ONLY about RM920 million of the RM3 billion fiscal stimulus packageintroduced by the Government in March is expected to be disbursed byyear-end, with stringent bank rules, red tape and slower economic growthall seen as contributing to the fund's low utilisation rate.

By the end of this month, disbursements would total a quarter of theallocated amount, or RM750 million, with RM200 million having already beenreleased, said an industry source.

Still, the construction sector can expect to see a flurry of activity inthe next few months as the authorities rush to step up the package'sutilisation, in response to the Prime Minister's comments on Monday,analysts said.

Datuk Seri Dr Mahathir Mohamad had said that only RM200 million, or 6.67per cent, of the allocation has been utilised so far, and greater effortswould be needed if the stimulus package is to have the intended impact onthe economy.

The RM3 billion was in addition to the RM28.8 billion expenditure approvedunder Budget 2001 and new projects identified for immediate implementationinclude the single school session programme (RM2 billion), communitycolleges (RM900 million), a university each in Perlis, Malacca, Pahang andNegri Sembilan (RM1.6 billion), housing for Armed Forces personnel (RM400million), and subsidies for oil palm and rubber growers (RM600 million).

A flying squad was established by the Ministry of Finance to fast-trackthe projects, but the implementation process is only now gatheringmomentum.

It is understood that distribution of subsidies for smallholders havestarted while funds for the construction of quarters for Armed Forcespersonnel are in the process of being disbursed.

However, Malaysian Institute of Economic Research executive director DrMohamed Ariff Abdul Kareem said it is normal, for all countries, to seespending pick up only towards the end of the year.

"If you look at previous years' spending patterns, utilisation of funds inMalaysia usually started slow and then slowly picked up towards year-end.

"Companies and organisations like to do things at the last moment andbunch up their activities late in the year, it seems, he said.

As such, any positive impact on the economy from the stimulus package islikely to be felt only next year, Mohamed Ariff added.

29 August 2001Business Times