KUALA LUMPUR: Government ministries have so far spent very little from what they are targeted to under Budget 2011, but their spending will be stepped up to boost domestic demand, says Deputy Finance Minister Datuk Donald Lim Siang Chai- "We've found that the spending by the ministries in the first six months was not up to the mark as some of them recorded spending as low as 10 per cent of what was targeted (under Budget 2011)," Lim said- The Finance Ministry will direct government ministries and departments to expedite their targeted development projects-Towards this purpose, It will also seek the assistance of the Performance Management and Delivery Unit, Lim said at a media briefing after launching the 26th National Economic Briefing by think tank Malaysian Institute of Economic Research (Mier)- He said the delay in implementation could be due to bureaucracy and red tape- He was, however, confident that the second half would show better performance as the projects under the Economic Transformation Programme (ETP) would be underway- On the expected reduction of budget deficit to gross domestic product (GDP) to 5-4 per cent this year, he said the process of reducing it to 2-8 per cent by 2015 would have to be undertaken gradually- On the Goods and Sales Tax (GST), he said it will take 12 to 18 months to educate individuals and small businesses about its mechanism, via roadshows and training- Lim was confident that the Malaysian economy would be able to chart the official 5 to 6 per cent growth on an improved second half as projects come on board- The economy moderated to 4-6 per cent year-on-year in the first quarter of this year, supported by private consumption (6-7 per cent) and public consumption (6-1 per cent)- "Over the near term, the overall GDP growth is likely to trend lower due to the effects from the recent disaster in Japan and weakening sentiments due to rising inflationary expectations-" Economic growth will strengthen from the second half of 2011 onwards as the rebuilding of Japan and implementation of ETP projects become entrenched- While most indicators suggest that the Malaysian economy is fairly sound, that does not imply that Malaysia is completely immune to future global economic or financial crisis, he warned- Malaysia is tightly integrated to the world economy and the recent global financial crisis clearly indicates that Malaysia is vulnerable to adverse external shocks- Mier, meanwhile, expects the 2011 GDP growth to reach 5-2 per cent year-on-year, before rising to 5-5 per cent in 2012- "Under-performance in next exports will drag down economic growth in 2011, while domestic demand is likely to be strong due to supportive government policy measures," its executive director Dr Zakariah Abdul Rashid said in his presentation- Mier's in-house Consumer Sentiment Index declined slightly to 107-9 points in the second quarter, while the Business Conditions Index edged up marginally 114-0 points- The Retail Trade Index and Tourism Market Index registered growth of 124-8 points and 125-4 points respectively- However the Automotive Industry Index, CEO index and Residential Property Index slipped lower to 120-8 points, 111-9 points and 128 points- On inflationary pressures building up, Mier has projected overall CPI to peak at 3-8 per cent in June due to recent hikes on electricity tariff by 7-12 per cent on the average and petrol prices by 28 per cent- It expects inflation to be around 3-5 per cent, with upside risks from indirect second round effects- The CPI, it added, is expected to average 3-3 per cent in 2012 prompting further hikes in Overnight Policy Rate to 3-50 per cent- ...

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