Earning RM1,500 by 2020, you call that a success?

Rebutting opposition claims about the Economic Transformation Programme, Performance Management and Delivery Unit (Pemandu) today said that millions of Malaysians would be even poorer in its absence.

Speaking to Malaysiakini, Pemandu analyst Marc Fong said that while it is true that some seven million Malaysians would earn around RM1,500 in 2020, the same people would make even less without the ETP.

Quoting from the ETP Roadmap, Fong said its projection is that 2.3 million people will earn under RM1,000 while the income of 4.7 million will be in the RM1,000-2,000 range in 2020.

"I am assuming that this is where (PKR de facto leader) Anwar (Ibrahim) is getting his numbers from.

"What we are saying is that yes, seven million will earn about that much in 2020, but there will be a positive shift in income brackets," Fong said.

According to the roadmap, 600,000 people earning less than RM1000 today will earn more in 2020.

An additional one million will earn RM1,000 to RM2,000 in the year 2020, compared to in 2009, while even more people are projected to earn upwards of RM2,000 which they did not before.

In a statement today, fellow Pemandu analyst Salina Salleh added that Anwar's (right) claim that the ETP will send an additional 1.7 million Malaysians into poverty in 2020 is "misleading".

"It is not only misleading, but irresponsible to focus on the two lowest income brackets without considering the increases across the board, including the higher income bracket," she added.

Anwar had at a forum last week said that more Malaysians would be poor under the ETP, as the projected income does not take into account annual wage rates and the prevailing inflation.
Pemandu added that it is untrue that the income gap would be wider, as 80 percent of the 3.3 million jobs created under the programme are in the low and middle income brackets, requiring a range of qualifications from unskilled labour to professional degrees.

Inflation projection realistic

According to Salina, ETP's inflation projected remains realistic and is accommodated as its roadmap considers real and not nominal growth.

"The six percent annual growth projected by the ETP required for Malaysia to achieve high income nation is real growth, and excludes the inflation factor.

"This means that we are able to adapt to the inflation rate, whatever it may be at," she said.

She added that the average inflation rate cited in the ETP is not unrealistic, as claimed by Anwar, as it matches Malaysia's average inflation rate of 2.77 percent from 2005 to 2010.

This average, she notes, includes an all time high of 8.5 percent in August 2008 due to high oil prices.

"As at October 2011, inflation is up 3.4 percent year-on-year while for the period of January to October 2011, it is up 3.2 per cent year-on-year.

"Based on historical and current data, an assumption of 2.8 percent inflation over 10 years from 2011 to 2020 is reasonable. ETP targets are definitely still relevant," she said.

The ETP is expected to release a second press statement today to answer Anwar's claims that the annual wage growth projection of 3.6 percent  is overly optimistic.
In a statement on the ETP website, Pemandu also took on Anwar’s contention about wage rate increases, saying that wages will rise as the demand for talent increases alongside economic growth.

“The Robert Walters Global Salary Survey earlier in the year revealed a projected wage increase of between 5 percent and 30 percent in Malaysia, which it attributes to a combination of inflation and market forces.

“Efforts under the Strategic Reform Initiatives to liberalize business conditions are hoped to allow a follow on effect of increasing competition amongst corporations for talent. Inevitably, increasing wages will be a key facet in retaining experienced staff,” it said.

Anwar had said that the 3.6 percent annual wage growth predicted from 2010 to 2020 is too optimistic given that the Human Resources Ministry’s data show that average growth in wages over the past 10 years was only 2.6 percent.

The politician also said that real wage growth from 1984 to 1997 in the manufacturing and plantation sectors was only 2.3 and 2.8 percent respectively according to the Asian Development Bank.

COMMENTS FROM MALAYSIAKINI READERS

YOURSAY 'Do the people in Pemandu know that we can hardly survive now with RM1,500. What more in 2020.'

Pemandu refutes Anwar, M'sians poorer without ETP

Kgen: I think the average layperson is smarter than those in government think-tank Pemandu. This outfit appears to be saying that earning RM1,500 in 2020 is an improvement from earning RM1,000 now.

Hello, at a barely realistic compounded inflation rate of 5 percent a year, RM1,000 now will have the same purchasing power of RM1,550 in 2020.

If we consider RM1,000 as the yardstick for poverty now, this means seven million people will be classified as poor in 2020 instead of 600,000 now. So where is the positive shift in income bracket?

Pemandu analysts, go and talk to your wife or mother about 3.2 percent inflation rate a year and see if she doesn't laugh in your face.

Onyourtoes: Are there real economists in Pemandu, I mean those studying applied and analytical economics as majors?

I am not referring to those studying general business administration, history, human resource and marketing with one or two optional papers in economics. I am sure you have plenty of those around.

You talked about real GDP growth and not nominal growth. But the income you cited - is it nominal or real? It appears nominal to me.

