJI JAIS, A.D.K. (Sabah Selatan). TuAN EDMUND LANGGU ANAK SAGA, P.B.S. (Saratok). DR LIM CHONG Eu (Tanjong). TUAN HAJ1 Motto. CHIK JoHARI ONDU MAJAKIL (Labuan-Beaufort). tUAN MUHAMMAD FAKHRUDDIN BIN HAJI ABDULLAH, J.P. (Pasir Mas Hilir). TUN DATU HAJI MUSTAPHA BIN DATU HARUN, S.M.N., P.D.K., K.V.O., O.B.E. (Marudu). DATUK PANG TET TSHUNG, P.D.K. (Kota Kinabalu). DATUK SRI s. P. SEENIVASAGAM, S.P.M.P., D.P.M.P., P.M.P., J.P. (Menglembu). DATUK , P.N.B.S. (Miri-Subis). TuAN (Padawan).

YANG HADIR BERSAMA: Yang Berhormat Menteri Tugas-tugas Khas, DR LIM KENG YAIK (Dilantik). 3543 6 DISEMBER 1972 3544 DOA Another change concerns the allocation of expenditure between the operating and the (Tuan Yang di Pertua mempengerusikan development budgets. Beginning with the Mesyuarat) 1973 Budget, a significant number of defence items which used to appear in the develop­ RANG UNDANG-UNDANG ment account will henceforth be regarded as operating expenditure. These defence items are more in the nature of replacement or RANG UNDANG-UNDANG recurrent expenditure and hence rightly PERBEKALAN, 1973 belong to the operating budget. As a result of the shift of these defence items, the operating Bacaan Kali Yang Kedua budget for 1973 will be increasd by $163 million while the development budget will be Menteri Kewangan (Tun ): reduced correspondingly. With this shift, (Dengan izin) Mr Speaker, Sir, I beg to move development expenditure will henceforth be that a Bill intituled "An Act to apply a sum expenditure which actually promotes out of the Consolidated Fund to the service economic, social or national development. of the year 1973 and to appropriate that sum and such other sums as have been authorised In my last Budget speech, I indicated that to be issued for the service of that year" be the New Economic Policy had made itself read a second time. felt in a sizable increase in public demand. In 1972 the implementation of the New For the first time in our history, an Economic Policy is visibly reflected in a new Economic Report is being presented to Parlia­ trend in development expenditure. Gross ment as an appendix to the Budget speech. I lending to statutory bodies, which include hope that this Report will provide Parliament PERNAS, the Urban Development Authority and the public with a comprehensive survey (UDA), State Economic Development and analysis of the Malaysian economy. It is Corporations, Lembaga Padi dan Beras intended that this Report will supply readily Negara, Majlis Amanah Rakyat (MARA) available information on our increasingly and State Government leapt from complex economy in an annually updated $160 million in 1970 to a record level of $331 and compact form. The Report will be million in 1971. It is expected to increase to distributed to Honourable Members before $350 million in 1972 and to $375 million in we adjourn today. As a result of this innova­ 1973. As a result of this greatly increased tion the Budget speech itself will concentrate development lending by the Federal Govern­ on highlighting major developments in the ment there has been a substantial stimulus to economy, including the public sector and involvement by State Governments and Government finances in addition, of course, public authorities in public investment. This to the new revenue proposals. major change in the development process which has been taking place in the last two A second major change is that, with the years represents a significant broadening of amalgamation of the operating and develop­ the base of the public development effort. Of ment budgets into one volume, one speech even greater significance is the fact that this would cover both budgets and there would be change represents the pervasive contribution only one debate for both budgets. I venture of the Federal Budget to the implementation to suggest that this is a rational development of the New Economic Policy. because it does not make sense to have two speeches and two debates on what is As a result of the increasing momentum essentially the same subject. Such a procedure of development expenditure, the planned will save the time of everybody concerned targets for development both for 1971 and and I hope the House will endorse this new 1972 have been exceeded. Honourable procedure--in fact, it did so yesterday. In Members might recall that, as Minister of order to ensure, however, that an adequate Finance, I have always maintained that number of Honourable Members on both where sound economic projects are concerned, sides of the House will have a chance to finance is not the main problem. Further, speak, the time allotted for the general debate with the sharp rise in the prices of imported will be increased to 8 days instead of the goods, in particular machinery and capital the customary 5. equipment, which rose by 9.6% in 1971, 3545 6 DISEMBER 1972 3546 expenditure on development has risen and is 1960 and 1970 the share of rubber and tin in likely to keep on rising until the developed total exports fell from 69% to 53%, while countries can curb inflation. Honourable the share of exports in the GNP went down Members will also recall that in the Second from 39% to 33%. The share of agriculture Plan the public sector's share of the in· the gross domestic product has shrunk development expenditure target was $7,250 from 37% to 25%, while the share of manu­ million with a minimum expenditure target facturing went up from 9% to 15%. The of $6,000 million. Public sector development share of agriculture would have shrunk more, expenditure in 1971 and 1972, the first two but for the impressive strides in modernisa­ years of the Plan, has exceeded the estimated tion and efficiency made by the rubber annual targets by no less than one-third! industry. At the same time, there has been Accordingly, the appropriation for public substantial diversification into palm oil and sector development, originally fixed at $7 ,250 timber as well as solid progress in million, has been raised to $8,297 million. industrialisation leading to import substitu­ This figure includes defence expenditure tion, especially in consumer goods. amounting to $449 million which will hence­ forth appear in the operating budget. Based A second important factor, contributing on our experience of the first two years of the towards the increasing resilience of the Plan, public sector expenditure will probably economy, is the more positive role of the be well above the Plan figure of $6,000 public sector. In the late 1950s and early million. 1960s the operations of the public sector were frequently procyclical. For example, an Let me turn now to major developments in absolute decrease in G.D.P. in 1958 (-4.5%) the Malaysian economy. Economic trends in was accompanied by a cut in public invest­ Malaysia during most of 1972 were ment ( -17 .4 %). Similarly, a G.D.P. increase influenced by stagnant exports and low world in 1960 of 11 % was paralleled by an market prices for the country's major export increase in Government investment of 29.6%. commodities. However, the pace of economic This reflected the policy of balancing the growth began to accelerate in the course of Budget in every single year. Over the years the latter half of the year. In 1972 the gross and in particular since 1969, the operations national product or GNP at market prices is of the public sector have become consciously estimated at $12,900 million which is 5.8% anti-cyclical. The export-induced economic higher than the level of $12,194 million slowdown in 1970-72 was countered by an achieved in 1971. Whereas in 1971 the increase in public sector investment of no growth in GNP was only 4.8%, the outlook less than 23.5% in 1971 and 40% in 1972. for the immediate future is more reassuring. Government consumption was allowed to It is expected that GNP will grow by 8% to increase by 18.5% in 1971 and 14% in 1972. 9 % in 1973. The increasing ability of the This offset to some extent the weakness in economy to counter external influences has the export sector and the resulting weakness been helped by the anti-cyclical nature of in private investment, which has practically Federal Government spending. During the stagnated since the record investment boom sixties the economy witnessed wide fluctua­ of 1970. Thus the public sector proved to be tions in its annual growth rates; the the principal stimulus to the economy in the range was between 0.4% and 9.4%. In 1958 last two years. a decrease in exports produced an absolute decrease in GNP. In 1961, it led to The industrial economies of North stagnation. On the other hand, in 1971 and America, Western Europe and Japan, where 1972 when exports declined for two consecu­ almost two-thirds of all Malaysian exports tive years, and particularly in 1972, when the go, show signs of picking up in 1972 though price of rubber fell to its lowest level in 25 inflation continues to be a problem. The years, the economy was able to register general upswing was led by the United States growth rates of 4.8 % and 5.8 % respectively. (U.S.) whose economy is approaching a boom The growing resilience of the economy in the towards the end of 1972. In Western Europe face of sharp fluctuations of primary and Japan a recovery is now clearly visible. commodity prices is the direct result of the This trend is strongest in France, Germany diversification of the economy which until and Japan, and somewhat less in the United recently was largely based on the production K:ingdom and Italy. As a result, imports by of a few commodities for export. Between the industrialized countries have begun to rise 3547 6 DISEMBER 1972 3548 sharply leading to a strong recovery in Tin exports remained more or less primary commodity prices. stagnant with some pick up towards the end of the year. Production of tin is likely to More than one-third of Malaysia's exports reach 76,000 tons in 1972, compared with go to destinations other than the indus­ 75,400 tons in 1971, and estimated exports trialized economies of North America, at 89,000 tons in 1972 should fetch $915 Western Europe and Japan. Among these, the million compared with 87,100 tons fetching centrally controlled economies of the Union $905 .8 million in 1971. The decline in the of Soviet Socialist Republics (U.S.S.R.), tin price which occurred in 1971 and for Eastern Europe and the People's Republic most of 1972 has since slowed down. of are important. Their purchases have, however, fluctuated widely in the past. Palm oil and timber are relatively new This also holds true in 1972 when China, export items compared to the two traditional after trade talks with Malaysia, stepped up commodities of rubber and tin. Since late its rubber purchases so that Malaysia's 1968 Malaysia has experienced a steep rise exports to China may be twice as much as in palm oil production which compensated in 1971. The Government would like to see somewhat for the poor price performance of trade with these centrally controlled eco­ rubber. The decline in palm oil prices since nomies increasing steadily. 