– Kamal Salih, Muhammed Abdul Khalid and Lee Hwok Aun
The Malaysian Insider
29 November 2014

We refer to statements by the Governor of Bank Negara (BNM), Tan Sri Dr Zeti Akhtar Aziz, reported on various print media on November 28, 2014, on portions of the Malaysia Human Development Report (MHDR).

She disputes our finding that over 90% of Malaysians have no savings, claiming that the analysis is “partial” and “misleading”.

We thank Tan Sri Dr Zeti Akhtar Aziz for engaging with the MHDR, and for providing this opening to reaffirm our findings. Allow us to clarify the points raised by Tan Sri Zeti.

She is quoted as saying, “The report published by UNDP (United Nations Development Programme) is partial and misleading, as it relies heavily on data by the World Bank, which track household savings via banking accounts.”

In calculating household savings, the MHDR does not rely on World Bank data. We clearly explain that the source of the data is Household Income Survey, which was provided to us by Department of Statistics (DOS) and Economic Planning Unit, which are under the Prime Minister’s Department. The data analysis for this report is entirely conducted by us and our research team.

The Household Income Survey data captures reported interest and dividends from commercial entities, cooperatives and other savings institutions, across both formal and informal sectors. Thus, the survey data is more extensive and inclusive, encompassing more than formal banking accounts.

Our findings are also consistent with data from DOS, that shows that in 2009, households constituted only 2.2% of gross national savings, with the vast bulk coming from corporate and government sectors.

Zeti also asserts that we “probably looked at savings in the banking system but they don’t look at savings (in the non-bank financial intermediaries) like Tabung Haji and cooperatives.”

To clarify again, the MHDR’s estimate of household savings excludes forced savings, as we are interested in precautionary savings. Households do not have access to forced savings (eg EPF) during emergencies.

The report does capture investment in Tabung Haji (TH) and PNB and other investments, which we define as financial investment, not savings.

Our data shows that 57% of Malaysians have no financial investments. This is consistent with data from Tabung Haji which shows that about two-thirds of Muslims do not have an account with TH, while about half of Bumiputera do not have an account with ASB.

The BNM Governor also refers to BNM data that shows “more than 90% of our population have saving accounts.” It is methodologically and empirically insufficient to equate savings with mere possession of a savings account.

The majority of Malaysians have bank accounts, and some even open multiple bank accounts, but one can have a bank account without savings.

Our findings may be staggering, but they derive from careful handling of reliable sources and address specific questions pertaining to inclusiveness. We continue to welcome constructive and critical engagements on the report in order for us to have an informed debatein all of our interest for the country to make a leap forward towards an inclusive future for all Malaysians. – November 29, 2014.

* Kamal Salih, Muhammed Abdul Khalid and Lee Hwok Aun are the authors of Malaysia Human Development Report 2013.