Bursa Saham Malaysia is not suffering from a crisis of confidence and this is evident from the 48 percent improvement in the bourse's performance since the stimulus package and market liberalisation policies were introduced by Prime Minister Najib Abdul Razak, the Dewan Rakyat was informed today.

chor chee heung Deputy Finance Minister Chor Chee Heung said against the backdrop of a global economic crisis, the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI), which dipped to a low of 800 points mid-October 2008, has recovered to hover around the 1,250 points level.

He was confident sentiment on the stock market would improve further and the FBM KLCI would test the 1,400 points level beginning next year.

"Bourses the world over were badly affected by the global economic crisis and Malaysia was no exception with the FBM KLCI falling to a low of 800 points.

"However, with the injection of financial stimulus packages, at home and in other countries, we have seen stock markets worldwide improving," he said in a supplementary question to Nur Jazlan Mohamed (BN-Pulai).

Smaller contraction

Meanwhile, Chor also refuted the allegation that the government has prescribed the wrong treatment for the economy.

He said measures taken by the government to overcome the impact of the economic crisis had yielded positive outcomes.

"This can be seen from the smaller contraction in the country's economy, that is from 6.2 percent in the first quarter of 2009 to 3.9 percent in the second and 1.2 percent in the third," he said.

He was answering a question from Dr Dzulkefli Ahmad (PAS-Kuala Selangor) who had asked the finance minister to state why major towns in Malaysia were faced with the pressure of inflation when the country's gross domestic product (GDP) had experienced a contraction in the first and second quarters of 2009.

He also asked if this meant that the government's prescription, for treating the economy was wrong, and off target.

Chor said in 2008 and 2009, many countries including Malaysia had implemented stimulus packages and accommodative monetary policies to overcome the impact of the global financial and economic crisis.

Slow rise in inflation

According to Chor, the country's inflationary pressure had reduced this year resulting from the fall in the price of food commodities and oil, following the global economic crisis.

"As such, inflation which is measured through changes in the annual Consumer Price Index (CPI), recorded an increase of 3.7 percent in the first quarter of the year and slowed down to 1.3 percent in the second.

"From January to October 2009, inflation only registered a rise of 0.6 percent compared to 5.5 percent for the same period last year," he said.

He said that inflation in towns also showed a slow rise this year compared to 2008.

He highlighted that inflation in towns in the first quarter of 2009 was 3.6 percent, 1.2 percent in the second and fell to 2.4 percent in the third compared to 2.6 percent, 4.7 percent and 8.2 percent in the same quarters of 2008.

- Bernama