1971 and during most of 1972 may well reflect a process of consolidation and a The decline in the value of Malaysia's reaction to the rapid expansion of palm oil exports since 1970 is largely the result of the production. Palm oil is likely to be a highly downward trend in the rubber market. The profitable crop even at the lower price levels estimated value of Malaysian rubber exports expected in the future. in 1972 is about 35% lower than that in 1969. The impact of this fall on the overall Malay­ Since the middle of 1972 timber prices sian economy is decisive, since 30% of have gone up dramatically, so that the export earnings and about 15% of total out­ timber industry, especially in Sabah, should put are accounted for by rubber and rubber recover from its setback in 1971. In 1972. products. During 1972 it is estimated that exports of sawn timber estimated at 1,531,000 rubber exports should reach 1,390,000 tons tons and $307 million in value will be more in volume with a value of $1,330 million than one-third higher than in 1971 which compared with 1,390,400 tons and $1,460 saw a performance of 979,000 tons and $201 million respectively for 1971 which was by million respectively. Although there has been no means a good year in so far as rubber is a marked shift from the export of purely concerned. (All quantities given are in metric saw and peeler logs to a higher proportion tons unless otherwise stated.) However, there of processed timber products, much more was a rapid and strong recovery in demand remains to be done. There is no reason why and hence prices during the second half of we should not uitimately export our timber 1972. It is likely that rubber prices will move largely in the form of sophisticated products to more satisfactory levels in 1973. Pro­ like furniture, especially knocked down duction costs of synthetic rubber are likely to furniture. We have the skills except that such rise, as its basic raw materials, which are skills are not widely diffused as, at the derived from the petro-chemical industry, moment, they are largely confined to small will cost progressively more as a result of family enterprises. Experience elsewhere has the recent agreement between the Organi­ shown that even smail countries without significant forested areas have managed to sation of Petroleum Exporting Countries develop a major furniture export industry. (O.P.E.C.) and major oil consumers in the This shows what can be done given the will developed world. Further, increasing use of and the right leadership and guidance. Such synthetic rubber will aggravate the problem a development would increase employment of environmental pollution in the developed opportunities in a big way apart from giving world, a problem which does not arise if a considerable boost to the economy. It natural rubber is used, and recently voices would certainly increase foreign exchange have been raised in favour of greater use of earnings significantly, among other things. natural rubber. These two factors should The increase of export duty from 10% to have a favourable impact on prices in the 15% ad valorem on log exports from West foreseeable future. Malaysia in the 1972 Budget and the recent 3549 6 DISEMBER 1972 3550 temporary ban on the export of certain by the recent Federal Industrial Development grades of round timber from West Malaysia Authority (FIDA) industrial trends survey should provide a further spur for shifting should be reinforced by the upturn in exports from largely log exports to timber manu­ expected in 1973. This assessment seems to facturing. be backed by the increase in bank credits to private borrowers. The upturn in the economy Meanwhile, it is expected that exports of alone will not ensure the expected increase manufactured goods will go up by almost in private investment. In implementing the 30% in 1972.This would mean that the share Government's development programme, it of industrial goods in total exports is now would be necessary for public officials on the approaching 10%. In regard to services ground to be responsive to the problems and which comprise 12 % of Malaysia's exports, requirements of the. private sector. It is two promising fields are tourism and ship­ essential that the public and private sectors ping. Tourist expenditure has gone up by 30% work together to achieve the economic and annually in the past 2 years indicating the social objectives of the nation. In regard to great potential that exists for this highly private consumption it is estimated to have labour intensive industry. The expansion in gone up by St% in 1972. Since it is the largest the operations of the Malaysian International component in the economy and does not Shipping Corporation (M.l.S.C.) is of fluctuate much, it is an element of consi­ increasing help in reducing the traditionally derable stability. Growth seems to have been big deficit on freight and shipping charges. relatively fast in durable consumer goods This Company hopes to enlarge its fleet to such as cars, motorcycles and television sets 1 million tons by 1975. To some extent the and relatively slow in textiles and food. The existence of a national shipping line could rise in food costs was primarily due to the persuade the shipping conferences to exercise rise in world prices of sugar and dairy more restraint when they fix their charges products. for carrying our goods. In 1972 consumer prices are likely to rise In 1972 public sector demand continued by about 2t%. Previously the changes in to be the main expansionary force in an these prices were measured by the official otherwise sluggish economy. As a result, retail price index. However, the latter was Government consumption is expected to go based on the consumption patterns of the up by 14%. While the increase in public lower income groups in 1957 and has since consumption had stabilizing effects on private become out of date. Hence, the Statistics incomes and consumption, I am concerned Department is publishing a new consumer that Federal Government ordinary expendi­ price index which reflects the latest consumer ture has gone up by more than 50% over the behaviour. The 1972 rise in prices is largely last 3 years. This is three times the increase due to imported inflation. The years 1969 to in the national product. Such an increase in 1972 coincided with a period of worldwide consumption spending cannot in the long run inflation which has finally affected the be maintained without endangering the domestic price level, bearing in mind that the economy. most stable of our trading partners revalued their currencies making it more expensive for Private demand expanded in 1972 as Malaysia to buy from them. Until the late slowly as in 1971. Private investment almost sixties, Malaysia had been able to avoid stagnated since the end of the investment boom two years ago. A certain pause in outside inflation by shifting sources of supply investment was to be expected after the rapid from higher priced exporters to cheaper spurt in 1970. While there have been pauses suppliers in East Asia. This helped to keep in private investment before, the length of the the import price index stable. However, the current stagnation merits a closer look. The pace of outside inflation and the yen and rise in import costs may have contributed to deutsche mark revaluations of December investor hesitation particularly at a time of 1971 have limited Malaysia's options for slow expansion in internal demand. While minimizing imported inflation. In 1972 itself, there has been a decline in investment in the the key industrial countries had to cope with perennial crops there are signs that building inflation rates of from 3% to 9%. Seen construction has been expanding. The against this background, Malaysia's per­ optimistic judgment of investors as indicated formance is still remarkable, particularly 3551 6 DISEMBER 1972 3552 since the Malaysian economy is an open one to determine quality and price, when R.S.S. with many direct ties with the industrial No. 3 and even lower grades account for the countries. bulk ·of usage in the manufacture of tyres, is Money supply in 1972 is estimated to have obviously not in the interests of producers, grown by about 10%. compared to 4.2% in particularly as this is the rubber which is 1971. The main factor influencing the growth largely produced by our smallholders. of money supply in 1972, as in 1971, was the increased spending of the public sector. In Palm oil production is likely to reach view of the slowdown in private investment, 890,000 tons in 1972, continuing its high rate internal monetary policy was largely geared of growth, an increase of 25 % over the 1971 to stimulating a recovery in investment and output of 715,200 tons. Malaysia now in the economy as a whole. Money was thus accounts for more than 50% of world more abundant and made cheaper. exports, but until recently all our palm oil was exported in crude form, though at Production present there are 8 factories refining it. There I have given you a broad picture of the are now also 4 factories extracting oil from economy from the demand side, i.e. how and palm kernels. It is clear that every effort will on what we spend our money. I would like have to be made to refine a far greater now to give you an account of what the proportion of the oil produced. economy produced in terms of physical out­ put, i.e. the supply side of the economy. It is The main worry of the Government, in estimated that the gross domestic product or so far as rice production is concerned, G.D.P. in 1972 at $11,260 million will is that we may produce more than we can register a growth rate of about 6!