28-Day Countdown to 13GE – Najib’s “Alice-in-Wonderland Statistics in his Transformational Malaysian Economy”

I have received an email from a retired international banker from the Malaysian Diaspora, who describes himself as a “Fact-Finder” monitoring the Malaysian economy, sharing his outrage on what he described as Prime Minister Datuk Seri Najib Razak’s “Alice-in-Wonderland Statistics in his Transformational Malaysian Economics” in his hour-long television interview on Tuesday.

I find this email so interesting, perceptive and pertinent that I am reproducing it in full, viz:

“Misuse of Data

The Prime Minister cut a rather sorry figure in his appearance on TV3’s programme entitled ‘Conversation with the PM’ aired on March 12th.

His remarks were a disappointment as he indulged in delivering clichés and ‘feel good’ statements concerning the state of the economy. He missed an opportunity to present a clear a vision of what he stands for.

There was no indication of the range of policies a Barisan National Government under his leadership, if re- elected, would offer.

He failed dismally to state how a new administration would tackle the host of problems that have accumulated during his four-year watch. The most significant of these problems are:

• The sharp increase in debt, both public and private;
• The persistent Federal Government deficits despite GDP growth rates averaging 5 percent per annum;
• Stagnant wage and earning levels that have failed to reflect the fruits of growth;
• The failure of private investment to respond to the so-called stimulative and incentive measures announced in successive Budgets;
• The ever-growing cancer of corruption.

There were two key themes in his interview that responded to a ‘soft’ questions posed to him.

Najib was in a pure electioneering mood wherein he was at pains to criticize the Pakatan Rakyat’s election manifesto by claiming that the promises it contained would be impossible to deliver.

However, he made no attempt to indicate as to what the BN offered in terms of specific policies and measures that would go towards meeting the challenges confronting the nation and in uplifting the living standards of the vast majority of the population facing widening income disparities.

The second theme taken up by him was a rather brazen set of claims about economic well-being that are patently false.

Bernama quoted that Najib said that when the BN goes to the polls to seek a fresh mandate from the people, it was on the basis of a very solid track record. He went on to say: “We can show the people that we have delivered,” he added.

He is further quoted by Bernama as saying: “When we talk about benefits to the people from 2009 to 2011, our Gross National Income (GNI) per capita has grown from US$6,670 to US$9,970, roughly about 49 percent.

“There is no country in the world that has achieved this kind of result,” he said.

To appreciate fully the import of these statements, it is appropriate to point out:

• GNI per capita is measured in current prices; therefore never used to calculate a growth rate. In national accounts, all growth rates are calculated in CONSTANT PRICE terms. E.G. GDP growth rate is always in constant prices.
• The numbers cited by the Prime Minister are a fabrication and deviate widely from the GNI per capita numbers for Malaysia published by the World Bank on its web site :
http://data.worldbank.org/indicator/NY.GNP.PCAP.CD/countries/MY-4E-XT?display=default

The World Bank website shows that the numbers were:

2009—– US$7,550

2010—– US$8,090

2011——US$8,770

• The World Bank calculations are in US dollars with certain adjustments to ensure inter-country comparability of GNI per capita levels AT A POINT IN TIME. This is the so-called World Bank Atlas method and the almost universally accepted measure for reporting per capita GNI. The World Bank data sets NEVER show growth rates of GNI per capita in US dollars OVER TIME in the way Najib has done. Thus, the 49% figure is based on an inappropriate calculation and the number is wholly meaningless and therefore misleading. The true measure of a country’s performance is shown by the GDP growth rate expressed in constant prices. On that basis the Malaysian economy grew at approximately 5.0 percent per annum over the three year time span cited by Najib.
• It is also wholly inappropriate to use flawed calculations of the type cited by Najib in inter-country comparisons. Thus the statement: “”There is no country in the world that has achieved this kind of result,” is nonsensical.

To place matters in perspective, Najib has made three claims.

First, that Malaysia has achieved a GNI per capita level of US$ 9,970 in 2011. This is incorrect. The World Bank figure was US$8,770. Thus he overstated the level by US$ 1,200. This is a sizable overstatement.

Second, he has calculated a growth rate based on current price terms. This is an inappropriate measure. If indeed he wishes to make the point that there has been per capita income growth, he should have used GDP per capita numbers in constant prices. Had he done so, the rate of growth would have been around 3 percent per annum.

Third, he has attempted an implied inter-country comparison of erroneous growth rates when he says “… no country has achieved…”———– this is totally wrong. These are Alice in Wonderland statistics not worthy of the Prime Minister.

This is patently a classic example of how to lie with statistics and hoodwink the public at large. However, serious analysts and market observers will see through this shard. Najib’s credibility will be seriously impaired and the entire attempt will be seen as a cheap stunt and bring shame to the country.

The Prime Minister is an economist by training and should know better unless of course he is totally ignorant of basics. Or perhaps he believes that the public at large can be fooled into believing made-up numbers such as these and misrepresentations based thereof.

It is thus legitimate to ask the Prime Minister: Where is there tangible evidence of such a huge increase in terms of per capita household consumption? Where is the evidence that households now enjoy income levels of this magnitude? With manufactured statistics such as these, the Prime Minister has lost all credibility! ”

Malaysians are entitled to a response from Najib whether he had lied in his statistics or whether he had been grossly misinformed and misguided by his coterie of economic advisers to make false claims in the hour-long television interview about Malaysia’s per capita GNI growth from 2009 – 2012, in particular about Malaysia being the world’s fastest country in per capita GNI growth in the two years from 2009 to 2011?