Sunday, February 10, 2008

Malaysian Income Rose by 40% over 3 years?

The Star reported that Malaysia's per capita income rose by 40% in 2007 compared with 2004 according the Second Finance Minister, Tan Sri Nor Mohamed Yakcop in Penang. He said that per capita income was now RM22,345 compared with RM15,819 previously.

Nor Mohamed Yakcop must either be completely out of his mind, or can no longer perform simple Mathematics or worse, attempting to insult the intelligence of ordinary Malaysians.

Malaysia's Gross Domestic Product (GDP) grew by 5.0%, 5.9% and an estimated 6.0% in 2005, 2006 and 2007 respectively according to the Government's official statistics.

Based on the above growth rates over the past 3 years, Malaysia's GDP grew by approximately 17.9% from 2004 to 2007.

Income or GDP per capita is calculated by dividing the GDP with the total population. Therefore, it is completely inconceivable that our per capita income increased by 40% when our GDP grew by only 17.9%. Unless of course, the honourable Minister believes that our population shrunk by some 16%!

To achieve 40% growth, Malaysia must be growing in excess of 12% per annum. Hence, to grow by 40% over 3 years, with a population growing at just under 2% per annum, that will actually make Malaysia the fastest growing economy in Asia, outstripping even China and India.

The Second Finance Minister should refrain from getting intoxicated by the general election fever, in the attempts to paint a heavenly picture of the Malaysian economy. He must instead make an official public apology for his outrageous claims.

35 comments:

Anonymous said...

I had a good laugh when I first read the news. Don't know how many M'sians would believe his outrageous statistics on GDP per capita.

Anonymous said...

With election around the corner, there will be a lot of ' SILAP MATA' around.
I am not surprised if next he would claim that all malaysians are millionaires.
The point is to which group of people is the silap mata directed to?

Anonymous said...

Would the appreciation of the ringgit have an effect on per capita income

Unknown said...

If you read the Star story, the clueless minister said that in US Dollar terms, i.e., if we include the appreciation of the ringgit, our income would have increased 55%.

We should be so lucky. ;-)

Anonymous said...

The biggest silap mata that I saw, which surprisingly didn't catch many people's attention was:

“Malaysia’s inflation rate is the lowest in the world and this mirrors the government’s efforts in keeping the prices of essential goods low,” he [Najib] said.

This was proclaimed on 24 January, with a callout on the frontpage.
http://thestar.com.my/news/story.asp?file=/2008/1/24/nation/20107783&sec=nation

As far as I know, other economies like those in Europe and Japan hold this title.

Anonymous said...

But generally if you ask around, workers in most industries are not actually earning fantastically more and did not enjoy fantastic pay hikes for the last 3 years ie. there wasn't any fantastic real wage increases ... I think I read somewhere the forecast real wage increase for Msia ( in 2007 ) was only 2 - 3.5% compared to say, India ( 7% ( and ) China ( 6 % )

Anonymous said...

Open your eyes now! It's all dirty tactics by BN for the sake of winning votes!!

Anonymous said...

;)原諒他吧:)他還在發夢未睡醒,吃飯不知米價。要問一個富裕人家鍋粑的味道損失如何?還是省點力氣多勞多獲讓自己肚子溫飽吧。;)

Anonymous said...

I also remembered just about a year ago, a senior Minister said in one of his speeches, that in 2006, the retail sector grew 7.5% vis-a-vis GDP growth of 5.8% while Msia per capita income was RM11,500 ( in 2006 ) compared with RM6,100 ( in 2001 )... whose statistics are right ?

Shannon James said...

Tony, that's a good question you raised. (Perhaps you need to start a school of journalism in Malaysia to train future reporters to ask the same!)

Here's my analysis:
GDP growth is measured in real terms, i.e. excluding inflation. So, if you add the 2.5% inflation on top of real GDP growth, you get nominal GDP grew by 26.4% instead of 17.9%.

See the effects that even small inflation can amount to! Of course, no consumer really believes we have 2.5% per annum in Malaysia for the past 3 years, but that's besides the point.

Now from 26.4% to 40%, it could be partly due to rise in civil service wages above GDP growth, and in part also decrease in capital returns.

Now, you should ask the minister: why claim inflation is low, but not adjust the (supposedly) 40% rise in nominal income, and say it rose 30% in real wages instead?

Anonymous said...

You have to use compounded GDP growth rather than simple addition for three consecutive years.

But I guess the total GDP growth is still lower than 25%.

It's still a possibibity to have 40% income per capita growth in ringgit sense if both ringgit appreaciation and compounded growth are considered.

Let use the correct method first before laughing at someone arithmatic skill.

Unknown said...

Hey anon above,

Yes, lets use the correct method as you said.

1. I used compounded growth over 3 years to arrive at 17.9%. Otherwise, simple addition will add to 16.9.

2. As mentioned in my comments above, the 40% claimed by the Minister is without taking into account currency appreciation. He stated that with appreciation, it will be 55%.

Yes, I think one should do the counting and reading first before suggesting that we have used the wrong method.