% more consume internally. It would be disastrous than the 1971 figure of $10,563 million. if this were to happen as domestic rice prices averaging $430 per ton, are far higher than Rubber production which is likely to world prices averaging about $330 per ton. constitute 11.8 % of G.D.P. in 1972, If we produce more than we can consume, accounted for 12.5% in 1971, although we obviously have to export it at a loss or production in 1972 estimated at 1,330,000 let it rot in our godowns. Whatever we do, tons is higher than the 1971 figure of 1,324,500 we are in for trouble for reasons which are tons. Apart from the steady changeover to only too obvious. It is therefore vital to Standard Malaysian Rubber, or S.M.R. for ensure that we do not produce more than short, and this could mean that one half of 90% of total domestic requirements under total exports would be in the from of S.M.R. any circumstances. This should be our basic by 1975, the Government will have to stand though there is a temporary rice consider, in conjunction with other major shortage, and the world price of rice has producers and consumers of natural rubber, thus risen considerably during 1972. overhauling its obviously outdated system of grading. This system has not been changed Progress has been rapid in a wide variety for the last 60 years or so, indeed since of minor crops. Pepper output has been rubber began to be marketed in commercial stepped up to 29 ,500 tons in 1972 making quantities at the beginning of the century, and Malaysia the largest pepper exporter in the at the moment it bears no relevance to the world. So far, tapioca production has not existing situation. For example, what is been on a large scale, although yields per known as Ribbed Smoked Sheet No. 1 (R.S.S. acre in Malaysia and the quality of output No. 1) is practically meaningless now as tyre are equal to if not higher than that in major manufacture absorbs about two-thirds of producing countries. There is a ready market total natural rubber consumed. Tyre manufac­ for tapioca, mainly in the European Econo­ turers in North America, Western Europe mic Community (EEC). and Japan use mainly R.S.S. No. 3 and lower grades, and yet R.S.S. No. 1 is still the grade The timber industry also continues to by which the whole price structure is deter­ grow impressively. After a slowdown in out­ mined, although in so far as properties and put in 1971, mainly because of the slack usage for tyre manufacture are concerned, it in Japanese demand, the production of saw is not the preferred grade. The perpetuation logs in 1972 is likely to increase by 20 % of a system whereby R.S.S. No. 1 is the grade from 10.7 million tons in 1971 to 12.8 of rubber which the trade uses as a yardstick million tons.

------·------3553 6 DISEMBER 1972 3554 The fishing industry is likely to increase Unemployment is estimated at slightly its output by about 1 % from 325,000 tons below 8 % of the labour force in 1972. The in 1971 to an estimated 335,000 tons in 1972, slight rise in new job creation has not been reflecting a slowdown following the rapid strong enough to reduce registered unemploy­ growth of the last 3 to 4 years. This growth ment, mainly because Malaysia's labour is mainly the result of trawler fishing that force is growing at 3.2 % a year, one now accounts for about 35 % of total fish of the highest rates in the world. The Labour landings. Inshore fishing remains a problem Force Sample Survey of April/May 1972 industry that suffers from low productivity estimates urban unemployment at 10.2 % and hence low incomes, especially on the and rural unemployment at about 6 %. More East Coast where modern equipment and than four-fifths of the unemployed are below proper marketing facilities are lacking. I am 30 years of age. The unemployment problem informed that in Trengganu, for example, is aggravated by strong preferences among inshore fishermen's incomes are in the region certain first time job seekers for clerical of only about $60 per month. We should rather than manual jobs, which are more spare no effort to urge such fishermen to turn readily available. These school leavers hence to offshore fishing. If this tneans that addi­ find hemselves unable to secure the kind tional funds will have to be found over and of work which they consider suitable for above that committed in the Second Malaysia their educational qualifications. Faster econo­ Plan, the Treasury should be prepared to mic growth, increasing orientation of educa­ consider such a bid sympathetically. Given tional programmes to meet actual needs, and the vast potential of overseas demand, mainly a universally acceptable family planning in Japan and the United States, this programme are among the long term answers industry should find a ready market for its to this difficult problem. products, and this is one reason why we should develop it as rapidly as possible. This cloud, however, has a silver lining. Not so long ago, Penang faced a serious The manufacturing sector has progres­ unemployment problem. Today, I venture sively taken on the role of growth leader, to predict that in the foreseeable future it a position traditionally held by the rubber will face the opposite problem, i.e. a labour and tin industries. In 1972, generally a shortage. This dramatic transformation has year of slow growth, manufacturing output occurred because the State Government was is estimated to have grown by 12% from not satisfied with waiting for industries to $1,471 million in 1971 to $1,650 million come to it. Instead, its Chief Minister, Dr in 1972. It also increased its share of the Lim Chong Eu, went out of his way to GDP from 11 % in 1967 to 15% in 1972. persuade industries to come to Penang. This Although the share of manufacturing in the effort has paid off handsomely. Likewise, GDP is still low by the standards of the J ohore is surging forward and I hazard to developed world, the steady growth and make another guess, and that is that the healthy export performance of the past are J ohore Bahru area will in the foreseeable encouraging and could well be a pointer to future become one of the most important future growth trends. The individual per­ industrial areas of Malaysia. Negri Sembilan formance of the various industries is and Malacca are making a vigorous effort shown in the Economic Report, but I might add that wood processing, metal to bring industries to their respective States, products and textiles have made rapid and I have every confidence that they will progress in particular. It is clear that we meet with increasing success. I, of course, are approaching the peak of our import accept that some States are more favourably substitution effort and future growth in placed than others to attract industries manufacturing will therefore lie in export because of their location, their more orientated industries. With the increasing developed infrastructure and other ancillary emphasis being placed on labour intensive facilities, but the very fact that Negri industries to cope with unemployment, Sembilan and Malacca. which are far less and with the siting of industries in the favourably placed for this purpose than less developed areas of Malaysia, it is either Selangor or Penang, can make head­ interesting to note that 25 % of new indus­ way shows what can be done if State trial projects approved in the first half Governments inject more imagination and of 1972 were for the less developed States. drive into their development effort. I 3555 6 DISEMBER 1972 3556 have referred to these recent developments consecutive days. On the other hand, we on the industrial front in this part of converted our sterling reserves into other my speech because the greater the number currencies at a much higher rate. I chose not of industries, the greater the number of to announce this development earlier as I jobs that would become available. believe that Malaysia is the only country Malaysia's net external reserves as at the so far to have left the Agreement and we did end of October amounted to $2,837 million not want to be accused of rocking the boat and were $62 million higher than at the end by making a premature announcement. of 1971. Reserves are expected to continue to rise over the remaining 2 months of this Federal Government Accounts year to reach an estimated $2,864 million at Let me first refer to the actual outturn for the end of December representing an increase 1971 and the results anticipated in 1972 of $90 million for the year. This level of before dealing with the 1973 Budget itself. reserves would be sufficient to finance about 8 months of retained imports at the 1972 1971 Accounts level. Since the Telecommunications Department Sterling Guarantee Agreement began to operate on a commercial accounting Shortly after the Smithsonian Agreement, system in 1971, I will exclude the revenue to which the British Government was a party, and expenditure of this Department from the was concluded in December 1971, I wrote 1970 accounts of the Federal Government in to the British Chancellor of the Exchequer order to make a meaningful comparison of suggesting to him that the Sterling Guarantee the two years. The actual financial outturn of Agreement between Malaysia and Britain the Federal Government in 1971 was more should be amended accordingly in view of favourable than anticipated in my 1972 the fact that one of the effects of the Budget speech. Ordinary budget revenue at Smithsonian Agreement was that the parity $2,417 million exceeded the amount of the United States dollar to the pound estimated in that address by ~37 million, sterling was raised from US$2.40 to US$2.60. registering an increase of 5.7% over 1970. Without an appropriate amendment Malay­ Ordinary budget expenditure amounting to sian holdings of sterling would not be $2,458 million was 0.9 % lower than the covered should its parity subsequently fall estimate of $2,480 million given in the last below US$2.60 to the pound. After a Budget. After making the usual adjustments protracted exchange of correspondence, the to ordinary revenue and expenditure, the Chancellor finally replied in March 1972 to current account ended with a surplus of $20 the effect that he was unable to accede to our million instead of the deficit of $32 million