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The numbers that tell a different story – Dzulkefly Ahmad

September 15, 2014

The numbers that tell a different story (TMI)

So what do Prime Minister Datuk Seri Najib Razak’s 6.4% growth number and Minister Datuk Seri Abdul Wahid Omar’s RM5,900 a month average household income have in common? We shall later see.

Malaysia’s economy grew faster than expected at 6.2% in the first quarter and 6.4% in the second quarter this year. Growth is said to be driven by stronger expansion in domestic demand and a turnaround in net exports.

Najib concluded that the economy was “on the right track” and wanted the Umno leadership “to go down to the grassroots and explain the country’s economic success so that the people understand and appreciate it better”.

But the government didn’t quite realise that the rakyat are still reeling from the rising cost of living following the double whammy of subsidy rationalisation and the cascading effects of petrol and utility tariff hikes on so many goods and services.

While the link between economic growth and human well-being seems obvious, there has been a rising disconnect between a country’s per-capita GDP and its citizens’ well-being due to “unsustainable development”. To paraphrase the Nobel laureate Simon Kuznets (1934), “the welfare of a nation can scarcely be inferred from a measure of national income”.

This is not, however, to deny the fact that GDP provides valuable information about a country’s production, expenditure and income stream, much as it measures the flow of goods and capital across borders.

Additionally, Wahid’s announcement that the average household income has surpassed RM5,900 a month according to the latest statistics, if not well explained, could be another “meaningless” number that is neither significant nor relevant to the immediate life of the ordinary rakyat.

Many could very well feel “alienated” as they are nowhere near the household income of “average” Malaysians.

Incidentally, 80% or 7.9 million households were reported to be recipients of BR1M 3.0 in 2014, while 5.3 million were beneficiaries in 2013. Only households with incomes of less than RM4,000 are eligible. That is very telling indeed of the “average income” of many Malaysians.

While Wahid could mean well, he should not overlook the fact that the 2012 Household Income and Basic Amenities Survey (HISBA) in 2012 had already registered that the average Malaysian household was RM5,000.

Yes, it has indeed registered an 18% increase or a 9% average annual growth increase going by his revelation. Yes, the number looks good too and certainly above GDP growth of 5.1% for 2013. But so what, many income earners may ask?

the average income figure is skewed by the very rich.

Going by the 2012 HISBA, the median monthly household income was RM3,626 (as compared with RM5,000 as average). However, the top 20% has an average income of RM12,159, the middle 40% has RM4,573 and the bottom 40% has RM1,847.

Wahid would have been seen as more honest and cool had he been more willing to disclose the actual median monthly household income for 2014. But could he?

Presumably, he couldn’t because these statistics would only be available by year end. So why rush to announce the average income?

Perusing the 2012 data, it is hardly surprising for Malaysians to be told that we have one of the worst income distributions in the region.

Incidentally, our Gini coefficient, a measure of inequality of income distribution, is worse than that of Thailand and Indonesia while equal to that of the Philippines.

A better and more revealing measure of economic inequality is in fact that of “functional income distribution” – the percentage of GDP going to wages of labour compared with capital.

Thomas Piketty’s Capital in the 21st Century has compellingly argued that rate of return on capital (r) exceeds the overall rate of growth (g) over the last two decades in the US and elsewhere in the West to varying degrees.

The conclusion that r>g inevitably results in the concentration of both income and wealth on those who own capital as compared with those who mainly own labour. Studies in four of five selected Asian countries, for example, have shown that labour or wage share of GDP has declined over the last few decades.

Continue reading here…..

* Dr Dzulkefly Ahmad is executive director of the PAS Research Centre and former MP for Kuala Selangor.

* This commentary first appeared in this week’s issue of The Edge Weekly.

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

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One Comment leave one →
  1. najib manaukau permalink
    September 16, 2014 12:17 am

    Any number or statics given by the Umno schmucks, especially by the repugnant and avaricious Mahathir, such as the number of muslims in the country or the number of Malays in the country must never ever be taken seriously at all. They were given to legitimise all the actions and implementation of his policies. A typical example are the numbers on the population in the country they were figures manipulated by the lackeys just to legitimize the many policies they implemented to marginalize the pendatangs.

    If the number of muslims in this country are true to what the repugnant Mahathir claims them to be true , how come he imported so many muslims during his tenure as PM ?
    There were imported to come up with the manipulated figures published in the first place.
    He too must have sanctioned the million of illegal immigrants, mostly Indonesians, to have come into this country ? He just wanted these million of Indonesian illegal immigrants to mingle around in the city and displaying them as Malays. Thus the believe that the Malays population in this country are the majority, simple as that .

    Not a few hundreds or thousands of them but a few millions, don’t we have an immigration department with a border control unit ? Even a retard will tell you that you just don’t allow million of illegals to come into the country without noticing them coming in by the millions. They were allowed in to make up the false numbers this repugnant Mahathir came up with in the first place.

    Every nation on earth is trying to bring in talented immigrants but Malaysia under Umno is bringing thieves, robbers not to mention non professionals immigrants into the country. To show to the world the illusion that this country is hot in demand to come to as a country !
    It took the Brits and the combined efforts of the people centuries to take Malaysia to become what Malaysia used to be, one of the four Tiger economy, in south east Asia but just see what this repugnant Mahathir and Umno have done to this country’s economy in a matter of just a few decades. Rome was the greatest country once but is now in the brink of bankruptcy just like Malaysia !

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