Najib's fictional economic figures come from Idris Jala's fictional economic figures

Yesterday, March 13, 2013, Bernama[1] quoted Najib as saying the following: "We have been able to buck the external global economic trend. In the last quarter, we achieved 6.4 percent growth, which indicates the resilience of the national economy. "When we talk about benefits to the people from 2009 to 2011, our Gross National Income (GNI) per capita has grown from US$6,670 to US$9,970, roughly about 49 percent. "There is no country in the world that has achieved this kind of result," he said.[2] Where did our Prime Minister / Finance Minister get these figures from? I suspect that it’s from none other than Idris Jala, the CEO of PEMANDU. Here, http://idrisjala.my/davos-takeaways/, after a trip to Davos in 2012, Idris wrote:

1. In just two years, we increased our GNI per capita by 45% from US$6,700 in December 2009 to US$9,700 in December 2011, a rare feat in today’s world. (http://idrisjala.my/davos-takeaways/)

But Idris’ figures were wrong to begin with. He understated the 2009 GNI figure and overstated the 2011 GNI figure to exaggerate the overall GNI growth. To give an exaggerated analogy to illustrate this point, it’s as if the 2009 figure was actually 5 while the 2011 was actually 9, but Idris changed the 2009 figure to 4 and the 2011 to 10. Suddenly, the growth rate suddenly increased from 80% to 150%!!!

One should actually look at the increase in GNI in Ringgit terms in order to have a more accurate picture of how much GNI per capita has increased. If we use GNI in US$ terms, it would be influenced by changes in the exchange rate that reflects little of whether Malaysians have gotten better off or not. If the Ringgit strengthens by 10% against the dollar, it doesn’t mean that Malaysians have experienced a 10% increase in their income (except for those who travel overseas often for shopping and such).

According to the latest Bank Negara Monthly Statistical Bulletin (Table 3.3.1a, January 2013 MSB which can be downloaded here http://www.bnm.gov.my/files/publication/msb/2013/1/xls/3.4.2.xls), Malaysia’s nominal GNI per capita (or GNI per capita in current prices) was RM23,850 in 2009 and RM29,094 in 2011 respectively.

This means that GNI per capita increased by RM5,244 from 2009 to 2011, an increase of only 22.0%, which is less than half of the 45% quoted by Idris Jala and definitely nowhere near the 49% increase which Najib was reported to have said during his TV interview a few days ago.

Let’s say we want to compare the US$ increase in GNI per capita using the Bank Negara MSB figures, just for argument’s sake. According to the BNM statistics (Jan 2013 MSB exchange rate data which can be downloaded here (http://www.bnm.gov.my/files/publication/msb/2013/1/xls/2.6.xls), the exchange rate was RM3.4245 / US$1 in 2009 and RM3.117 / US$1 in 2011 representing a 10% appreciation of the RM against the US$. Even with the appreciation in the RM / US$ exchange rate, Malaysia’s GNI per capita in US$ increased by only 34% from US$6964 to US$9334. (See Table 1 below)

Table 1: Comparison of 2009 and 2011 GNI per capita using various sources

What we have here is PEMANDU’s CEO Idris Jala misrepresenting the GNI figures in US$ in 2009 and 2011 to show a ‘fantastic’ growth rate from 2009 to 2011 and our Finance Minister and Prime Minister, Najib Tun Razak further exaggerating Idris Jala’s figures to show an even more ‘fantastic’ world record breaking result.

With two of our esteemed ministers who are in charge of the economy trying to misrepresent basic economic figures, it is no wonder that the public is sceptical about the supposed benefits that the Economic Transformation Program (ETP) has brought to the people.

In light of the Bank Negara statistics shown here, PM Najib should clarify the origin of the figures quoted in his TV interview and to apologize for misrepresenting the facts and figures.