July 22, 2008

Analysis of the MidTerm Review of the 9MP

Posted in Malaysia at 5:16 pm by egalitaria

I do such a crappy job of upkeeping my blog, sometimes I wonder if it’s worth having at all! Anyway, it’ll just be an avenue to store all my various writings elsewhere I suppose. Here goes…

More info needed on mid-term review of 9MP


A brief analysis of the Mid-Term Review of the 9th Malaysia Plan.

THE Mid-Term Review (MTR) of the Ninth Malaysia Plan (2006-2010) was tabled in Parliament last Thursday and will be hotly debated this week.

It paints a glossy picture of sound macroeconomic fundamentals over the past two years and credit must be given to the focus on eradicating poverty, providing affordable housing, water, electricity, healthcare, and improving the standard of living of marginalised groups.

It also acknowledges the impact of the slowing global economy on Malaysia and the need to respond accordingly.

Upon closer perusal, however, the MTR lacks the pizzazz that many were looking forward to.

While the MTR provides a progress report, it seems to be an academic exercise and fails to introduce any new measures to address increasingly crucial issues. The MTR fails to impress on three main counts.

First, the few surprises that did emerge leave room for questions. One would expect such announcements to be accompanied by fuller answers in anticipation of public queries.

The reason cited for the two Penang projects being postponed (RM2bil monorail and RM1.5bil Penang Outer Ring Road) was to relocate resources to cushion the impact of the increase in global oil prices and focus on people-centred projects.

Politics aside, this is an ironic move because these two projects would achieve the objective to “cushion the impact of increase in global oil prices”.

If an enhanced public transport system does not qualify as a people-centred project, it is difficult to fathom what would. This therefore seems to contradict initial targets of improving public transportation systems to address public needs.

There was also an addition of RM30bil to the already sizeable RM200bil expenditure allocation.

The reason cited was the rising costs of projects, with RM10bil going to the five corridor projects and RM2bil for a double-tracking project from Ipoh to Rawang. Whilst this may indicate a level of seriousness from Government in delivering the projects originally introduced, the MTR however fails to provide a full financial justification in detail.

The only detail provided is “the increase in construction-related materials cost”, with no accompanying accounts to justify a round figure of RM30bil additional expenditure.

Second is an inconsistency in policy statements. Inflation rate was originally estimated at 2.2% per annum, and the MTR has revised this to 2.8% per annum over the period 2006-2007. The accuracy of this figure has been questioned frequently.

The MTR wisely predicts that global inflation rates will escalate due to protracted increase in energy, commodity and food prices. It also projects 5.9% inflation in emerging markets and developing countries, and 2.2% in the advanced economies.

Third, the frustrating tables of figures that provide some, but not sufficient, information. The MTR follows the traditional breakdown of all Malaysia Plans in classification terms, but better would be a disaggregated breakdown of those within the broad “bumiputra” category.

This is done for income breakdown in Sabah and Sarawak (Malay, Iban, and so on) but not in peninsular Malaysia. The disaggregated figures should also be calculated for the Gini coefficient, which is a measure of income inequality distribution (breaking down bumiputra into smaller groups – Malay, Iban, etc.), where presently the coefficient is calculated lumping them together as “bumiputra”.

There is no data given on the status of the orang asli, who need serious attention. The concern is that there needs to be specially tailored efforts for specific communities (even within the bumiputra category), aside from a general objective of improving income distribution.

The calculation of equity ownership in Malaysia also follows the same methodology as the Ninth Malaysia Plan, which is disappointing. Firstly, a more detailed breakdown of the equity ownership used to be the practice in older Malaysia Plans.

Secondly, it still makes use of par value of shares – the reason given is that market value is available only for listed companies in Bursa Malaysia. If that is the case, then there should be two tables giving calculations of companies that are listed and those which are not, and then combining the results obtained from both tables. This would give a clearer picture of actual equity ownership.

As argued in previous discussions, using par value for all companies to demonstrate wealth is clearly misleading as it is the market capitalisation that is truly reflective of a company’s worth. Then there is the further complication of the exclusion of Government shares in companies (this includes Government-linked companies), which requires another discussion altogether.

As it stands, the methodologies used are unclear and I would welcome a more detailed clarification of the calculations, with a full appendix or transcript of methodologies used. Hereon, this should be the standard practice for all developmental plans published officially by Government.

The MTR, although mentioning the importance of good governance, fails to record any public finance scandals that have emerged over the past two years nor how lessons learnt would enhance present mechanisms.

Finally, it is unfortunate that policies addressing socio-economic imbalances are continually awash with the same racially-skewed language. Much attention is presently given to improving the status of the bumiputras.

The focus should be instead on those socio-economic classes that are in need, bumiputra or not. The rise in petrol and food prices affects all regardless of racial group.

In the final analysis, the MTR provides a report of activities to date. There do exist sound overall objectives and goals, manifest in the main pillars outlined. However, the contention lies in the specific policies, especially those that provide little detail.

In order to complement the MTR, the Government should now lay bare the realities on the ground, being frank about the difficulties being faced presently. Telling the truth – and then seeking solutions – may serve to improve the presently flailing public perception of government.

Tricia Yeoh is the Director of the Centre for Public Policy Studies. She welcomes further discussion on the MTR and other policy issues from all parties, and can be contacted at tricia_yeoh@cpps.org.my


1 Comment

  1. Fikri said,

    It’s like waiting for the buses…you spend ages waiting for one, and then 9 come along at once… 🙂

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