request. I thereafter informed him that in anticipated in the 1972 Budget. such circumstances Malaysia would consider itself free to protect its own interests in case Development expenditure in 1971 for the the parity of sterling looked like falling first time exceeded the $1 billion below US$2.60. Early in June this year we mark. Development Fund expenditure which in the Treasury felt uneasy and started includes gross lending by the Federal Govern­ reducing our sterling holdings below 36%. ment increased substantially by 58.4%, from As events turned out, we were not far wrong. $685 million in 1970 to $1,085 million in As under the Sterling Agreement, we were 1971. The latter figure is $195 million more obliged to maintain a minimum sterling than that envisaged in my last Budget speech. proportion of 36% in consideration of the After deducting principal repayments on guarantee, this action on our part meant that existing loans, development expenditure and this Agreement was inoperative in so far as net lending canie to $1,070 million. we were concerned, even 5 months ago. The net effect of this operation is that we have The overall deficit thus amounted to $1,050 lost less-in fact, far less-than we would million. This deficit was financed by net have done had the Agreement been operative, domestic borrowing amounting to $676 because it should be borne in mind that million, net foreign borrowing of $344 million Britain only takes good the loss in the and special receipts of $39 million, resulting value of our sterling holdings if it drops in an increase of $9 million in our realisable below US$2.38 for a period of at least 30 assets.

------~---- 3557 6 DISEMBER 1972 3558 Estimated Financial Outturn for 1972 deficit of $49 million is expected instead of Ordinary budget revenue is now estimated the surplus of $69 million originally to reach $2,793 million or $60 million more envisaged. This is due to the very high expen­ than envisaged in the original estimate. This diture incurred this year as a result of the represents an increase of 15.6% over 1971 continuing institutional growth of the public receipts. The favourable outtum stems sector and the lump sum payment of salary mainly from various special items credited to arrears. the Consolidated Revenue Account and in­ cluded $184.8 million of the residual assets of The development budget provision in 1972 the Currency Board. including supplements came to $1,545.8 million, but actual expenditure is expected to The performance of the new taxes reach $1,100 million. This represents an introduced in 1972 was much better than increase of 1.4 % over actual 1971 anticipated. Sales tax collection, originally expenditure. This increase is largely due to estimated at $84 million in the last Budget, is major loan disbursements estimated to reach now expected to reach $109 million, an a level of $350 million. It includes loans to increase of 29 %. The yield from gaming tax FELDA, MIDF, PERNAS, UDA, the Tele­ is likely to exceed the Budget estimate by communications Department and the various 25%. Royalty on petroleum will probably State Economic Development Corporations. exceed the Budget estimate of $8.5 million by Meanwhile Government commercial invest­ $14.2 million, an increase of 167%. This was ment is expected to reach $40 million. This due to the steep rise in petroleum production will provide for investments in the Malaysian in Sarawak. Airline System, the Government Officers' Housing Development Sendirian Berhad and Revenue from export duties in 1972 is the Malaysian Rubber Development expected to decline sharply by $43 million or Corporation Berhad. 15.8 % compared with the original estimate. This is not surprising considering the sharp The overall deficit for 1972 is thus fall in rubber prices. estimated at $1,126 million which is $307 million more than the figure anticipated in The yield from import duties and excise the last Budget. The financing of this deficit also appears to have fallen short of the is met from domestic and foreign borrowing Budget estimate of $828 million by about $22 and foreign grants, resulting in a decrease in million. This is the result of the slowdown our realisable assets of about $6 million. It is in the rate of investment and consumption in significant to note that out of the net foreign 1972. The lower yield from import duties has borrowing, estimated at $305 million in 1972, consequently resulted in a decline of 12.9% $70 million and $138 million were accounted in the yield from import surtax, compared to for by two market loans raised in the German the 1972 Budget estimate. Other items of market and through a consortium of inter­ revenue are generally fairly close to the national and Malaysian commercial banks original estimates. respectively. This is the first time that a developing country in Asia has been able to The ordinary budget expenditure raise a market loan in the German capital appropriation of $2,735 million for 1972 is market. expected to increase by $162 million to reach a total of $2,897 million after allowance has been made for shortfalls in expenditure by The 1973 Budget certain Ministries. The revised estimates take The total amount proposed in the into account two supplements of $103 million Estimates for 1973, tabled as Command passed by this House earlier and further Paper No. 58 of 1972, is $4,642 million, of supplements needed to finance salary which $3,155 million is for operating revisions for the Armed Forces and teachers, expenditure and $1,487 million is for develop­ among other things. These 2 items alone cost ment expenditure. The latter includes $60 an estimated additional sum of about $261 million for the Contingencies Reserve. million! Given the estimated outturn of current Current Account revenue and expenditure and after making As I stated earlier, as from 1973, certain the customary adjustments, a current account defence items which used to appear in the 3559 6 DISEMBER 1972 3560 development account will henceforth be estimate for 1972. The bulk of the increase regarded as operating expenditure. In order is expected to come from rubber which is to make the 1973 Budget comparable with estimated to yield $63.8 million, an increase the last one, the 1972 Budget has been of $13.9 million or 27.9% higher than the amended accordingly for this purpose. revised estimate for 1972. With greater over­ Ordinary Budget expenditure for 1973 is seas demand for rubber, the 1973 estimate estimated at $3,155 million or 3.9% higher is based ori an average price of 50 cents per than the revised estimate for 1972. Compared pound or 110 cents per kilo for R.S.S. No. 1, to the last Budget estimate the increase is of and a net export volume of 1.4 million tons. the order of 15.4%, bearing in mind that the Export of palm oil, estimated to reach latter estimate did not take into account 900,000 tons, with prices averaging $500 per special items of expenditure like salary ton, is expected to yield $40.5 million in increases for teachers and the Armed Forces. export duty, which is $10.5 million or 35% more than in 1972. Export duty on tin is Comparing the· details of the 1973 allo­ expected to reach $123.2 million, which is cations with those of 1972, it will be found $2.3 million less than the revised estimate that the largest expenditure increase is in for 1972. respect of social services. The Ministry of Revenue from import duties and excise is Education requires $94 million more while estimated at $861.3 million, representing an the Ministry of Health has been allocated an increase of 6.9% over the revised estimate additional $34 million. for 1972. Besides the natural growth in con­ sumption, this significant increase is expected Other major increases are in respect of because of the anticipated upswing in the expenditure on debt service charges, security, overall economic situation. Public Services Department and broad­ casting. Debt service charges have been Sales and gaming taxes which were allotted $50 million more in order to meet introduced last year are expected to yield the increase in interest payments due to $148.5 million and $16.8 million respectively. larger borrowings in recent years. Expen­ The Inland Revenue Department is expected to collect $843.3 million, or an increase of diture on security has been increased by $66 2.6 % over the revised estimate for 1972. million (with the 1972 defence allocation Income tax inclusive of development and computed on a comparable basis) in order to tin profits tax is expected to yield $749 expand the size of our Armed Forces and million or 5.5% higher than the revised the Police and to step up operations against estimate for 1972. A lower rate of increase communist activity in the border areas. The is envisaged because of the poor average Public Services Department requires an price of rubber in 1972 on which assessments increase of $12 million, while the Ministry will be based. Revenue from petroleum royal­ of Infonnation and Broadcasting needs $13 ties is anticipated to reach $24.5 million, a million more. rise of $1.8 million over the 1972 revised estimate. The levelling of revenue from this Ordinary Budget revenue at current tax source is mainly the result of production rates is estimated at $2,887 million, which is reaching a more stable level. 3.4% more than the estimated outturn for 1972. If, however, we exclude special receipts With revenue at current tax rates estimated in 1972, like the Malaysian share of the at $2,887 million, and an ordinary budget residual assets of the Currency Board, expenditure allocation of $3,155 million, the ordinary budget revenue in 1973 at current Consolidated Revenue Account is expected tax rates is expected to be 8.1 % more than to result in a sizable deficit of $268 million. the estimated outturn for 1972. After making the customary adjustments in revenue and expenditure, the current account Further comparisons of the 1973 estimates is estimated to result in a deficit of $206 and the revised 1972 estimates show that million. If the special sum of $163 million revenue from export duties in 1973 is arising from the transfer of defence items expected to reach $250 million, which is from development to ordinary account is $22.4 million or 9.8% more than the revised excluded, the deficit will be $43 million.

