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PEMANDU ETP 2014 Report shows anomalies and abberations if not deceits and delusions – The report is grossly misleading and PEMANDU should be disbanded!

9th MAY 2015 
BLINDSPOT

PEMANDU ETP 2014 Report shows anomalies and abberations if not deceits and delusions – The report is grossly misleading and PEMANDU should be disbanded!

The Guardian newspaper recently wrote an article “The Tory economic plan is NOT working, at all – sadly their PR is”. It depicts how the Conservative government in the run-up to the 2015 Election – tried to paint a positive picture using deceit and delusion employing sophisticated PR methods despite its economic policy having failed miserably.

Blindspot is troubled that the government has gone on the same path with its ETP Annual Report 2014.

In this analysis of the ETP Annual Report 2014 (henceforth as “AR 2014), Blindspot highlights some of the anomalies and aberrations, if not deceits and delusions.

Based on the arguments presented herein, we conclude there is no real value in Malaysia having PEMANDU and the ETP.  The nation will in fact lose value and  self-respect to endure the flawed economic approach of the ETP and Pemandu’s mischiefs; and continue to bear the absurdly high operating costs of Pemandu and its consultants if only to receive more obfuscations and untruths but importantly NO REAL RESULTS!

1) Has the Non-NKEAs outperformed the Pemandu-backed NKEAs?

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Exhibit 1.3 of the ETP Annual Report 2014 

From the above Exhibit 1.3 of the AR 2014, we extract the GNIs for the NKEA and Non-NKEA sectors to

 Table 1 – GNI growth analysis of NKEA and Non-NKEA sectors: 

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 Table 2 – Share of the Total GNI

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Well into the fifth year of the ETP why are the annual growth for the GNIs of the NKEA sectors lower than the Non-NKEA sectors?  Why has the NKEA’s share of the total GNI declined from 70.3% to 68%?

This is strange considering the NKEAs get special attentions and promotions by Pemandu, enjoys problem escalations at the highest level – with each EPP having its own monthly steering committee chaired by a minister; notwithstanding receiving various forms of fiscal incentives, even regulatory flexibilities.

Bearing in mind all the above and that the NKEAs are supposed to be the more dynamic sectors, HAS ETP AND PEMANDU ACTUALLY STIFLED THEM INSTEAD?

 

2) The EPPs’ contribution to the economy thus far is insignificant

The NKEA sectors were not created by ETP or Pemandu. They existed and were thriving even prior to ETP or the establishment of Pemandu. Pemandu only classified them as focussed or key sectors.  In fact many of the projects now rebadged as entry point projects (EPP) were already ongoing or operational before ETP.

The question is how much have the supposedly new projects (EPPs) under Pemandu contributed to the economy?

NOT MUCH ACCORDING TO OUR ANALYSIS.

Table 3 – Analysis of the EPPs’ contribution to the economy 

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In the ETP Roadmap, the base GNI for the pre-ETP NKEA sectors (henceforth as “base NKEA”) was stated to be RM 456 billion (or 69% of the total GNI).

With or without ETP the base NKEA sectors are bound to grow anyway. So we have extrapolated the base NKEA (without EPPs) for 2010 onwards using nominal annual growth rates as calculated from the national accounts. The Non-NKEA GNI contributions between 2011 and 2014 are actual numbers from the AR 2014.

Table 3 shows the projections of the GNI breakdown of the base NKEA, Non-NKEA and the EPPs’ GNI contribution.

As shown in the encircled numbers in Table 3, the EPPs’ GNI contribution thus far shows a paltry average of RM 33 billion annually or some 3% of the overall economy; and apparently the EPPs’ contribution is not even growing but regressing at a CAGR of -13%!

The ETP claims to deliver some RM800 billion from the EPP-based NKEA.  At average annual rate of RM 33 billion it’ll take some 24 years to fulfil that claim.

THIS IS FAR FROM BEING “BIG RESULT FAST”

 

3) Why is NKEA’s productivity growth rate negative while the Non-NKEA’s productivity growing at 8%?

From the following chart we see the true colours of the much-celebrated NKEA. These are actual data from the AR 2015.

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What happened to ETP’s aspiration of the shift towards higher value-add and knowledge-intensive activities. Plain as daylight it’s not the NKEA sectors which are shifting towards higher value-add and higher productivity but the Non-NKEA sectors.

 

4) Why is the Annual Report 2014 covering 96 EPPs only not all 151 EPPs?

How many EPPs are there?  Eventhough Pemandu started with 131 entry point projects (EPPs) from the 12 NKEAs in 2010, with the additions of new EPPs, there are now are a total of 151 EPPs – Appendix (List of EPPs) of AR 2014.

Table 4 – 55 EPPs not reported on in ETP Annual Report 2014

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Based on the AR 2014 there are a total of 151 EPPs of which 145 EPPs are 2012 intakes or earlier.

In other words, between 2010 and 2014 from the baseline of 131 EPPs (2010), 27 new ones came on board while 7 disappeared off the radar.

But in the ETP Annual Report 2014 of the total 151 EPPs in the official list, only the progress of 96 EPPs are reported. Why so?

Regardless of whether the 55 unreported projects have not taken-off at all or been struck out, they must remain in the report card – to be evaluated, and their individual progress consolidated into the overall progress.

Pemandu in selecting 131 EPPs in 2010, then another 21 new ones by 2012 claimed they were all “cangkul-ready”; so it’s quite curious what happened to the unreported 55 EPPs.

Considering some may have already received special privileges like grants, subsidies and tax incentives – shouldn’t there be some formal public accountability reporting on the status of each EPP?

