ASEAN KEY DESTINATIONS
Thailand, Malaysia spend billions to boost economy
Several Asian governments have launched multi-billion dollar plans to help their economies in the face of weakening domestic demand and as business with their key export markets, Europe and the United States, deteriorates, reported Reuters.
In Malaysia, overall subsidies were 33.8 billion ringgit ($9.8 billion), largely accounting for the budget deficit overshoot to 4.8 pct of GDP this year from a planned 3.1 percent.
In 2009, the budget deficit is forecast at 3.6 pct of GDP, which few economists believe can be achieved with the government fighting for its political survival. There were personal tax cuts for top rate tax payers by 1 percentage point to 27 percent and 1 percentage point off the main 13 percent rate, measures aimed at stimulating faltering domestic demand.
The packages compared with a gross domestic product of $246 billion last year, around 1.1 percent of GDP.
Among the other countries using fiscal stimulus to boost their economies include China, Hong Kong, Japan and Taiwan.
China has increased value added tax rebates to textile exporters, and state newspapers say contingency planning for a fiscal stimulus package is under way.
JPMorgan says the package could total 200-400 billion yuan ($29-58 billion), while Medley Global Advisors says policy makers are eyeing measures worth 1.4 percent of GDP comprising 150 billion yuan in tax cuts and extra spending of 220 billionHong Kong's government, awash with cash after a four-year economic boom boosted public revenues, announced a HK$45 billion ($5.8 billion) package of concessions and handouts in its annual budget in February -- including a one-off cut in income tax and temporary waivers on public housing rent.
Asia's biggest economy and the world's second largest compiled a package of steps to help small businesses and individuals cope with high oil and food prices late last month, including 1.8 trillion yen ($16.8 billion) in new spending -- roughly 0.4 percent of GDP.
The relief package was smaller than past programmes that were aimed at stimulating the economy through pork-barrel spending, given worries of the mountain of Japan's
outstanding public debt amounting to 1-½ times GDP.
In Taiwan, the government said a string of economy-stimulating steps unveiled since May could generate T$1 trillion ($31.2 billion) in investment and consumption, as it tries to hit its growth target amid slowing demand for its goods.
The scheme announced by the cabinet on Thursday would cost the government T$122.6 billion in subsidies and tax cuts, including a measure that would halve the tax on stock trading, and an extra T$58.3 billion in infrastructure spending.