. ------3561 6 DISEMBER 1972 3S62 Development Estimates Stamp Duties Out of the total appropriation of $1,487 It is proposed to increase the rates ·of million. a sum of $1.125 million is expected stamp duties on certain instruments relating to be s~t resulting in a shortfall of 21 %. to the sale of property including shares• .It is estimated that about 64 % of thi~ actual stocks and marketable securities. expenditure will be on items of direct eco­ nomic significance, 19% on education and Charges or Mortgages, Agreements for a other social services, 12 % on security and Charge or Mortgage, Bonds, Covenants, the remainder on consumption items such as Debentures, etc. general administration. Major projects are geared towards regional development. They At present the amount of stamp duty include the Tenggara and Johore payable on charges or mortgages, agreements·, Tenggara schemes which cover a total area for a charge or mortgage, bonds. covenants of more than 3.2 million acres and the and others as specified under item 27 (a) of completion of regional master plan studies the First Schedule to the Stamp Duty for the Miri-Bititulu region in Sarawak. the (Special Provisions) (Malaysia) Act. 1967 Klang Valley and Trengganu. While a total depends on the value of the instrument. The of $366 million has been allotted for agri­ rate is now $1 where the only or principal cultural progralllllles such as land develop­ security for the payment or repayment of ment, rubber replanting. animal husbandry money does not exceed Sl.000 and $2 for and fisheries. a sum of $364 million is each additional $500. It is now proposed to earmarked for transport and communi­ increase these rates to $2 and $2.SO cations.· Major Jµghway projects which have respectively. been started or are nearing the implemen­ tation stage are the East-West highwayfrom Contract Notes Kelantan to Perak. the East-West highway in Sabah. the Kota Kinabalu-Ranau road and According to its present rate structure, a the Semporna-Kunah-Lahat Datu road. contract note for shares. stocks or marketable securities in comp~es incorporated in After deducting. loan repayments. total Malaysia attracts a ftat rate of SO cents if the development expenditure ..and net. lending value does not exceed $1.000 and $1 for should reach $1,101 million. With the current others. The corresponding rates for such account deficit· anticipated at $206. million, documents in regard to ·· conipaliies the overall deficit of the 1973 Budget is now incorporated elsewhere are $1.SO and $3 estimated at $1,307 million. As usual. this respectively. The following features of the gap will be narrowed by borrowing from . present rate structure may be noted. Firstly. both ·domestic and· foreign sources. though ' it makes a distinction between shares. stocks or marketable securities in companies such borroWing will not be sufficient to close incorporated ·in Malaysia and those. in it entirely. The remaining gap will have to companies incorporated outside Mala)'sia. be closed by a. drawdown of the Federal Secondly, the rates are specific and not Government's realisable assets lllld the new related to value at all. It is considered .that revenue proposals which I shall now present. the. existing rate structure is not realistic and should be replaced by one which is closely Revenue Measures related to the values involved. The duty .is therefore to be changed to $1 for every Before outlining the actual proposals, I $1,000 of the value of any shares. stocks or should make it clear that unless otherwise marketable securities in companies~ regardless stated, every revenue yield figure that I give of whether their place of incorporation is in is the estimated additional revenue f ot a full Mala)'sia or outside it. year. This is to avoid the monotony of repeating the words "per annum" every time I give figures of additional revenue expected. Conveyances. Agreements, Transfers· of The proposed measures are expected to Absolute Bills of Sale provide a total of about $53 million of addI~ On a sale of property other than shares. tional: revenue in a full year. I shall. deal stocks or marketable securities, the ~ first with direct taxes. duty is Sl for every $100 of the money vahle 3563 6 DISEMBER 1972 3564 of the consideration or the market value of figure stands at 20%, but in 1973, it is the property, whichever is the higher. The proposed to reduce this figure to 10 %. This duty is now to be revised as foliows: would mean that 10 years after Malaysia, (a) For the first $100,000 of the money individual taxpayers in East Malaysia would value of the consideration or the still pay 10% less income tax than residents market value of the property, whichever in West Malaysia in the $50,000 or less is the greater, the duty will remain income group. We feel that this is not unchanged at $1 for every $100; unreasonable, and is in accord with our undertaking that the level of taxation in East (b) For any amount in excess of $100,000, Malaysia would be brought up to West the duty will be $2 for every $100. Malaysian levels in graduated stages.

