11
May
17

Pemandu: A half a billion colossal failure

Pemandu: A half a billion colossal failure

ARE we on track towards becoming a high-income nation? As recent as last month, Idris Jala, the head-honcho of Pemandu claimed that we were on track, just 15 percent off the mark to be among the high-income nations, alongside South Korea, Germany, France, Singapore and the like.

Let me put it bluntly, we are not on track. Pemandu has failed. I would give them an ‘F’. Let me explain why they deserve that grade.

Their assertion that we are close to become a high income country is at odds with the data.

Our GNI per capita is declining, not increasing. Data from Bank Negara shows that our GNI per capita had fallen by 15 percent from US$10,345 in 2013 to US$8,821 in 2016. This is far from US$15,000 that Pemandu benchmarked to be a high-income economy.

This is not rocket-science, as our currency has weakened by 42 percent against the US dollar between 2011 and 2016. Last year, it depreciated by 4.5 percent, and the year before that it was a whopping 23 percent. The high-income benchmark was in US dollars, so when our currency weakens, the target moves further away.

Spare us the lame excuse that other currencies also weakened. Let’s look at how we performed against our regional (read: poorer) neighbours. In the past two years (2015 and 2016), our currency dropped by 14 percent against the Philippine’s peso, 15 percent against Thailand’s baht, and 16 percent against Indonesian’s rupiah. Get real and face the facts.

Even assuming the ringgit remains at the same level, we are still off target simply because our economy grew at a lower rate than Pemandu’s target of 6 percent per year in order to reach high income economy. Between 2011 and 2015, our growth rates were just slightly above 5 percent on average.

Can we expect the economy to expand more than 6 percent to cover the shortfall in the next 3 years?

Highly unlikely. Growth has been on the declining trend, from 6 percent in 2014 to 5 percent in 2015 to 4.2 percent in 2016. Asian Development Bank expects our economy to grow less than 5 percent in the next two years. In other words, we can forget the 6 percent target as proclaimed by Mr Idris Jala and company.

These ‘court jesters ‘ would argue that the economy is still ‘resilient’. They are wrong.

Just look at how our firms are doing. KLCI already lost 13 percent of its market value between 2014 and 2016 and corporate earnings are equally depressing. Lest we forget, the dividend rate announced for ASB unit-holders in 2016 was the lowest ever recorded, in fact, it was much lower compared to 1997 and 1998 when we had our financial crisis.

Pemandu proudly claimed that 3.3 million new jobs were created, but they conveniently forgot to tell us that most of the job creation were low income jobs, which would not make us high-income workers or high-income nation.

Data from EPU shows between 2010 and 2014, the share of skilled workers in total employment has in fact declined, from 27.6 percent in 2010 to 25.5 percent in 2014. The creation of mostly labour-intensive and low-productivity employment in the country pushed up the share of low-skilled worker to total employment from 9.5 percent to 15 percent during the same period.

So where was the inflow of investments that created 3.3 million high income jobs which Pemandu is talking about? For those left scratching their heads while sitting in horrendous traffic jams, the basic story is that we somehow don’t create enough high-income jobs. Bank Negara Malaysia, in its latest annual report, clearly stated: “the Malaysian economy also continues to face the challenge of attracting high-quality investments that would create more high-paying, high skilled jobs for the local workforce”.

There are negative repercussions for this failure. Not only are we not producing enough high-skill jobs, the slowdown in the economy is in fact eliminating the existing pool of high-skill workers. Data from the Human Resources Ministry shows in 2015, 1 in 2 of those retrenched are skilled workers compared to 1 in 3 in 2010. Only 12 percent of those retrenched were low-skilled workers in 2015, compared to 19 percent in 2010.

Sure, Pemandu can crow as much as it cares to our youth about the ‘successes’ of ETP. But those unfortunate kids will tell them that the reality is starkly different.

Youth unemployment is creeping up. In 2015, youth unemployment rate was at 10.7 percent compared to 10.2 percent in 2010, despite that the economy still growing. Even having a tertiary education doesn’t guarantee these heavily indebted students a job. In fact, among those with tertiary educational attainment, the unemployment rate is higher at 15.3 percent compared to youths without tertiary education (9.8 percent).

In case these ‘court jesters’ are still in denial, let me quote what BNM says; “chief among factors that led to high youth and graduate unemployment was that job creation locally has remained focused on low and mid-skilled jobs”.

Worse still, even if these kids were lucky enough to land a job, 54 percent of graduates earn less than RM2,000 a month. In fact, starting salaries for graduates have remained largely stagnant since 2007.

Is that an indicator of high-income workers? Absolutely not. Yet Pemandu tells us we are on track.

For the sake of argument, let us assume that this is a fairy tale and somehow we are on track to become high income nation by 2020. The major flaw among those who keep on shouting that we need to be high-income economy as measured by GNI per capita is in their intellectual thinking.

What we should aim for is a developed economy where growth is sustainable and inclusive.

How about Pemandu’s accomplishments in reducing corruption? Total catastrophe!

We are falling down the ranking. What is more shocking is that despite fighting corruption enshrined as a target of GTP, there is total silence, not even a word from Pemandu on the biggest kleptocracy case, despite the media all over the world carrying this shameful story. We must speak the truth to power, even if it is as painful as a spike through the flesh.

The thing is, Pemandu has failed miserably despite consuming a lot of taxpayers’ money. How much you may ask? A whooping RM639.5million, according to data from the Finance Ministry. That is more than half a billion ringgit right down the drain. But despite overpaid bosses in Pemandu, the strategy, analysis and policy making and thinking were done by consultants.

…more
Pemandu: A half a billion colossal failure
24 Apr 2017 – Malaysian Insight

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