Osman Jailani : Data from FAMA showed that average price of beef has jumped by nearly 90%, coconut milk (santan) by 100% and chicken by 15%. In the past two years, the price of spices has increased by 16%, seafood by 15% and even coconut and nuts by 10%.

Pemandu: A half a billion colossal failure

Published on 24 Apr 2017 7:13AM ·  

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% 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 nation is at odds with the data.

Our gross national income (GNI) per capita is declining, not increasing. Data from Bank Negara shows that our GNI per capita had fallen by 15% 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% against the US dollar between 2011 and 2016. Last year, it depreciated by 4.5% and the year before, that it was a whopping 23%. 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% against the Philippine’s peso, 15% against Thailand’s baht, and 16% 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% per year in order to reach high-income economy. Between 2011 and 2015, our growth rates were just slightly above 5% on average.

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

Highly unlikely. Growth has been on the declining trend, from 6% in 2014 to 5% in 2015 to 4.2% in 2016. The Asian Development Bank expects our economy to grow less than 5% in the next two years. In other words, we can forget the 6% target as proclaimed by 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% 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 the Economic Planning Unit (EPU) shows that between 2010 and 2014, the share of skilled workers in total employment has in fact declined, from 27.6% in 2010 to 25.5% 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% to 15% 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 is a skilled worker compared with 1 in 3 in 2010. Only 12% of those retrenched were low-skilled workers in 2015, compared with 19 % 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% compared with 10.2% 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% compared with youth without tertiary education (9.8%).

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% 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.

GNI is a measure of economic activity and not a comprehensive measure of societal well-being. Those who try to use it as such are showing off their ignorance. GNI is simply telling us the value of goods and services the economy produced, and not whether it all went to produce useless stuff and destroy the environment, or whether the richest elite in Malaysia and their spoilt kids pocket it all. Cutting those forest trees in Kelantan and Kedah is good for GNI, extracting minerals while polluting our rivers in Tasik Chini is equally good for GNI. But it is not good for society as a whole.

Let me be clear: being a high-income country, in terms of GNI per capita, does not mean we are automatically a developed nation. Just look at Qatar, it’s GNI per capita is higher than Sweden, and UAE’s per capita is higher than France. Brunei is richer than Japan, and Kuwait is richer than South Korea. We can easily name products produced by Sweden, France, Japan and Korea, but nobody knows what Brunei or Kuwaiti produce.

In fact, there is no point to be a high-income country if the rakyat’s income remain low.

As of 2015, data from EPU showed half of the workers earn less than RM1,600 per month. In Kelantan and Sabah, it is RM1,200 and RM1,100, respectively. It is the same sad story even in the richest Federal Territory Kuala Lumpur. One in two workers in KL earns less than RM2,200 per month. We can be a high income country, but only on paper. Your pay check is still your pay check. That’s where the rubber hits the road.

Now, let us not forget the Government Transformation Plan, which we seldom talk about despite it being the other part of the national transformation agenda.  I shall focus only on GTP’s two key results areas – fighting corruption and addressing cost of living.

Again Pemandu flunked. Another "F".

You don’t need to be an economist to notice that cost of living has been escalating in the past few years. In fact, the Consumer Price Index (CPI) in February is the highest since November 2008.

Small consumer items also have increased. For instance, during the same period, data from FAMA showed that average price of beef has jumped by nearly 90%, coconut milk (santan) by 100% and chicken by 15%. In the past two years, the price of spices has increased by 16%, seafood by 15% and even coconut and nuts by 10%. Don’t worry, we can eat well as we are on track to become high-income economy. 

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.

A director of Pemandu can earn up to RM50,000 a month, and an associate director – RM32,000, while senior managers can earn up to RM21,000 monthly. We generously overpaid them, but they didn’t deliver their promises. Nor did they make our lives better. This is counter-intuitive to the management mantra that if you pay peanuts, you get monkeys. Maybe peanuts are now expensive, equivalent to RM50,000!

Without much fanfare, Pemandu has been transformed into Pemandu Associates Sdn Bhd few months ago, which is a private company that is co-owned by its CEO and president Idris Jala. In other words, it was privatised. At what price? Only god knows. What are the terms? Only god knows. Best still, they have steady inflow of government jobs.

The government will continue to engage Pemandu Associates for consultancy services in the next two years. In fact, the taxpayers have graciously funded this private entity RM15 million to host the recently held elitist 2017 global transformation forum.

Unthinkable isn’t it?  There are few words that come to mind to describe the above – a case of abuse of power, corrupt practises, and state capture? Maybe another word would be just as appropriate – a traitor.

Our great intellectual maestro Syed Hussein Alatas has warned us decades ago about these kind of people whom he coined as jadong – jahat (evil), bodoh (dumb) and sombong (arrogant). Individuals like these lack morals and integrity.

We should start viewing them as people who are either not very good at their work or not very honest, or perhaps both. Clearly, we should not be looking to them for guidance in policy debates. They deserve to have their arguments exposed, challenged and debunked, not treated as pearls of wisdom in serious debates.

More importantly we must hold them accountable for all their actions. They have to answer for the damaging consequences that flow from their stubbornly sticking to the flawed target of high income nation.

The entire policy focus and socio-economic agenda of the country was skewed and distorted at the altar of this statistical gimmick. We lost precious time while they sank deeper and deeper into window dressing to play to the gallery.

Precious time that should have galvanised us to face the real challenges of the nation - the need for high income employment, youth employment, wages increase and adequate investment for sustainable economic development. No less central to the well-being of the rakyat, attention was not given to matters related to managing the cost of living as well as to the crusade against the scourge of corruption.

By masking these issues over with sweet blanket claims for high-income growth, Pemandu has done the nation a grave disservice. They have to answer to the nation for the more than half a billion ringgit of expenditure of public funds. Publish the list of all the consultants engaged and their fees and nature of work done. How much of that money went to pay for Pemandu staff salaries and benefits?

Because they have not been brought to book they are emboldened to continue to feed at the trough under the guise of a private entity. We the public are the victims again.

Let us stop this madness.

Let’s have a thorough public inquiry into the performance of Pemandu, examine all their expenses and scrutinise the terms and conditions of their new company. They must be given fair treatment under the law and due process. Pemandu should welcome this opportunity to show to the nation that they have acted with integrity and in the best interest of the nation.

That would serve as an example of transparency and accountability for which they have so passionately espoused. Any refusal on their part should raise alarms to all of us. And if they are guilty of wrongdoings, they should be severely punished. We should not have any sympathy for those who destroy this great nation. – April 24, 2017.

* Osman Jailani is a The Malaysian Insight reader.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight.