ETP: Part 3 (i) — PEMANDU strengthens the ‘know-who’ cancer

(Also published on The Malaysian Insider)

ETP: Part 3 (i) — PEMANDU strengthens the ‘know-who’ cancer
Dr. Ong Kian Ming & Teh Chi-Chang

Very swift progress, but is it due to PEMANDU? In its eight ETP updates so far, PEMANDU has announced multiple new EPPs (Entry-Point Projects) worth billions of ringgit of investment and creating thousands of jobs. One EPP — Johor Premium Outlets (JP Outlets) — is already open. But how much of this rapid execution is due to PEMANDU instead of normal private sector efficiency?

Opportunistic naming of existing projects as EPPs. For example, the JP Outlets and St Regis Hotel projects pre-dated the ETP. Their completion dates were unchanged by their subsequent EPP status, suggesting minimal input by PEMANDU. Naming them as EPPs gives the illusion of quick wins and overstates PEMANDU’s success.

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ETP: Part 2 — We won’t really be twice as rich in 2020

(Also published on The Malaysian Insider)

ETP: Part 2 — We won’t really be twice as rich in 2020
Dr. Ong Kian Ming & Teh Chi-Chang

RM48,000 in 2020 is not real income. The ETP promises to double gross national income (GNI) per capita to RM48,000 by 2020 from RM23,700 in 2009. However, RM48,000 in 2020 will be worth a lot less than RM48,000 today, just like RM100 today buys a lot less than RM100 eight years ago, thanks to ever-rising prices. If Malaysians are really to be twice better off, nominal income must be RM64,000 by then, to compensate for the 2.8 per cent per year inflation that PEMANDU expects.

Nothing transformational in the RM48,000 target.

This target is for nominal income, which includes inflation, and not real income, which strips out inflation. Because of inflation, nominal GNI per capita growth averaged 8.2per cent from 2001-2010, whereas real GNI grew only 3.2%. At the historical average 8.2 per cent per year growth rate, nominal incomes will exceed RM48,000 by 2018 anyway, with or without the ETP or PEMANDU.

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ETP: Part 1 — Introducing DEEDS

(Also published on The Malaysian Insider)

ETP: Part 1 — Introducing DEEDS
Dr. Ong Kian Ming & Teh Chi-Chang

Let’s evaluate PEMANDU on its DEEDS.

The Economic Transformation Programme is ambitious indeed. The ETP promises to double gross national income (GNI) per capita to RM48,000 by 2020 from RM23,700 in 2009. An average 6 per cent per year real income growth over 10 years and 12.8 per cent per year private investment growth over five years is required to achieve this. Ultimately, RM1.4 trillion of investments in 131 Entry-Point Projects (EPPs) within 12 National Key Economic Areas (NKEAs) will create 3.3 million new jobs.

Predictably, there are critics. Any plan as bold as this is bound to attract critics. But the attacks so far have mainly been against specific projects, such as the MRT and 1 Malaysia email; carping about the slick façade and expensive costs at PEMANDU — the Performance Management and Delivery Unit, Prime Minister’s Department — the government agency that created and is now steering the ETP; or questioning the viability of its lofty targets.

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