As Honourable Members will have noted, Excise Duties those who can only afford to buy property with a value of $100,000 or less need not It is proposed to levy excise duties on a worry about the proposed change (Ketawa), number of domestically manufactured but for those who buy property with a value products which at present have not been of, say, $150,000, the duty will now be touched. Gas operated stoves, cookers and slightly more and I think Honourable related items will now attract excise duty at Members will agree with me that those who the rate of 10%; air-conditioners for use in can afford to pay that much should also .be motor vehicles at 10% or $65 each, whichever prepared to pay a little more to the Govern­ is the higher; batteries for motor vehicles at ment. 10% or $2 each, whichever is the higher, or 10% or $3 each, whichever is the higher, Share Certificates depending on size; electric irons at 10 % or $3 each, whichever is the higher, electric rice The existing duty is 20 cents for every cookers at 10% or $4 each, whichever is the share certificate irrespective of the value of higher; electric ovenettes at 10% or $2.50 the shares. This duty is very low and is now each, whichever is the higher; flourescent to be increased to $1. lamp tubes at 10% or 25 cents each, which­ ever is the higher, and gramophone records Other Instruments at 10% or 20 cents each, whichever is the The opportunity is also taken to increase higher. All these new excise duties are the existing rate of duty of 50 cents to $1 for expected to generate about $1.28 million of every fire policy, third party policy or additional revenue. comprehensive policy. It is. also proposed to revise the existing It is estimated that all these stamp duty excise duty on private motor vehicles which changes will bring in about $4.S miilion of are at present subject to a single rate of 25%. additional revenue. This additional duty will A graduated scaie of excise duty is to be be borne by those classes of people who, in introduced to replace the present fiat rate, our opinion, are best able to do so. This is in as follows. On an ex-factory value not fact one area where we can justify increasing exceeding $7 ,000, the rate will remain at the duty rates, especially in. the light of the 25%. On every dollar of the next $3,000, the considerable rise in the value of properties duty will be 30%; and 35% on every dollar and the highly speculative dealings which are of the next $3,000; on every dollar thereafter now taking place in the \hare market in the duty will be 45%. It will be seen that this increasing quantity. is a progressive scale which is very much in line with our individual income tax rates Abatement of Income Tax in East Malaysia which reflect the principle of ability to pay. Those who can afford to buy expensive and Honourable Members will recall that when luxurious cars should be prepared to Malaysia was formed, an individual taxpayer contribute proportionately more to the in East Malaysia with a chargeable income Government's financial needs than those who of not more than $50,000 per annum would are in a less favoured position. I should like pay 40% less income tax than an individual to make it clear that the duty is based on ex­ tllXpayer in West Malaysia with the same factory value which is the basis for amount of chargeable income. Today, this calculating excise duty. According to our 3565 6 DISEMBER 1972 3566 calculations, only a small range of cars will We also propose to increase the import be affected by this additional duty, and of duty on fruits. At present imported fresh those affected by this change, about 70% will and dried fruits such as oranges, apples, attract an additional duty of less than $200. pears, grapes, figs, peaches, plums and so on I note that there is a considerable margin that fall under heading Nos. 08.01 to 08.09 between the ex-factory value and the selling and 08.12 in the Customs Tariff Classifica­ price of cars, and I hope that the industry tion attract import duty at the rate of $448 will be abie to absorb some of, if not all the per ton or 20 cents per pound. The new rate will be $896 per ton or 40 cents per pound, increases, in a fair number of cases. that is, twice the old rate. Preserved fruits which fall under heading Nos. 08.10 and Import Duties 08.11 and which are subject to import duty Since the new excise levies will narrow the at $672 per ton and under heading No. margin of protection for these products, it is 08.13 which attract a duty of $112 per ton therefore necessary to increase the duties on will now be made dutiable at $1,344 and similar imported items correspondingly. The $224 per ton respectively. Honourable Members will recall that in my last Budget import duty on gas operated stoves is to be speech I announced suspended import duties increased from 35 % to 45 % ; air-conditioners on fruits with a view to encouraging more for use in road vehicles will now attract extensive cultivation of our own fruits which import duty at 50% or $250 each, whichever are as good as imported fruits in every sense is the higher; batteries for motor vehicles at of the term. This has not produced the 40%, or 70% or 60 cents per pound, which­ desired results and I therefore feel that we ever is the higher, or 60% or 50 cents per should go further. Indeed, our papaya and pound, whichever is the higher, depending on jambu batu contain as much vitamin C as size; electric irons, at 45 % or $5 each, which­ imported oranges, according to our scientists. ever is the higher; electric rice cookers, at Our rambutans, belimbing segi, durians and 55 % or $5 each, whichever is the higher; and pineapples, for example, contain more vita­ electric ovenettes, at 55 % or $5 each, which­ min C than apples, plums, pears or grapes. ever is the higher. Gramophone records will Our bananas have as much vitamin C as now attract a higher import duty of 35 % apples (Ketawa). I would like to invite instead of 25 % and flourescent lamp tubes Honourable Members' attention to a booklet $1.65, an increase of 15 cents each. As for published by FAMA entitled "Mengenali motor cars, import duty will be increased Buah-buahan Malaysia" which compares from 45% to 60%. Import duty on cameras, the vitamin content of our domestic fruits their parts and accessories are to be increased with foreign fruits, from which it can be seen from 20% to 25%; gramophones, dictating that we can get vitamin C from our own machines, record players and related items fruits more cheaply. Under the circum­ will be liable to 30% import duty, an increase stances, I hope Honourable Members will of 5 %. In addition, portable transistors fitted agree with me that we should do everything with gramophones and car radios are now to encourage greater consumption of our liable to 30% import duty instead of 25%. own fruits, especially when they are equally At present domestic manufacturers of liquor delicious. The estimated yield of all these import concentrates of liquor and bottle and increases is $11.5 million. blend them with domestic spirits to make One form of evasion of import duty which various types of liquor such as whisky, rum, is known to be commonly practised is brandy, and so on. An examination of their declaring an item under a tariff code which costs of production and ex-factory prices attracts a lower or no duty at all. This shows that the duty element per gallon of practice not only gives rise to a consider­ domestically blended liquor is still small. In able number of administrative problems, view of this, it is proposed that the import it also generates undesirable practices. It is duty on concentrates of liquor should be therefore proposed to close these loopholes increased from 50% to 100% (Ketawa). All by increasing the relevant duties to the levels the duty increases I have just mentioned will of comparable items. Hence, the import yield approximately $6.9 million of additional duties on lubricating oil preparations under revenue. heading No. 34.03 100 are to be increased 3567 6 DISEMBER 1972 3568 from $1 to $1.05 per gallon; liquid wood abolish all these import duties there to be in preservatives and related items, manufactured line with West Malaysian practice. This wood of coniferous and non-coniferous harmonisation exercise will result in a loss of species which are at present either non­ revenue of about $172,000. dutiable or attract a duty of 15% will now be liable to 20% duty. Import duty on The opportunity is also taken to put under rubber piping and tubing is to be increased the Customs Common Tariff a number of from 30% to 35%. Aluminium plates under items as specified in the Order. All these heading No. 76.03 100 will attract a duty items are at present non-dutiable. of 45 cents instead of 35 cents per pound. Finally, I come to the last source from Various refrigerating equipment and parts which we hope to obtain additional revenue will now attract a duty of 35 % instead of to the tune of $21.2 million. This is from the 20%. Similarly, the import duty on parts of proposed increase in sales tax on a number electrical apparatus for use in electric fans of luxury goods. The sales tax on cigarettes, is to be increased from 15% to 40%. The cigars, alcoholic beverages, perfumes, pre­ import duties on prepared and preserved cious stones and metals is now to be vegetables and fruits are both to be increased increased from 5 % to 10 %. The increased from the existing rates of 40 % and 20 % rate applies to both imported as well as respectively to 40% or $33.60 per cwt., domestically produced goods. whichever is the higher. The revenue yield expected from all these changes is estimated Honourable Members will find the details at about $2.1 million. of all changes in excise and import duties and sales tax which I have just announced in At the request of the Sarawak State the Import and Excise Duties and Sales Tax Government, the import duties in Sarawak Orders, copies of which will be distributed on petrol and other related petroleum shortly. products, excluding lubricating oil and grease, are to be raised from 80 cents to 90 This completes the new tax measures. I cents per gallon. The excise duties on these now come to the most pleasant part of my products will similarly be increased to 90 speech in so far as taxpayers are concerned. cents per gallon. Under our constitutional I am, of course, referring to the tax arrangements this additional revenue will be concessions which we intend to offer to assigned to the State. manufacturing industries and to ordinary taxpayers as well. We also propose to harmonise through­ out Malaysia the import duties on a few Income Tax-Scope of Charge more remaining items. The full import duty on butter in Sarawak is to be increased from Before I outline the tax incentives which $6.72 to the Sabah and West Malaysian full we intend to offer, I wish to announce one rate of $11.20. The full rate of duty in Sabah very important change to be made to our and Sarawak on prepared and preserved income tax law. fruits under heading No. 20.06 810 will be increased from $1,120 to $1,344 per ton and As Honourable Members are no doubt those under heading Nos. 20.06 910 and fully aware, our income tax law provides that 920 from $28 to $36.60 per cwt. The 15% not only income derived in Malaysia, but import duty rate on leather parings and also from outside Malaysia whether or not waste in Sabah and Sarawak is to be it is remitted here, is liable to income tax. harmonised at the West Malaysian full rate This basis of taxation is commonly known as of 25%. the "world income scope". This scope of charge was introduced in 1968 when the new In West Malaysia, ambulances are not unified Income Tax Act, 1967 replaced the dutiable on import while in Sarawak and three income tax laws of West Malaysia, Sabah they attract an import duty of 25 % Sabah and Sarawak. Under the old income and 30% ad valorem respectively. Similarly, tax law, the charge to tax was mainly based special purpose motor vehicles are non­ on income accruing in, derived from or dutiable in West Malaysia, but are dutiable received in Malaysia so that any income in Sabah and Sarawak at the rates of 7!