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Outgoing Prime Minister Mahathir Mohamad yesterday announced  a 7.3 billion ringgit (HK$15 billion) economic stimulus package to boost the flagging Malaysian economy and help sectors battered by the Sars outbreak. The measures are also likely to improve the government's electoral prospects.

The populist measures include bonuses for civil servants, cheap loans and micro-credit for farmers and  small traders, cheap housing for poor villagers and 1,000 boats for fishermen.

Dr Mahathir said the package comprised 90 different measures to help the tourism sector, ease foreign investment rules and provide funds to help troubled small traders. The package is equally financed from taxes and borrowings from the national pension fund.

Part of the borrowing will be used to launch the Project Hope scheme - a programme to build  cheap houses in rural Malay areas where the government lost to Islamic opponents in the 1999 general election.

The package, postponed several times, is the third and the largest of three off-budget packages since September 2001.

'The people must stay with the government and together pull through the difficult times,' Dr Mahathir said.

A political analyst said: 'It is a mixed package - to revive growth and prepare the people for an early election.  The government is helping traditional supporters badly hit by the Sars outbreak.'

The tourist industry lands a 5 per cent discount on electricity bills,  with hotels and restaurants also gaining an exemption from service tax.  Travel companies will be offered loans under a 1 billion ringgit scheme, and taxi operators gain a 50 per cent discount on road taxes.

Medical personnel fighting Sars gain a special allowance, with more money allocated to public hygiene programmes. A disease control centre also will be established.

Employers have gained a 2 per cent reduction in the mandatory pension payments they give workers, and investment  rules have been relaxed for foreign investors.

Although Malaysia's economic fundamentals remain strong, the country's growth has lagged recently.

Elections could be held after Dr Mahathir's retirement in October.



Malaysia launches a populist package for battered electorate