I don't care what the inflation rate is, but if you have 2.3 million people earning under RM1,000 and 4.7 million earning in the range between RM1,000 and RM2,000 in 2020, what good is the transformation programme?

Of course, 600,000 people earning less than RM1,000 today will earn more in 2020 - if not for inflation, there is also the benefits of time and skill enhancement.

Calvert Yap: Pemandu, are you proud that by 2020, we still have seven million people making RM1,500 per month?

If this is your agenda, I just have to say you should be ashamed. While all BN leaders enjoy luxurious lives, that include villas, first-class travel, Birkin handbags (and many of them), diamonds, etc, you dare say this?

Faz: Never trust projections and statistics. The government agencies never get it right or even close.

The experts behind the figures will always make the figures look good on the onset, until the actual time comes and excuses are offered continuously. They are actually nothing more than glamorous lies.

Anonymous: Seven million people will be earning RM1,500 in 2020 and we are aspiring to become a high-income nation? Do the people in Pemandu know that we can hardly survive now with RM1,500. What more in 2020.

James1067: Earning RM1,500 by 2020 - you call that a success? Pemandu must be dreaming; what can you get for RM1,500 now in 2011?

The cheapest house in Kuala Lumpur is at least above RM150,000 and most of the people are asking millions of ringgit even for a 1,200 sq ft condominium. This is just housing, and when you add up food, transport, medical and children's expenses....

RM1,500 can hardly raise a family in Kuala Lumpur. We are very far from providing our citizens with decent living conditions. The answer is cutting down corruption where most of the waste goes.

RM1,100 billion has flown away over the past one decade and if the government had done their work, this money would not only have settled our debts, but built better and affordable hospitals, houses, and provided better wages for Malaysians.

We really need to sit down and find a way to give our people a better quality life rather than discussing about it.

Malaysiasakit: By 2020, a total of seven million Malaysians will be earning below RM2,000 per month.

That is equivalent to A$650, but in eight years' time. Fast forward this, it is roughly A$400 today's money. Cleaners in shopping mall food courts in Australia are making $100 a day and it takes just four days to earn that much.

And Pemandu chief Idris Jala is calling this a high-income society? He's got to be kidding.

Hishamudin Alli: When playing with numbers, especially in explaining the numbers in 2020, it must be taken into account the inflation rate, cost of capital, net present value, these are all basic in business mathematics. Businessmen should be aware of these requirements.

Anonymou1s_403: Pemandu has the figures based on assumptions; and it is very presumptious and rather misleading to raise the hopes of workers that their income level will rise to RM1,500. The assumption that the growth may be maintained at 5 to 6 percent is just an assumption, based on all factors, including inflation, are frozen at a certain level.

Idris Jala mentioned last year that Malaysia may be heading down the Greek road - that is, bankruptcy by 2019 - if petroleum subsidies were not reduced. Even if subsidies were reduced, there is no guarantee that we are not heading that road.

This year, ex-finance minister Tengku Razaleigh Hamzah revealed alarmingly that our debt has ballooned to more than RM400 billion (double that six years ago).

Even servicing the RM400-odd billion loan is a gigantic problem, not to mention repaying the loan itself. I notice from ex-finance minister's warning that the Abdullah and Najib administrations have outstripped ex-PM Dr Mahathir Mohamad's 22 years by more than doubling our national debt.

What does the debt tell you? It simply tells you that Abdullah Ahmad Badawi and Najib Razak have been on a spending spree, pretending that money falls from the sky; and also that there is no tomorrow, so they might as well spend as much as possible.

And I understand that the two Putrajaya residences for the PM and DPM are on rental, costing RM26,000 per day. For one month, taxpayers pay RM780,000 in rental for these two. Multiply that by 12 for one year...

And why spend almost RM1 billion for the new palace in Jalan Duta? Don't tell me the old palatial building is not suitable enough. This amount could build thousands of schools, build libraries for generations of school children. Get your priorities right, please.

Ericlcc: This is a feel-good statistics for the people to lull one into believing that by a certain year we will reach a certain milestone.

Opposition leader Anwar Ibrahim, you are right, I am feeling poorer already having to read this Pemandu garbage everyday - the type of stuff which one can easily extract from some economics and development textbook.

Why waste millions on a set-up like Pemandu; it is just a decoy to make Malaysians feel good.

Abasir: By now, everyone with even a tiny bit of intelligence will realise that this Pemandu charade is designed to fool Malaysians with little knowledge or interest in the workings of the economy.

The assumptions behind the numbers are as suspect as the motives behind this 'transformation' game.

The successful 'turnaround' of the still bleeding red MAS (Malaysia Airlines) is perhaps the best indicator of what is to come with ETP (Economic Transformation Programme). Another 'success' like that and we are all done for.