Tony ;-)

(p.s., Shien Jin - yes, nominal growth will be just under 30%. However, the up to 40% increase in civil service wages would have been included in GDP growth - hence, no necessity for double-counting (and it certainly wouldn't make another 10+%!)

Anonymous said...

Anonymous at 8.01am above - why are you so fearless when you post exactly the same thing in Malaysia.Today, but becomes anonymous when posting here? I will give you the same reply I gave you there. Here goes:

fearless, Tony Pua is an economist from Oxford - he knows what he is talking about.

/// You have to use compounded GDP growth rather than simple addition for three consecutive years. ///

He had used compound growth - 5.0%, 5.9% and 6.0% - which is why he said it should be 17.9% for the 3 years. (1.05 1.059*1.06=1.178667) If you use simple addition, it would be even lower at 16.9%.

/// But I guess the total GDP growth is still lower than 25%. ///

It is exactly 17.86667% from 2004 to 2007. And certainly not higher than 40%.

/// It's still a possibibity to have 40% income per capita growth in ringgit sense if both ringgit appreaciation and compounded growth are considered. ///

The GDP figures are all in ringgit, so ringgit appreciation is not a factor. Compound growth is considered. The result is 17.9%. With population growth, the per capita GDP growth should be lower than 17.9%. I think we can all assume that the population of Malaysia is higher in 2007 than in 2004, unless there has been many citizens blown up by C4 without our knowledge, or a lot illegals being deported. (Sratch the last bit, as the illegals are not part of official statistics in the first place.)

/// Let use the correct method first before laughing at someone arithmatic skill. ///

Tony Pua used the correct method. Not sure about the Second Finance Minister. I am even more unsure about whether you know what you are talking about.

Who is laughing now?

Anonymous said...

Dont worry! There will be a lot of SILAP MATA and SILAP TELINGA before the election day!
Wat ever it is, I and my neighbours and family have dedicated and reserved our votes for DAP! We hope that Tony Pua will represent SUBANG JAYA this coming election! Give a chance for LEE HWA BENG to sweat in his pants...

NEO said...

Oh Yah! Our income really increased by 40%?!

If what mentioned by M. "Yakult" is true, than our BN Government is really facing great threat of corruption with our Inland Revenue Department.

If our per capital income increase by 40%, than our income taxes collection by IRB should also be increase by 40%!

Ah! Unless our IRB put the income tax collection into thier own pocket. ha ha

Macam-macam pun boleh as long as under administration of BN

Dear M. "Yakult" please stop making irresponsible statement and pressure me to disclose how you using your position as 2nd Finance Minister to interfere in relation to companies apply for listing on the Bursa Malaysia. Your lovely son is acting as your agents and we know about this.

Anonymous said...

tell us more about M Yakult! and about his lovely son...

Anonymous said...

Tan Sri Nor Mohamed Yakcop's false claim of a 40%-increase in incomes per capita is perhaps a good news to the opposition. Since the "true" average incomes rose by no more than 17.9% over the 3-year period, the "true" average person would be very angry with the government if they believed in Yakcop's words. Looking at their own income growth, the true average person would find herself doing so much worse than the (fake) "average" Yakcop's person. The true average person would think that she is now in the bottom of the distribution, when she is indeed not. Wouldn't this make her very angry?

Anonymous said...

开始为国家经济感到担心。。
怎么第二财长会犯这么一个错误啊。。

Anonymous said...

We can laugh about this here because we are all convinced that BN is bad for the country. And we will be voting for the Opposition if the GE is tommorrow.

But the reality is that we are only a minority here. That statement by the 2nd Finance Minister was not directed to us , but to the fence sitters. And believe me, no matter how idiotic his statement, there will be a few buyers. And thats the name of the propaganda game, convert a few each day.

Anonymous said...

Dear anon 10.47PM


The story is like this....
One company which apply for listing on MESDAQ in 2006 was rejected by Security Commission of Malaysia in 2007.

The Chairman of this company have approched M. Yakult son for speacial arrangement to be made.

After the Chairman son meeting up with M. Yakult son, and after both party agreed to the term and conditions, M. Yakult had issued a "Advise Letter" to Mr. "Keris" of Security Commission and requesting SC to re-consider the application.

However, Mr. "Keris" and his team in SC have not giving any face to M.Yakult and again "Rejecting" the application for listing for a 2nd time and explained to Mr. Yakult that it is too late as the "Advise Letter" is coming too late.

This is a real story!

Anonymous said...

Wah, Tony! You should really see the size of nasi lemak bungkus in the mamak shop! I went there yesterday and was shocked the size is about one third of the original size!

The size of the glass for holding the tea tarik now is about 50% less than before!

They increase the price recently but cut the size!!(TWICE CHEATED)

Definitely BN or UMNO is not in my card for this election now and future

How to survive Tony??

Now Red Snapper or Ikan Merah price is almost close to Salmon!! RM 40 per kilo! What are we going to eat Tony?

