This is a statement by not-for-profit research institute REFSA (Research for Social Advancement) released on Wednesday, 20 March 2013.

We are dismayed to find that perception manipulation and deception still surrounds the Economic Transformation Programme (ETP). The mainstream media today is full of praise and claims of excellent performance and transformation. This is exactly the opposite of the true picture. Today, REFSA draws attention to 3 points:

  1. Real national income growth has been pedestrian at under 5% per year, well below the 6% targeted by the ETP. PEMANDU is manipulating perception by trumpeting nominal GNI (Gross National Income) numbers, which include inflation, and in US$, which are irrelevant to the vast majority of Malaysians;
  2. PEMANDU still cannot get its basic math and data right. It said (nominal) GNI per capita hit US$9,970 in 2012, but also said it was RM 30,809 and the exchange rate was RM 3.058 (US$1). However, at that exchange rate, RM30,809 is equivalent to US$10,075. It is shocking that this high-powered unit cannot even get the basics correct;
  3. Based on Department of Statistics data, nominal GNI per capita grew an average of just 7.4% per year from 2009 to 2012, which is less than the 8.2% per year average growth rate registered from 2001 to 2010. PEMANDU and the ETP came into force in 2010. In short, the ETP and PEMANDU have failed to increase our GNI per capita above its long term growth trajectory.

Failed: Reaching the target to grow national income by 6% per year

“Propelling Malaysia towards becoming a high-income developed nation”, as promised by the ETP, requires Gross National Income (GNI) to grow by 6% per year. PEMANDU [1] gave much prominence to this 6% per year growth target in its “A Roadmap for Malaysia” report that launched the ETP with much fanfare in 2010 [2].

However, the recently published 2012 Annual Report of the ETP makes not a single reference to the fact that the ETP failed to meet this crucial 6% per year growth target last year. The fact is, real GNI grew by a pedestrian 4.3% in 2012 [3], well below PEMANDU’s aspirations and even lower than the 4.9% recorded in 2011.

Whatever happened to the 6% growth target trumpeted by the ETP on its launch?

Source: Executive Summary, Economic Transformation Program – A Roadmap for Malaysia, 2010 (page 5)

More perception manipulation and deception from PEMANDU

Rather than address the core issues impeding growth, PEMANDU continues to practise perception manipulation and deception in its efforts to hoodwink Malaysians into believing it has reached or exceeded its targets.

Firstly, its 2012 ETP Annual Report quoted real GDP (Gross Domestic Product) growth rates, which at 5.1% and 5.6% in 2011 and 2012 [4], were higher than GNI growth and presented a slightly better picture of the sad situation.

Secondly, when discussing GNI, PEMANDU used nominal numbers (which include inflation) and US$ instead of Ringgit. The 2012 ETP Annual Report states The country’s GNI per capita has risen from US$6,700 in 2009 to US$9,970* in 2012. This represents a 48.8% surge in just a two-year period. Based on current projections and barring unforeseen circumstances, this gives Malaysia the potential to achieve a GNI per capita of US$15,000 earlier than the 2020 target. [5]

As pointed out in our Focus Papers critiquing the ETP, quoting nominal numbers including inflation can be misleading [6]. Inflation does not make us any richer. If our incomes go up by 15% – as do the cost of things we buy – we are not any richer, because the extra income is spent on paying more expensive prices for the goods and services that we use.

We also pointed out that a weakening US$ will not directly help most Malaysians. Say your household income is RM3,000 per month (in line with about 70% of Malaysian households). At RM3 (US$1), that is equivalent to US$1,000. Say the US$ weakens to RM2.50. You still earn RM3,000 per month, but that’s now worth US$1,200, which PEMANDU can then claim to be an impressive 20% increase. But you live here and spend here. Your teh tarik still costs RM1.50, your coffee shop lunch RM5+. The US$ increase is certainly helpful if you are visiting the United States, but on a RM3,000 household income, that is an unlikely possibility. Rich Malaysians who travel overseas extensively would certainly benefit from a weaker US$, but not the vast majority of Malaysians [7].

PEMANDU still cannot even get its basic Math right [8]

Let’s go back to the part saying GNI per capita had ‘risen from US$6700 in 2009 to US$9970 in 2012’ and that ‘this represents a 48.8% surge in just a two year period’. Not only is 2009 to 2012 a 3-year period rather than a 2-year period, the calculations for GNI per cap in 2012 are also misleading. Exhibit B footnotes GNI per capita in 2012 at RM30,809 and an exchange rate of RM3.058 to US$1. This translates into a GNI per capita of US$10,075 rather than US$9,970.

So what are the correct numbers? Until the high-powered and highly-paid staff and consultants at PEMANDU can get their basic math right, let’s start from first principles and use data from the Department of Statistics. The latest set of GNI figures from the Department of Statistics (which PEMANDU surely has access to as well), shows GNI per capita at RM24,879 for 2009 and RM30,809 for 2012. This works out to a mere 23.8% GNI per capita growth from 2009 to 2012, less than half the 48.8% figure cited in the Annual Report!

On average, this works out to a 7.4% per year growth in nominal GNI per capita for the three years from 2009 to 2012 which is less than the 8.2% per year average growth rate registered from 2001 to 2010 [9]. GNI per capita has been below the long-term trajectory after PEMANDU and the ETP came into force in 2010. In other words, the ETP and PEMANDU have had no impact in increasing our GNI per capita above its long term growth trajectory!

Tomorrow, we shall reveal the massive plunges in investments and job creation.


Teh Chi-Chang, CFA                   Dr. Ong Kian Ming BSc (LSE), MPhil (Cantab), PhD (Duke)

Executive Director                       Visiting Contributor

[email protected]                     [email protected]



[1] The acronym that the Performance Management and Delivery Unit within the prime minister’s department is better known by. PEMANDU is the government agency that created and is now steering the ETP.

[2] This 6% target was very prominently highlighted at the very start of the Executive Summary on page 5 of the Economic Transformation Program – A Roadmap for Malaysia publication.

[3] Fourth Quarter National Accounts, pg. iv  Available at

[4] Exhibit A, pg.6, ETP Annual Report 2012

[5] Pg.8, 2012 ETP Annual Report

[6] For a simple explanation of the important difference between Nominal and Real growth please read our Focus Paper A Critique of the ETP (Part 2) – We won’t really be twice as rich in 2020.  Available at

[7] Covered in Part 1 of our series Dissecting the ETP Annual Report: Grade A+ for Obfuscation. Available at

[8] The dodgy math and data underpinning the ETP is covered in our Focus Paper A Critique of the ETP (Part 2) – We won’t really be twice as rich in 2020 and also in Part 4 of our series Dissecting the ETP Annual Report, 45% of GNI and 20% of Jobs Disappeared in Recalibration. Available at

[9] Derived from data published in Bank Negara’s Monthly Statistical Bulletins. 2010 nominal GNI per capita was RM26,175. 2001 was RM12,859. 8.2% is the compound average growth rate (CAGR) calculated.

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