% arising outside Malaysia was not taxable and 25% respectively. It is proposed to unless it was remitted to or received in 3569 6 DISEMBER 1972 3570 Malaysia. This scope of charge to tax is would also stand to benefit by usually referred to as the "derivation scope". avoiding the higher rate of Malaysian tax. This is perfectly legal, in fact it is done The Government's decision to switch from openly, and it is reported in the annual the derivation scope to the worid income directors' reports and accounts issued by scope in the new income tax law was based such companies, and we have reason to upon a number of considerations, mainly believe that the tax lost in this way is far fiscal and that based on equity. It was felt greater than the additional tax which we that the world income scope would widen have obtained by the world income scope. In the tax base thereby bringing in more revenue fact, the additional revenue gained by the to the Government. From the equity point of change to world income scope has been of view, it was considered that a resident should the order of only about $3 miliion annually, be taxed on his total income wherever which is clearly only a small portion of what derived so that the tax burden would be we should have got had we been able to equal. It was also felt that the world income enforce this provision of the law properly. It scope would discourage our people from is easy to understand why it is difficult to investing abroad. enforce this provision adequately because the Government clearly is in no position to check The Government has for quite some time tax evasion practised outside Malaysia. now been examining critically again the merits of retaining this basis of taxation. In any case, even the merits of this From the revenue point of view, the world objective need closer examination now. income scope has not been particularly Diversification of investments abroad by successful in widening the tax base and both and foreigners resident in thereby increasing revenue owing to difficul­ Malaysia is perhaps not an undesirable ties in enforcement. Indeed, the world income objective in itself in present circumstances. scope legislation is much more complex, and We should not discourage it if our aim is to this coupled with the need for multiple make a major investment double taxation agreements tend to affect centre, in which case we will have to allow adversely the quality of the work of the a two-way flow of investment. If we can assessment section of the Inland Revenue maintain political and economic stability, staff with consequential effects on revenue there is no reason why such a policy should yield. In regard to the objective of making it not result in a net gain for us in this field. less attractive for Malaysian residents to invest abroad, it is doubtful if this objective Indeed, the world income scope could can be attained since investments are more inhibit to some extent the acceleration of often than not made abroad regardless of Malaysia's industrialization and development tax considerations provided that the net programme by acting as an impediment to returns are attractive enough. a greater inflow of capital, skilled personnel and expertise. It is well for us to remember On the contrary, the shift to the world that we should not only aim at attracting income scope of charge has been counter­ investments in manufacturing and extractive productive in this respect. Many of our industries, we should also aim to attract larger companies have surplus funds and it service industries like consultancy services is customary for such companies to invest a and, even more important, increase the certain proportion of such funds overseas. importance of Kuala Lumpur as a major This is nothing unusual because all over the financial centre for this region as well. For world the large multi-national corporations the latter purpose, confining the scope of diversify their investments, both structurally income tax to the derivation scope would un­ and geographically. This is a worldwide and doubtedly become a factor in our favour accepted practice. In the case of Malaysian when an international institution has to companies they have only to form subsidiary choose between Malaysia or some other companies in Singapore and we would be country in this region. It is imperative that deprived of both income tax and develop­ we should do all we can to make the Malay­ ment tax which but for this would have sian investment climate as attractive as accrued to Malaysia. It will be seen that possible, particularly when there are other because of our world income scope Malay­ developing countries nearby competing for sian companies siting tbeir subsidiaries in foreign capital and expertise. In particular, 3571 6 DISEMBER 1972 3572 we must remember that Singapore is on our The revenue loss is estimated at about doorstep. Indeed, it is less than 2 miles from $200,000 for 1973. Johore Bahru. Under such circumstances, it would always appear more attractive, Tax on Interest Derived by Non-Residents bearing in mind that companies there do not have to pay development tax, while the Honourable Members will recall that in company rate in Singapore is no higher than my last Budget speech, I announced a reduc­ that in Malaysia. This is a fact of life with tion in the tax payable on interest paid to a which we have to live. non-resident person from 40% to 15% on the gross amount of the interest, provided On balance therefore the Government has that the loan or indebtedness giving rise to decided to abolish the world income scope the interest is made or incurred for develop­ of charge to tax in the Income Tax Act, 1967 ment purposes or for capital equipment and to replace it by the derivation scope, and required for development projects in this is to be made effective from year of Malaysia, and also provided that such loan assessment 1974. It is not possible to effect or indebtedness is approved by the Treasury. the change in 1973 for administrative reasons. As I explained then, this move was designed to make foreign borrowing cheaper. It is now Tax Incentives proposed to go a step further in this direction I now come to the area where the Govern­ by removing completely this rate of 15%. In ment will sacrifice revenue in order to pro­ respect of other loans, that is, loans which do vide a greater impetus to economic develop­ not qualify for the complete tax exemption, ment. the tax on interest payable to non-resident persons on such loans will be reduced from Development Tax the present rate of 40 % to 15 % , but on the basis of the gross amount. These changes will The amount of development tax charge­ take effect from 1st January, 1973 and will able for a year of assessment on a person apply to any loan incurred on or after that having a development source is an amount date. calculated at the rate of 5 % of every dollar of his development income except that in the Tax on Public Entertainers case of a company, a minimum development tax of $500 is payable. In the case of com­ Foreign public entertainers such as stage, panies which do not or are not likely to have motion picture, radio or television artistes, a substantial paid up capital and in the event musicians and athletes who exercise their that there is little or no development income employment or profession in Malaysia on for any year of assessment, payment of the short term contracts are subject to tax at the minimum development tax of $500 could be non-resident rate of 40% in respect of their a serious strain on the financial resources of earnings in Malaysia less any expenses wholly such a company. This is particularly true of and exclusively incurred in the generation of many Malay companies. It should also be such earnings. The effective rate depending noted that individuals who are partners in on the amount of gross earnings and expenses partnership businesses are no longer subject claimed and allowed is generally between to the minimum development tax of $100. 