KUALA LUMPUR Malaysia's government on Monday unveiled a bold plan to spend 110 billion ringgit ($28.9 billion) over five years on moving manufacturing upmarket, promoting a knowledge economy and wiping out poverty.

The eighth Malaysia plan, tabled by Prime Minister Mahathir Mohamad in Parliament, envisages 7.5 percent average annual growth until 2005, AFP reported.

Under the theme of "achieving sustainable growth with resilience," it sets policies and budgets to achieve the targets of a 10-year development blueprint unveiled earlier this month.

The three main thrusts are:

* Shifting the growth strategy "from input-driven to knowledge-driven"

* Transforming the agriculture, manufacturing and services sectors

* Sharing wealth more fairly to strengthen social stability

The plan reaffirms the target of giving Malays and other indigenous races a stake of at least 30 percent in the Chinese-dominated business world.

The corporate stake held by ethnic Indians should double to three percent by 2010.

Development spending under the plan is 6.2 percent higher than in the last five years.

The economic sectors get the lion's share of 50.5 billion ringgit. Defense spending is cut by nearly 16 percent to 10.75 billion, to make up for a higher allocation of 37.5 billion for the social sector.

The remaining 11.2 billion is for general administration.

The government's net foreign borrowing is expected to be 8.3 billion ringgit over the next five years, from 1.7 billion in the past five.

Mahathir said the 1997/98 financial crisis showed the need for social and economic resilience.

"It serves to remind us that we can no longer depend on past formulas for our future success," he said in a foreword to the 659-page plan formulated by the economic planning unit.

"The eighth Malaysia plan charts the next steps that we, as a nation, will have to take towards becoming a united and fully-developed nation in our own mould by the year 2020."

It would focus on "improving management and organizational techniques, upgrading research and development and science and technology as well as strengthening innovative capacity," he added.

Of the 50.5 billion economic allocation, 22 billion will be used to improve transport and communications including plans for a monorail for the new administrative capital of Putrajaya and neighboring Cyberjaya.

The agriculture sector is allocated 7.9 billion to raise production and cut soaring import bills which hit 13 billion ringgit last year.

Some 1.6 billion ringgit is allocated for research and development, and 10.3 billion to encourage manufacturing and other businesses to move into higher-tech activities.

Six billion goes to increase water resources. The energy sector gets 2.6 billion ringgit of which 926 million is to revive the controversial Bakun dam project in eastern Sarawak State.

The government will continue its privatization policy but emphasize more commercially viable projects and strengthen the regulatory framework.

The plan aims to reduce poverty to 0.5 percent in 2005 from 7.5 percent now.

It allocates 22.7 billion for education and training. A total of 20,000 new classrooms, four universities and 15 training institutes will be built and 8,000 schools equipped with computers.

A code of ethics will be inculcated at schools to counter the Internet's negative influences which could be a national security threat, it said.

One billion ringgit will be spent to reduce the digital gap between rural and urban areas.

A sum of 5.5 billion will be used to build 31 hospitals and 172 clinics, while 4.2 billion is allocated for low and medium-cost housing.