By Dr. Ong Kian Ming BSc (LSE), MPhil (Cantab), PhD (Duke) Teh Chi-Chang, CFA, BSc (Warwick), MBA (Cantab) Refsa | 19 January 2012
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 year real income growth over 10 years and 12.8% per year private investment growth over 5 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.
We will evaluate PEMANDU on its DEEDS. In this series, we shall evaluate PEMANDU and the ETP on its own terms by looking at the goals and plans outlined in the ETP Roadmap document. So, for example, rather than questioning its ambitious targets, we shall analyse how well it is measuring up to those aspirations. Doing so facilitates constructive debate as it uses the same framework which PEMANDU has chosen to work within. DEEDS – Data transparency and integrity; Execution – progress or lack thereof on announced EPPs; Enterprise – the success in stimulating private investment; Distribution – the spread of the 12 NKEAS; and Socio-economic impact – who benefits the most will be our concern. Mark the date – Wed, 25 Jan – when we declare “It does not compute!”
The Roadmap to High-Income Nation Status
The Economic Transformation Programme (ETP) was launched with much fanfare on Sept 21, 2010. 500 experts from the public and private sectors had spent 8 weeks brainstorming to produce this very ambitious roadmap to take Malaysia to high-income nation status by 2020, with a gross national income (GNI) per capita of RM48,000.
The ETP was conceived as a comprehensive programme to lift the country out of the middle-income trap to become a developed, high- income nation. It would be action-oriented, and aims to achieve ‘big and fast results’, a direct contrast to the nicely laid-out but poorly implemented government blueprints in existence.
Real GNI growth must average 6% for the next 10 years and private investment growth 12.8% over the next 5 years in order to achieve its goals, says PEMANDU – the Performance Management and Delivery Unit within the prime minister’s department – the government agency charged with steering the ETP.
Over the next 10 years, the ETP aims to pour RM1.4 trillion worth of investment into the economy to create 3.3 million new jobs:
The ETP focuses on 12 National Key Economic Areas (NKEAS) for which it has identified 60 business opportunities and 131 Entry Point Projects (EPPs). They include:
Let’s move beyond criticism of PEMANDU
A programme as massive and ambitious as the ETP is bound to have detractors. Critics have focused on 4 main issues:
For example, if the objective of the ETP is to really double our incomes, it would require a per capita real GNI growth of 6.6% per year from 2009 to 2020. This is two times the 3.2% average real per capita GNI growth rate achieved over the ten years ended 2010 – a tall order indeed.
Chart 1: 6.6% per year growth rate needed to double income per capita by 2020 is two times the average 3.2% in the last decade
Sources: Monthly Statistical Bulletin, Bank Negara
Supporters of PEMANDU, in response, may say:
We think these issues can be further debated, but these questions ultimately boil down to PEMANDU’s raison d’être. PEMANDU is already a fait accompli. Debating its existence serves no useful purpose at this point.
Evaluating PEMANDU on its DEEDS
In this series of Focus Papers, we shall evaluate PEMANDU and the ETP on its own terms by looking at the goals and plans outlined in the ETP Roadmap document. Doing so facilitates constructive debate as it uses the same framework which PEMANDU has chosen to work within.
In that vein, and in keeping with the spirit of the alphabet soup of NKEAs, NKRAs, SRIs, EPPs, GNI surrounding the entire GTP, we evaluate PEMANDU and the ETP on its DEEDS:
PDF version of this Focus Paper available for download __
McKinsey paid RM36mil to set up PEMANDU. Regina Lee, Malaysiakini, 3 Dec 2010. Retrieved on 26 Dec 2011.
RM16m paid to seven NKEA lab consultants. Malaysiakini, 23 Nov 2010. Retrieved on 26 December 2011.
McKinsey paid RM36 mil to set up PEMANDU. Regina Lee, Malaysiakini, 3 Dec 2010. Retrieved on 26 Dec 2011.
The eight updates took place on: 25 Oct 2010, 30 Nov 2010, 11 Jan 2011, 8 Mar 2011, 19 Apr 2011, 13 June 2011, 8 Sept 2011 and 10 Nov 2011.
Jumpstarting Malaysia’s growth: An interview with Idris Jala. 2 Nov 2011. Available at http://etpblog.pemandu.gov.my/posts/2011/11/02/jump-starting-malaysia%E2%80%99s-growth-an-interview-with-idris-jala/ Retrieved on 26 Dec 2011. Idris Jala argued that PEMANDU was instrumental in clearing away red tape to expedite the St Regis project.
National Key Economic Areas, National Key Result Areas, Strategic Reform Initiatives, Entry Point Projects, Gross National Income and Government Transformation Programme.
Next week – “It Does Not Compute!”
Mark the date: Wednesday, Jan 25!
In Part 2 of this series of Focus Papers, we will evaluate PEMANDU on the first D of DEEDS – Data integrity and transparency.
In the words of a robot that will be familiar to our more mature readers:
It does not compute! – Lost in Space tv series, 1965-68