20100310 0950 Malaysian Economic News.

Malaysia is ready to sign the joint declaration on economic cooperation (JDC) with the European Free Trade Association (EFTA), the Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed said. The EFTA comprises Switzerland, Iceland, Norway and Liechtenstein. "We are pleased to announce that all outstanding matters have been resolved and the JDC is ready for signing," he said. (Bernama)

RAM Holdings Bhd group chief economist, Dr Yeah Kim Leng said that the government's 5.1% fiscal deficit target for this year is achievable provided there is no unexpected spending, said an economist. The country's deficit level was considered moderate compared to the advanced economy. Malaysia's moderate debt level and strong funding capability with low external debt suggested no fiscal risk as long as fiscal retrenchment continued without derailing growth, he added.

• 5.0-6.0% economic growth this year is within the country's reach, helped by factory restocking activities and a global recovery, even though it has forecast 4.9% growth in the economy this year. Factories ramping up stockpile, will alone contribute 1.0-2.0% to the gross domestic product (GDP) expansion this year 
• Inflation would be at 2.5% this year. It would be cost-push rather than demand-pull and still below the trend of around 3.0-3.5%.
• The ringgit was likely to strengthen following better growth performance, high account surplus and positive interest rates. It is expected to strengthen by 2.0-3.0% to between RM3.20-RM3.30 by year-end. (Bernama, BT)

The government is considering an application from SME Bank for new allocation under the 10th Malaysia Plan to implement and develop its factory scheme. Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir said the ministry through SME Bank was giving priority to entrepreneurship programmes, particularly those involving small and medium scale Bumiputera entrepreneurs, in the country's development. (Bernama)

The government is expected to table the proposed Small and Medium Enterprise (SME) Masterplan 2011-2020 by June 2010. International Trade and Industry Deputy Minister Datuk Mukhriz Tun Mahathir said the government and other related agencies are currently studying the matter and putting in the details before tabling it to the Cabinet. It was reported that the SME masterplan is aimed to increase and synchronise the development of the sector with the new economic model. (BT)

The Federation of Malaysian Manufacturers (FMM) suggested that the government consider a Retail Sales Tax (RST) as the country was not ready for the Goods and Services Tax (GST). Chairman of the Task Force on GST Datuk Lee Ow Kim recommended that the GST be deferred until Malaysia was ready when average income was higher and the income disparity was smaller. The RST is an alternative which was simpler, less costly for government and businesses to administer but generates the same revenue to the government, he said. (Bernama)

The Malaysian Trades Union Congress (MTUC) called on the government to provide tax incentives to coffee shop and restaurant owners to encourage them to employ locals. The incentives could be in the form of rebates or lower tax when more locals were employed, said its vice-president, A. Balasubramaniam. (Bernama)