Incentives to attract foreign direct investment (FDI) into Malaysia are expected to be among the highlights of the upcoming Budget 2010.

"It has always been our role to provide whatever necessary incentives to encourage the entry of FDI into the country," Deputy International Trade and Industry Minister Mukhriz Mahathir said today.

manek urai by election tuan aziz and mukhriz mahathir bn campaign 070709 06 "We are after all competing with other countries particularly in the region, for investments. I cannot disclose though what the specific incentives are in the new budget.

"But, be assured we will ensure continuity in being competitive as an investment destination," he added.

Mukhriz said the government is committed to encouraging more FDI providing tax exemptions and the latest is the liberalisation of 27 sub-sectors of the services industry.

"As to what specific new incentives the new budget has, it depends very much on the Prime Minister, Najib Abdul Razak," he added.

NAP review soon

Commenting on the new National Automotive Policy (NAP), he said the International Trade and Industry Ministry is expected to announce details of the review soon.

"We are seeking a balance between imports and locally produced cars and of course, Proton is our main concern. Whatever it is, we will take into consideration, the interest of all parties," he said.

He also said this in response to a question as to whether Proton would be the only one to have the national car status under the NAP review.

As the country's economy is directly linked to trading globally, Mukhriz said there was a need to uplift the local automotive industry, so that it provides a balance.

"When there is a downturn, we will be impacted directly. Therefore, by uplifting the automotive industry, we can balance off our trading activities," he said.

Lower deficit projected

Meanwhile, the Malaysian Rating Corp Bhd (MARC) projects the budget deficit for 2010 to be between six and seven percent of the gross domestic product (GDP), lower than some forecasts of above seven percent.

"There could be some surprises on what the government is going to trim in terms of operating expenditure in 2010," said MARC chief economist Nor Zahidi Alias.

According to him, the government is in a position where it is ready to cut some of the operating expenditure, especially in terms of subsidy.

"The government may compensate the subsidy reduction with special assistance to certain groups like what they are doing for rice," Nor Zahidi said.

"Thus, don't discount the possibility that the budget deficit may be slightly lower than seven percent," he said.

- Bernama