The government's decision to spend RM8.5 billion on development schemes reflects a shift in policy away from the "mega projects" favoured in the past, analysts said today.

Two weeks after announcing it would increase development spending by RM10 billion in the next 18 months, the government yesterday said it would use RM8.5 billion on infrastructure development, education, housing and flood mitigation.

This "demonstrates the shift in policy, with the emphasis more on high priority and socio-economic areas", said Azrul Azwar, senior economist with MIDF Bhd.

"With this social dimension, the government seems to be doing away with big-ticket projects and appears determined to ensure a wider reach of the public funds disbursed, touching the lives of many 'ordinary people'," he said.

"Apart from acting as a booster for construction activities, this fresh injection could also bring indirect spillover effects in the overall economy through higher consumer spending and further development in building materials industries," he said.

Small projects

A total of RM1.5 billion from the allocation would be used to build part of a highway on the east coast of peninsular Malaysia, Prime Minister Abdullah Ahmad Badawi said in a statement.

Abdullah, who is also Finance Minister, said that RM2 billion would be spent on small projects, such as the building of roads and schools.

The remaining RM5 billion would be spent on more than 50 projects for which letters of intent had already been issued, including infrastructure development, education, housing and flood mitigation.

The highway linking northeastern Terengganu state to central Pahang state was "expected to stimulate economic growth in Terengganu specifically and the east coast generally," Abdullah said.

When he first announced the additional RM10 billion allocation last month, Abdullah said it would not involve any "mega projects" but would focus on those generating economic growth.

The government has been cutting back on big projects since Abdullah took over last October from his predecessor Dr Mahathir Mohamad, who had a penchant for grandiose schemes.