If the BN win and remove subsidy on petrol I think we will live on porridge. Talk about sending our astronout into space...months ago!!! Where are the results of the breakthrough and cutting edge research?? Guess our RM 100 million burnt!

Anonymous said...

To all the Anon who write in Chinese,
Please write in English so that we can enjoy your comments too! If not provide subtitles laaa....

BN and UMNO bashing should be shared together :)))

Anonymous said...

Its obvious GDP did not grow 40%, the number is something else, probabaly GNP converted to ringgit or something. Anyone with half a brain can do the calculation easily AND instinctively know its not true.

But the problem is this second finance minister who was a former central banker could make a rudimentary mistake like this. You realize why he did a dumb thing as to try and corner the silver market under Dr. M, the resulting losesm which BTW would have ammounted to those missing nearly 20% GDP numbers in today ringgit terms easily.

Anonymous said...

the thing is that it is documented black and white (newspaper) and can be used as research and statistic in future, "you know AAB is best minister managing economy to gain GDP 40%, not even PM ke-4 can achieve this" - researched by student year 2015 quoting 2008 newspapers....

Anonymous said...

that must have been a lousy student being supervised by an equally lousy supervisor or lecturer! Nobody now or in the future with the right mind will believe today's newspapers especially with alternative source of information provided by the internet

Jason said...

I have read your flyers of regarding inflation, and alos the intro of you and Lau Weng Sanand Dr Cheah. Frankly, I am disappointed that the fyers only highlighted the problems but not toouch of DAp how your party ideology in this GE and how ur ideology can bring this country forward.Mentioning target 40 seats is less ambition though i understand current situation. How bad the condition is, you should bring the party idology if u think is really correct. Then must list out how DAP want to rule this country. Then only hightled the gov problems...now DAP must also developed the thinking of voters especially non chinese voters..how DAp become a true Malaysian Party..I cant see the progress as too many Chn and Indian in fact. SOrry for complaint so much as I think it is good people like you join DAp but it just not enuff to bring Malaysia forward...social, economics,etc...give some hope to malaysia OK?

Unknown said...

Hi Jason,

Thanks for your comments.

We do have a manifesto being launched very soon, which essentially puts into a page or two our key ideas and policies, condensed from all the information you will find on our websites and blogs.

Unfortunately, we can't put it all into a single flyer, and neither can we give too many flyers at one time.

Hence one of the focus at this point of time is inflation what we can do about it, or at the very least, make it less painful.

But we do have other flyers on other issues, including some of the issues you mentioned above.

If you need any other info, please let me know.

Thanks once again.

Tony

Anonymous said...

Hi Tony - not the first time what... remember the calculation about the stupid racial stock ownership percentage by ASLI?

Their calculation methodology is genuinely ASLI.

Keep up the good work Tony! My best to you, your family, the party and the country... it is too bad I can't exercise my vote this time around as I am still out of the country...

NEO said...

"Income per capital" is derive from GDP and GDP is comprise of total value added created by both the individual as well as corporations in the country.

Thus, an increases in Income per capital will not ensure increase in the average earning & standard of living of the "Rakyat"!

If the increase of GDP is mainly attributable to PLC, MNC or GLC, than the improvement in the wealth creation will only be benefit by the respective stakeholder and not the "Rakyat Biasa"

Anonymous said...

Malaysia's income did rose by 40% in a single year.............. that's when this (ex) regime announces 40% raise for all civil servant irrespective of their performances or where the money might be generated from to pay for these low life worms.

Anonymous said...

Whatever it is the present BN government needs to go! They have been there too long......

1Roti canai have become smaller, thinner and paper thin with price increase
2 A glass of tea has become smaller with less tea and milk and more costly
3 Red snapper is out of our reach...
4 medicines getting sky high

Soon, oil prices will go up triggering an economic and inflation tsunami

And Nero plays continuously on his violin, while the drama of "it looks like me and sounds like me" keep getting attention. Alltantuya court hearing keep going on and on

Everybody is tired! We need a change in the government

damian said...

Halo Tony,

I'm working in S'pore as a Technician now so I don't have the option to take 1-2weeks off to volunteer for DAP as I did in the last election for the PJ state/par
I noticed organization is somewhat lacking at the PJ HQ at Seapark, This time, may I suggest u get better organized, front office to meet any & every potential donors or better, volunteers. get the party manifesto out asap & 10-point action plan to revive the economy. that should dispel any rumours that DAP is only to oppose but no program to improve & run the country. 2ndly may I suggest, as the public is really sometime 'kiasu' in nature, instead of asking for direct donations why not sell merchandise with DAP emblem, such as collar-pin or badge, should be very popular item people can buy & wear proudly, at the same time you & DAP can get the funds u neeed to
campaign & defeat the AXIS of evil UMNO-MCA-MIC, good idea?

Anonymous said...

I cannot believe this. We still have these people in our government in the 21st century?

Anonymous said...

He did not take into account of inflation. He is using GDP at current price or GNI per capita at current price.

Anonymous said...

i believe the MP who said 40% income rise. Maybe It is his only.Maybe through illegal means?