10% and 25%. However, the need to agree With a view to providing some relief for with the Inland Revenue Department their the small Malay companies, and generally to claims for expenses and therefore their tax­ encourage the formation of even small able income has given rise to administrative companies, it is now proposed to reduce the difficulties and inconvenience all round, and existing minimum development tax of $500. not infrequently to charges of discrimination and unfair tax treatment. These difficulties (a) to $100, where the paid up capital as and frustrations could discourage foreign at the end of the basis period of the artistes from performing in Malaysia. This is company liable to the tax was not more certainly not desirable, particularly in view of than $50,000; and present Government efforts to boost tourism (b) to $250, where the paid up capital as and the hotel industry. It is, therefore, at the end of the basis period was not proposed to introduce a uniform tax rate for more than $100,000. the assessment of foreign public entertainers 3573 6 DISEMBER 1972 3574 and athletes in respect of their income incorporating not less than 50% of domestic derived from the exercise of their employ­ materials or components. ment or profession in Malaysia. This would simplify the taxation on such persons without This concession is to apply to all industrial any noticeable revenue implications. The rate products, including products which have been will be 15% of gross earnings. processed further than necessary for purposes of transport. The export of primary products will not therefore qualify for the proposed Incentives for Exports allowance and these include tin in the form of Industrialization in Malaysia has now ore, ingots or slabs, natural rubber (crude and reached the stage where greater efforts must processed), crude palm oil, palm kernel oil be made to export our manufactured goods. and palm kernel, crude coconut oil, copra This is obvious when we have gone as far as and coconuts, logs, sawn timber and wood we are likely to go in the matter of import chips, mineral ores and refined metal, substitution. In order to accelerate the precious metal and precious stones development of export-orientated industries (unmounted), crude petroleum and petroleum the existing export incentives provided in the products, marine products not further Investment Incentives Act, 1968 have been processed than necessary for transportation, reviewed and a more generous and effective tea leaf and tea dust, spices (raw and scheme of export incentives will be unprocessed), raw hides and skins and introduced. tapioca roots and chips. A pioneer company, after the expiry of its tax relief period, will Export Allowance also be eligible to qualify for this proposed export allowance. It is intended that this new The present export allowance provided scheme of export incentives will be reviewed under the Investment Incentives Act is to be after it has been in operation for 3 years, or made more liberal. The proposed export earlier if necessary. allowance is by way of a deduction from gross income in arriving at adjusted Income Tax (Promotion of Export) Rules, or taxable income. The amount of the I968 allowance is 5 cents for every dollar of the increase in the export sales of a taxpayer, To achieve our objectives, it will also be such increase being the excess of his total necessary to liberalise the Income Tax export sales of the year in question over his (Promotion of Export) Rules, 1968 average annual export sales of the 5 accordingly. The proposed changes will immediately preceding years, except that become effective from year of assessment 1973. (a) where there were export sales in only 4 immediately preceding years, the average annual export sales will be the Licensed Manufacturing Warehouses average of those 4 years; and It is also proposed to off er further customs (b) where there were export sales in only 1, facilities to promote export-orientated in­ 2 or 3 immediately preceding years, dustries. The introduction of the Free Trade the average annual export sales will be Zones Act, 1971 enabled the Government to one-third of the total export sales of establish free trade zones. A company setting that 1 year or of those 2 or 3 years, as up a factory in such an area can obtain the case may be. exemption from customs and excise duties and sales tax on all goods brought into the Where there were no export sales in the area except those goods which are specifically immediately preceding years (i.e. where the and absolutely prohibited by any written taxpayer first commenced to export only law. In addition, the movement of goods is during the year in question), the export subject to the minimum of customs allowance will be 5 cents for every dollar of procedures and supervision. All these his total export sales for that year. To facilities are designed to assist exporters of encourage the greater use of domestic industrial products to be more competitive in materials or components, it is also proposed the world market. Recently, interest has been to increase the allowance to 8 cents for every shown by a number of companies in dollar in respect of exports of products establishing factories for the manufacture of 3575 6 DISEMBER 1972 3576 products mainly for export in areas where In this connection, I would like to quote the setting up of a free trade zone is neither the advice given to us by Mr McNamara, the practical nor desirable. To enable such President of the World Bank, when I had a companies to do this, it is now proposed to discussion with him in his office in amend the Customs Act, 1967 to enable the Washington last September. He told me that establishment of licensed manufacturing Trade Commissioners cannot do much in the warehouses. matter of export promotion apart from providing information to potential buyers. At present, section 65 of the Customs Act He felt that the main thrust must come from already provides for warehousing facilities. the private sector. He said that all that the All goods imported into such licensed ware­ entrepreneur needs do is to buy an aeroplane houses are not subject to customs duties until ticket to New York or wherever he wanted to they are released from bond. The proposal sell his goods, appoint a selling agent and now is to allow manufacturing activities to be give not only the particulars and prices of the carried on as well. To this extent, customs goods themselves but, equally important, the facilities to be made available in such ware­ amount available for sale. He quoted houses will be comparable to those obtain­ instances where this direct approach had able in a free trade zone. The proposed produced spectacular results. I feel that this customs facility will not only provide a advice is sound and would like to transmit it further incentive to the growth of export­ to the private sector. If I may say so, life in orientated industries, it will also encourage this country is so easy that the private sector the dispersal of industries away from the has not so far had to bestir itself unduly. A major urban areas, thereby bringing employ­ little effort produces results which are more ment opportunities to our people in the than worthwhile and hence there is no spur smaller towns and the rural areas. to make the little extra effort which spells the difference between modest success and Overall Deficit spectacular growth. With the net additional revenue of about $53 million expected from these tax changes, To those of the business community who a current account deficit of $154 million is at present are only engaged in buying and anticipated. Taking into account total selling, I would give one piece of urgent development expenditure and net lending of advice and that is to switch to manufacturing $1,101 million, the overall deficit would, as soon as possible. We in Malaysia are therefore, be $1,255 million. determined to industrialize as rapidly as possible and those who insist on remaining Conclusion as merchants, whether large or small, might It is clear that two areas show the greatest one day find that their livelihood is gone. promise in the matter of future growth Change your livelihood therefore before it is prospects. Firstly, we must concentrate on too late. I would also like to take this building up export orientated industries. opportunity to sound another warning. Secondly, and this might be easier of Industrialization like everything else, has its fulfilment, we must process a much higher price and that price could well be a slightly proportion of the primary commodities higher cost of living from time to time. Our which we now export overwhelmingly in new industries require adequate protection if crude form. Malaysia is the world's largest they are to survive, particularly bearing in exporter of rubber, tin, palm oil, tropical mind that our domestic market, on hardwoods and pepper, and we are certainly which they depend for their bread and butter, the world's largest producer of rubber and tin so to speak, is far too small. Let us remember as well. It is not too much to expect that we that even the largest developed countries, should export a reasonable proportion like the U.S.A. and Japan, which have of such products in a more sophisticated enormous domestic markets, still provide form. In both these areas the Government their domestic industries with considerable has offered adequate incentives. If the private tariff and other forms of protection. It is not sector feels that such incentives are still not surprising then that the much smaller enough, we are prepared to think again, as industries in developing countries like we keep an open mind, but the private sector Malaysia whose home markets are equally too. must play its full part. small would require even more protection. I 3577 6 DISEMBER 1972 3578 sound this warning because I see that some Mesyuarat mengenai Anggaran Pemba­ Chambers of Commerce have from time to ngunan, 1973 diedarkan kepada Jawatankuasa time put up statements asking the Govern­ ment to reduce levels of protection in order sebuah-buah Majlis yang berbunyi- to keep costs down. This is an unrealistic Bahawa Dewan ini membuat ketetapan approach and is clearly a non-starter, if I may be permitted to use a colloquial iaitu satu jumlah wang sebanyak tidak expression. lebih daripada $1,487,522,103 dibelanja­ To sum up, the indispensable element for kan daripada Kumpulan Wang Pemba­ the success of the New Economic Policy is ngunan bagi tahun 1973, dan bagi maksud growth. Growth is necessary to provide us Kepala dan Pecahan-pecahan Kepala per­ with a bigger national cake with larger slices belanjaan pembangunan yang dinyatakan for all Malaysians, including the have-nots of all races. To achieve this, three economic di bawah Kepala Pembangunan atau "(P)" measures have to be taken. The first is dalam senarai Belanjawan Persekutuan growth, the second is growth and the third is bagi tahun 1973 yang dibentangkan still growth. sebagai Kertas Perintah No. 58 tahun 1972, The time has, therefore, come for the adalah diuntukkan di bawah Kepala-kepala private sector to reappraise its thinking and dedicate itself anew to the challenges which yang berkenaan jumlah-jumlah yang berten­ now confront us. If they can rise to the tang dengan pecahan-pecahan kepala itu di occasion, I have little doubt that the rewards ruangan 6 atau 7 senarai tersebut; dan will be impressive, and in the process they will not only help themselves, they will make bahawa Usul yang telah diluluskan oleh a worthy contribution to our national goal of Dewan ini pada 23hb Ogas, 1972, creating a more just society. mengenai perbelanjaan yang dibelanjakan Sir, I beg to move. (Tepuk) daripada Kumpulanwang Pembangunan bagi tahun kewangan 1973 adalah dibatal­ Menteri Burnh dan Tenaga Rakyat (Tan kan. Sri V. Manickavasagam): Tuan Yang di Pertua, saya mohon menyokong. Tan Sri V. Manickavasagam: Tuan Yang di Pertua, saya mohon menyokong. USUL Tuan Yaug di Pertua: Mesyuarat di­ ANGGARAN PEMBANGUNAN, 1973 tangguhkan sehingga pukul 2.30 petang esok. Tun Tan Siew Sin: Tuan Yang di Pertua, saya mohon mencadangkan bahawa usul Dewan ditangguhkan pada pukul 4.45 yang tersebut dalam Aturan Urusan petang.