A new investment institution known as "Dana Harapan" will be set up under the mid term review of the Eight Malaysia Plan to attract and mobilise bumiputera resources.

It will also enable the introduction of innovative unit trust products and further expand investment opportunities for bumiputeras, Prime Minister Dr Mahathir Mohamad said today.

In addition, the government will award at least 60 per cent of procurements and contract works in government projects to "responsible, competent and capable bumiputeras".

"The government is aware that efforts to increase Bumiputera equity ownership during the remaining plan period will become more challenging particularly with globalisation and greater market liberalistion," Mahathir said in his presentation of the review in Parliament this morning.

He pledged more opportunities to bumiputeras in selected sectors saying that it was necessary if the target of at least 30 per cent bumiputera equity ownership by 2010 is to be met.

Still fragile

The target is part of the New Economic Policy, an affirmative action program drawn up following racial riots in 1969 to help Malays catch up with the wealthier Chinese minority by giving them preferences in business and education.

Meanwhile, AFP quoted Mahathir as saying that bumiputera firms were "still too friable" and easily affected by economic turmoil.

Their equity share stood at only 18.7 percent last year and their ownership of share capital grew an average 7.8 percent over the past two years to RM73.2 billion in 2002, compared to Chinese ownership which grew at a faster pace of 11.2 percent to RM159.80 billion, he noted.

"We are not taking a step backward but if we don't have quotas, the bumiputeras may not get anything at all," he told reporters later.

"Unless you can balance the economic performance of bumiputeras and non-bumiputeras, there is always a danger of jealousies and this can played up by some irresponsible people."

Assessing the country's economic performance over the past three years, Mahathir said GDP grew an average three percent a year, per capita income rose an average 2.4 percent a year to RM14,324 in 2003 while purchasing power grew 3.9 percent a year to RM35,644.

Prospects over the next two years were "promising" with GDP "projected to grow at an average rate of six percent per annum" to put Malaysia back on track to becoming an industrialised nation by 2020, he said.

Per capita income is forecast to surge to RM15,600 in 2005.

Exports will grow

Private investment, which contracted by an average 11 percent in 2001-03, is expected to turn around and grow 12 percent annually over the next two years, he said. With better prospects in world trade, exports are likely to grow 7.4 percent a year.

Mahathir said the manufacturing and services sectors would continue to drive growth in the next two years, with increases of 7.8 percent and six percent a year respectively until 2005.

The premier said the government would not continue its expansionary fiscal stance and would take measures to cut its budget deficit from 5.5 percent of GDP to 1.8 percent by 2005.

Malaysia must increase its competitiveness, strengthen its resilience and improve productivity and creativity to prepare for increased competition from emerging economies such as China and India, he said.

"We should make Malaysia a gateway for products and services from other parts of the world to the countries in the region," he said.