Friday, 4 October 2013

Malaysia: A "High Income" nation for whom by the Year 2020?

One of the reasons I call myself "IT.Scheiss" is because of having had to report on the organisations mentioned in media which wants their advertising ringgit or just to be in their good books.

Like Demi Negara wrote in his blog post ....And the CONmen Go Marching In by doing so, I have long felt a sense of unease with what they have had to say.

You can read his blog in full here.

Also, many of these "this," "that" and "the other" awards ceremonies are money making affairs, sometimes even the ONLY revenue stream for the companies which hold them.

Firstly, the presence of the Silly Con Valley IT industry in California has done nothing to solve unemployment and other such socio economic issues in the rest of the state, so what will it do or has it done to ease the sufferings of the rakyat.

When I was in San Francisco in 1996, I went by myself to see the Mission District in San Francisco, where I saw people living out of supermarket carts and beggars on the street asking for spare change.

Does Malaysia need to develop all these gee whiz technologies to become a developed, high-income nation?

Look around the world. How much home grown high-tech comes out of countries such as Australia and New Zealand which have a high standard of living and an enviable lifestyle.

Very little, that I know of. These countries don't even have their own home grown brand of manufactured products.

Now did I hear that "their labour costs are too high for manufacturing" whine from the apologists?

Hmmm! So they must be high-income economies then. Their workers' productivity and income are so high that they can only excel in very "First Wave" industries such as resource extraction, agricultural produce, animal products, food production and tourism.

Does Singapore have any home-grown brands of manufactured goods to speak of or home grown IT products and services to speak about but it's doing OK with its port, financial, ship servicing and trading activities.

What industries does Switzerland have besides its famed watches, cuckoo clocks, pharmaceuticals, chemical, specialised industrial equipment, agriculture, chocolates, Swiss Army Knives, cheese perhaps, ski resorts and its famed financial services industry.

Also, Switzerland has managed to remain fairly immune from the European financial crisis by remaining out of the Euro Zone. It uses its own Swiss Franc.

So why must Malaysia "move up the value chain" to become a "K-Economy" to become a "high income" nation with a gross national income (GNI) of RM48,000 per capita by the year 2020?

GNI is an average income per capita measured in International Dollars in purchasing power parity (ppp) terms, after taking into account gross income per capita, taxes,subsidies, etc per individual.

Wikipedia describes the Geary-Khamis (International Dollar) here.

According to the World Bank, Malaysia GNI was 16,530 International Dollars in 2012.

According to the latest United Nations Data, the conversion factor for Malaysia in 2011 was 2.16, so applying that, we get RM35,708

In 2012, Thailand's GNI per capita was 9.430 Int$ or 17,827 Baht or about half Malaysia's in ppp terms. Singapore's GNI per capita was 61,100 Int$ or Sin$92,872 (equivalent to RM238,133).

Anyway, these are average figures and averages tend to be pulled up by the high income earners in each country, and where there's wide income disparity, the GNI per capita will be much higher than the income of most persons in that country.

A better indicator of income is the median income value.

According to Department of Statistics' table of household income, mean (average) household income per month in Malaysia was RM5,000 in 2012, up 7.2% per annum from RM4,025 in 2009. However the median household income was RM3,626 per month in 2012, up 8.1% per annum from RM2,841 in 2009.

However, mean and median household incomes varied by state, with the mean ranging from RM3,168 in Kelantan to RM7,023 in Selangor in 2012 and the median from RM2,387 in Perlis to RM6,489 in the Putrajaya Federal Territory.

Median household income for the top 20% overall was RM9,796 in 2012, RM4,372 for the middle 40% and RM1,852 for the bottom 40%.

For urban areas, the medians for 2012 were RM10,912, RM5,108 and RM2,263 respectively and for rural areas they were RM5,912, RM2,883 and RM1,343 for the three percentile groups respectively.

By ethnic group - i.e. Bumiputra, Chinese, Indians and Others, the lowest household income earners were Others in rural areas with RM1,117 mean and RM1,206 median per month.

Bear in mind that these are household, not personal income figures, which could be half or less per income earner in each household. 

Assuming two income earners per household, the RM3,626 median monthly household income overall in 2012 would translate into RM21,756 per annum in 2012 and assuming the 8.1% annual growth continues, it would be RM37,528 per annum in 2020.

Likewise a mean household income of RM5,000 in 2012 would be RM48,807 per income earner in 2020 if the 7.2% annual growth rate continues.

So that RM48,000 per capita GNI by 2020 which Pemandu quotes is the average overall figure for Malaysia. Those lucky ones in Putrajaya might earn even more, whilst Others in rural areas could well earn the least.

As an estimate, assume the lowest mean household income of RM1,117 in 2012 grows at 12.1% annual growth rate for Sabah from 2009 to 2012, that would translate into mean individual income of RM14,908 per annum for individuals in this rural Others group in 2020 and that's being optimistic.

Those income figures don't take into account the effects of inflation by 2020.

What will be the purchasing power of income in 2020 compared to today, especially at the rate prices are rising today.

Malaysia's leaders, and that includes Mahathir BTW, were taken for a ride by  CON Sultants.

Have they read Confessions of an Economic Hitman by John Perkins? Well I have and it jives for Malaysia pretty well.

Will Pakatan be an answer? Perhaps but looking at high property and accommodation costs in Penang, it does not seem so and I don't see anything better on the ground in Pakatan ruled Selangor where I live. All we got was another set of towkays' & tycoons' parliamentary representatives in the driver's seat.

Will a revolt in the upcoming UMNO GA put a stop to this? Perhaps, but let's see.

My question is, that if enough of the rakyat, especially the rural rakyat, are burdened economically, why did they vote for the BN in May 2013 and if they are further burdened, will they continue to vote for the BN come 2020?