GERAKAN should attend a basic Economics 101 course before it can lecture the Penang State Government

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 17th of October 2016

GERAKAN should attend a basic Economics 101 course before it can lecture the Penang State Government

I refer to the Star newspaper report “Ask Rahman Dahlan for help, Penang told”[1] and “Learn economics from Rahman Dahlan, GERAKAN tells Guan Eng”[2] from last week in reference to GERAKAN Secretary General, Liang Teck Meng’s press conference on the GDP per capita figures for Penang. In this press statement, he criticized the Penang state government for the low % growth rate in the state’s GDP per capita figures since 2007. He also suggested that Penang Chief Minister Lim Guan Eng should learn economics from the Minister in charge of the Economic Planning Unit (EPU), Rahman Dahlan. I want to make the following three points in response:

1) GERAKAN Secretary General should learn how to use the correct figures and calculations

The calculations in Figure 1 below was used by Liang in order to show that the % growth in GDP per capita for Penang from 2007 to 2015 was the lowest among all the states in the country.

Figure 1: Liang’s calculations show the absolute and % increase in GDP per capita by state, 2007 to 2015

I am not sure why Liang used the Department of Statistics (DOS) data from 2011 rather than the updated DOS data from 2014 which is shown in Figure 2 below. I want to highlight, in particular, the GDP per capita figures in 2007 for Terengganu and Sabah were 19,476 and 14,104 which is higher than the 17,284 and 13,067 figures used by Liang.

Figure 2: GDP per capita by state, 2005 to 2013, Department of Statistics

When the DOS statistics in Figure 2 were used, the state with the lowest % growth in GDP per capita from 2007 to 2015 was Terengganu (36.2%) followed by Sabah (40%) and not Penang (43%). Indeed, one wonders why Liang didn’t use the starting year at 2008 (rather than 2007) since this was when there was a change in the state government in Penang. If the GDP per state growth rate from 2008 to 2015 was used, then Sabah would be clearly at the bottom of the rankings at 13% followed by Sarawak at 19% and Terengganu at 26% with Penang coming in at 33%.

2) GERAKAN should praise the Penang state government for leading the state out of a serious economic recession in 2008

Liang also fails to acknowledge that one of the main reasons why GDP per capita in Penang did not grow, in percentage terms, as fast as some of the other states is due to the 2008 global financial crisis which hit Penang particularly hard. In 2009, Penang’s economy contracted by 10.5% as a result of the 2008 global financial crisis, of which the Penang state government had no control over. Penang’s economy was the worst hit out of all states because of Penang’s much higher exposure to global trade. The overall Malaysian economy only contracted by 1.5% in comparison (See Figure 2 below).

The Penang State government had to work hard to recover from this serious crisis which it did with impressive results. From 2010 to 2015, Penang’s GDP growth rate was higher than the Malaysian growth rate in all years except for 2012 (See Table 1 below). Penang’s GDP growth rate was also higher than Sabah’s growth rate in all years from 2010 to 2014.

Figure 3: GDP Growth Rate for Penang, Sabah and Malaysia, 2008 to 2015

3) GERAKAN should ask Rahman Dahlan why Sabah’s GDP and GDP per capita growth figures rank among the lowest in the country

The GDP per capita figures post 2008 global financial crisis tell a very different story. The GDP per capita growth rate for Penang from 2010 to 2015 was 33% or an absolute increase of RM11,250 from RM33,597 in 2010 to RM44,847 in 2015. Penang ranked 6th out of all states. In contrast, at the bottom of the pile was Sabah with an absolute increase in GDP per capita of only 11%, from 17,831 in 2010 to 19,734 in 2015. (See Table 2 below)

At the same time, Penang’s GDP per capita was the 3rd highest in the country in 2015 – after WP Kuala Lumpur at RM94,722 and WP Luan at 58,577 – while Sabah was third from the bottom after Kelantan at RM12,075 and Kedah at RM18,249.

Rather than asking Lim Guan Eng to take economics lessons from Rahman Dahlan, Liang should ask Rahman Dahlan to explain why the GDP and GDP per capita growth figures for his home state of Sabah ranks at the bottom or near the bottom of the pile.

It is sad to see GERAKAN, which used to pride itself as being an ‘intelligent’ party, use bad statistics and poor economics to criticize the Penang State government on its economic performance when the facts on paper and the situation on the ground tell a completely different story. If the people in Penang were not satisfied with the performance of the state government, they would not have given the Pakatan state government an overwhelming level of support (67%) during the 2013 general elections.

I suggest that Liang attend a basic Economics 101 lesson before he issues any further statements on economic issues. I would be happy to give him and his GERAKAN leaders a free lesson.

Dr. Ong Kian Ming
Member of Parliament for Serdang