15 questions on the ETP

By Nurul Izzah Anwar, The Malaysian Insider

The government has recently announced the launching of the Economy Transformation Program or ETP which is part of the New Economic Model (NEM). As a background, the government’s National Transformation Agenda is based on meeting the Vision 2020 of being an industrialised nation driven by four national transformation pillars of the 1Malaysia inclusiveness concept, Government Transformation Plan (GTP-with 6 National Key Result Areas (NKRAs)), Economic Transformation Plan (ETP- with the New Economic Model goals of High Income, Inclusiveness and Sustainability by having 8 Strategic Reform Initiatives (SRIs) and 11 National Key Economic Areas (NKEAs)) and the 10th Malaysian Plan.

I congratulate the government for introducing a comprehensive economic development plan that aims to position Malaysia as a High-Income economy by 2020.

However, I wish to ask a few questions from a lay person’s understanding of the economy to seek clarification on the eventual implementation of the plan and to obtain answers to the many challenges and contradictions facing us today.

Although some of the questions might be obvious, but the answers would lead to a better public understanding of the assumptions used for the projections.

All the data was derived from publicly available information with some interpretation done as best as possible for clarity.

I invite comments by all Malaysians to my enquiries in the spirit of ‘constructive engagement’ with the purpose of moving forward for a Better Malaysia.

Gross National Income  (GNI) Projections

Overall, the country’s GNI is projected to grow to at least RM1.7 trillion (US$523 billion) from RM660 billion (US$188 billion) in 2009 (using RM3.25 to US$1 exchange rate) for a 178% growth over 10 years (2010-2020).

Question 1: What is the impact to the GNI projections if the Ringgit weakens to RM3.50 and above per US$1?

Question 2: Will floating the Ringgit help in meeting the exchange rate needed to achieve the GNI targets?

6% Annual Growth Rate Target

This would require a 6% annual growth rate for 10 years (2010-2020).

However, from 2000 until 2010, Malaysia’s average annual GDP Growth was 4.72 percent.

Question 3: How are we going to maintain a 6% annual growth rate for the next 10 years with the predicted global economy remaining weak as compared to the preceding 10 year annual average of 4.72% when the global economy was relatively strong (except for the 2008 financial meltdown)?

ETP’s GNI Growth Contribution Target

The ETP projects will provide RM1.258 trillion (US$387 billion) or 74% of the country’s gross national income (GNI) of RM 1.7 trillion (US$523 billion) by 2020. The remaining 26% is expected to come from non-ETP project sectors.

The RM 1.7 trillion GNI growth contributions in 2020 are as follows:

31% from the 133 Entry Point Projects (EPPs), RM527 billion
10% from EPPs multiplier effects, RM 170 billion
33% from the 60 Business Opportunities (BOs), RM561 billion
26% of incremental growth from other non-ETP projects, RM442 billion

The ETP projects are part of the 11 National Key Economic Areas or NKEAs. The four largest NKEAs (oil, gas and energy, financial services, palm oil and wholesale and retail) are projected to generate 60% of the 78% ETP based projects incremental GNI growth from the 11 NKEA sectors.

Question 4: What impact on GNI targets if commodity prices (oil, gas, energy, palm oil) that are the two main NKEAs become lower during the 10 year ETP period?

GNI per capita Target

Gross National Income (GNI) per capita will reach above RM48,000 by 2020 from RM23,700 in 2009, for an increase of 102% over ten years.

For context, the income distribution schedule indicates that there are 5.8 million households in 2007. Of that, 8.6% have an monthly income below RM1,000, 29.4% had between RM1,000 and RM2,000, while 19.8% earned between RM2,001 and RM3,000; 12.9% of the households earned between RM3,001 and RM4,000 and 8.6% between RM4,001 and RM5,000.

Finally, around 15.8% of the households have an income of between RM5,001 and RM10,000 and 4.9% have an income of RM10,000 and above.