But isn’t it proper performance management and delivery accounting procedure to report on the progress of ALL 151 PROJECTS?

As such, the recent announcement by Prime Minister Najib Tun Razak that for 2014, the overall KPI for NKRA exceeded 105 per cent while the overall KPI for NKEA exceeded the target, at 110 per cent does not make sense at all. How can you achieve such numbers when you are only reporting 96 out of 151 EPPs?

Even if all the 96 EPPs reported scored 100% progress, the maximum overall progress based on 151 EPPs can only be about 64%. Even if weightages by GNI impact are applied, the overall progress cannot exceed 100%.

TO EXCLUDE IS TO CHEAT AND TO FALSIFY ACTUAL OVERALL PROGRESS!

 

5) ETP Annual Reports method of measuring progress is questionable

There is also the issue of how individual EPPs’ progress is measured. Strangely all ETP Annual Reports does not report on cumulative basis.

For example, in the TUKAR EPP (modernizing of the small retailers), Pemandu targets 5,000 outlets to be implemented for the whole 2010-2020 period. But up to 2014 there has only been 1,395 outlets implemented ie. about 28% cumulative progress.

For instance, in the AR 2014 the TUKAR programme is reported to have achieved progress of 102%. That refers to achievement in 2014 only. It does not show the overall progress from the start of TUKAR programme (2011). So although what the reader sees as a ‘more than 100% achievement’, in reality the TUKAR programme as a whole (based on the EPP’s target of 5,000 outlets) has only achieved 28% progress. See Table 5.

Table 5 – Progress on TUKAR

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The report however does not cover on achievements of GNI or jobs – which are primarily the crux of the ETP core goals. For TUKAR: GNI impact of RM5.6 billion and creation of 51,544 jobs.

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From ETP.PEMANDU website

Now that’s a tall order. And if progress is measured based on them, it’ll be near zilch!

Firstly, how could new GNI be created when people buys at TUKAR shops instead of elsewhere. It’s the just same GNI transferred from Tesco, Giant, Mydin and other mom and pop shops to TUKAR shops.

Secondly, 51,544 jobs over 5,000 outlets imply about 10 new jobs created per outlet! With say existing 2 workers already employed before TUKAR; that’ll make 12 total workers per outlet. Will that not drive the shops to the ground if ETP’s prescription is to be followed?

 

6) Has ETP really created 1.5 million jobs over the last 5 years? If so, for whom?

AR 2014 declared 1.5 million employment opportunities were created within the ‘NKEA universe’ out of overall total of 1.8 million. If this was true – the jobs must be skill-based and high-income – as promised in ETP’s Roadmap. The type of jobs that would at least get the workers to be registered with the EPF. But strangely, EPF records does not show any such development.

Table 5 – EPF Active Members

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Between 2011 and 2014 there has only been 620,400 new registrations with the EPF. Even more disturbing the rate of new members registering with EPF is tapering at CAGR of -15%.

Aren’t registration and contributions with the EPF by the employers mandatory by law?

Similarly based on Department of Statistic’s Salaries and Wages Survey Report 2013, only between 150,800 to 205,000 new wage recipients were recorded between 2011 and 2013. Wage recipients are workers with formal jobs working more than 120 hours a month. Our usual working hours are at least 160 hours a month.

Table 6 – Dept of Statistics (DOSM)

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The only explanation that could be thought of is the million of jobs created may have gone to illegal foreign workers, who knows.

 

7) Has the 1.5 million jobs created under the NKEAs improved salaries and wages over the last 5 years? If so, by how much?

The issue of wages is critical considering the rising cost of living has caused a lot suffering and traumas especially among the low-income households; not to mention ETP is already in its 5th year to bring us ALL to become rich in the high-income economy.

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ETP promises over 60% of new jobs will have middle or high salaries. Let’s again look at real data.

Table 7 – Dept of Statistics: Salaries & Wages Survey Report 2013

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Based on Department of Statistics Wages Report 2013 there is only slight improvement (growth rate of 4.2% only) in mean wages. In 2013, half of the workers population has basic wages below RM 1,500. See Table 7.

As reported by Khazanah Research “State of the Households” report shows 62% of active EPF members earned less than RM2,000 per month.

Strangely, the effects of ETP and NKEAs have not yet kicked-in despite the 4-5 years in operation. Slight improvement in 2013 mean wage is most probably due to the National Minimum Wage policy that began in 2013. But median wage has not improved much – was 9.3% growth in 2012 and 2.4% only in 2013. Workers in the middle (median line group) seemed not affected much.

Contrary to ETP’s claim, based on our analysis, job created in the low income sector grew by 44% compared to a drop of 36% in the mid income sector. Middle-income jobs hollowed out significantly due to a migration of middle-income jobs to low and high-income.

See following chart.

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As such, BLINDSPOT calls for a serious audit on the AR 2014 and put a stop to this continuous obfuscations and false reporting!

AZLAN AWANG, CO-FOUNDER
BLINDSPOT

For any queries please contact:
ANAS ALAM FAIZLI – aafaizli@gmail.com
AZLAN AWANG – azlanawang@gmail.com
KHALID KARIM – khalidbinkarim@gmail.com
RAZIN MURAT – 
razin@ymail.com

*BLINDSPOT founded since 2011 is a group of professionals who are passionate about economic and social justice. They cover issues that impact ordinary rakyat such as employment and wages, education, housing, cost of living, inequality, poverty, the changing economy of the rural heartland and the implication of today’s economic agenda on our future generations.

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