US tax cut package expected to boost Malaysia’s economy

  • Business
  • Thursday, 23 Jan 2003

THE measures introduced by the United States recently to boost its economy are expected to have a positive impact on the Malaysian economy by next year, Deputy Finance Minister 1 Datuk Dr Shafie Mohd Salleh said. 

“The package introduced by the US is expected to boost consumer spending and this will benefit Malaysia as the US is our major export market. Hopefully, it will also help boost further the KLSE,” he told reporters in Kuala Lumpur yesterday after witnessing an agreement signing between PUC Founder (MSC) Bhd and Yayasan Bekas Perajurit Wilayah Persekutuan. 

US President George W. Bush recently announced a 10-year tax cut package worth some US$674bil to stimulate the American economy. Dubbed a “growth and jobs” plan, it calls for the elimination of tax on stock dividends paid to individuals, and earlier implementation of across-the-board tax rate cuts.  

The package will also extend benefits and provide training for the jobless, increase child tax credit, raise federal funding for needy states and boost incentives for small businesses to spend on equipment.  

The White House said the plan would give 92 million American taxpayers an average tax cut of US$1,083 this year.  

Up to 35 million people who get income from dividends could also benefit, thereby increasing consumer spending and investment. 

Dr Shafie said the setting up of Valuecap Sdn Bhd and the government's plan to introduce its third pump-priming package were expected to further boost the local stock market and the economy.  

Noting that the government had introduced two pump-priming packages worth a total of RM7.3bil in 2001 to help improve the economy, he said: “Hopefully the third package will boost the KLSE further. I expect the KLSE Composite Index to gradually improve and reach between 680 and 700 points in the near future.” 

Equally owned by Khazanah Nasional Sdn Bhd, Permodalan Nasional Bhd and Kumpulan Wang Amanah Pencen, Valuecap is a newly established asset management company with funds totalling about RM10bil.  

The company, which began operations recently, will invest the amount in the KLSE over a period of time, depending on the value of the stocks and timing opportunities.  

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