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Power shift may release Malaysia spending

MALAYSIAN INFRASTRUCTURE spending could increase following this week's arrest of Malaysian deputy prime minister Anwar Ibrahim on sodomy and corruption charges, British consultants working in the country claimed this week.

Anwar, who was also Malaysia's finance minister, was detained on Sunday under an emergency law protecting 'national security'. His arrest sparked violent clashes between police and supporters of his reform movement across the capital, Kuala Lumpur.

But British consultants this week claimed that with Anwar in prison and prime minister Mahathir Mohamad's word unchallenged, more public money could be freed for infrastructure investment.

Mahathir and Anwar are known to disagree on the best way to kick start Malaysia's economy, which has collapsed during the Asia currency crisis. Anwar wanted public spending cuts, while Mahathir believes that pumping money into construction, which accounted for 25% of the economy before the crisis, is the best way forward.

A director of one leading British consultancy said: 'Everybody in construction thinks this is a good thing in the short term but it remains to be seen how things will go in the long term.'

Another senior manager claimed that while the expected change of economic policy would have a positive impact, it would not be enough to keep British companies in the country.

'You can stimulate major infrastructure projects, but the banking system is tightened up and liquidity is very low,' he said.

Director of Posford Malaysia Simon Harries claimed it was 'too early to tell' how the arrest would affect public spending.

Matthew Jones

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