Anwar urges Najib to answer his prognosis on ETP

Dec 28: Parliamentary Opposition Leader Anwar Ibrahim has urged prime minister Najib Razak to respond to his claim that Malaysia would be hit by widespread poverty by 2020 should the Economic Transformation Plan be allowed to continue.

L-R: Anwar and Najib

“This key question should be answered by the prime minister himself,” Anwar said.

Based on its higher than expected 3.6 percent wages growth and lower than expected inflation rate of 2.8 percent, ETP predicts that its programme will allow additional 2.8 million Malaysians to earn RM4,000 a month by 2020.
Challenging this claim, Anwar in a speech on December 15 described ETP’s wages growth number of 3.6 percent and inflation projection of 2.8 percent over the next 10 years as unsubstantiated, saying the average wages growth over the past 10 years according to the Human Resources ministry was only 2.6 percent and inflation rates in the periods 2001-2005 and 2005-2009 were much higher at 4.8 percent and 6.6 percent respectively.

The former Finance minister said even if wages were to grow at 3.6 percent every year over the next decade, there would still be 7.6 million people earning less than RM1,500 a month by 2020.

“This total accounts for 51 per cent of the country’s workforce in 2020, compared to 56 percent in 2009. Therefore, a failed economic programme that only increases the number of poor is bad economic planning that sidelines the people’s welfare," Anwar said.

Anwar's speech was followed by ETP's response insisting that its inflation assumption of 2.8 percent over the next 10 years was reasonable and as such its targets to achieve a high income nation was valid.

ETP also claimed Malaysia's inflation rate only averaged about 2.77 percent between 2005 and 2010, which included an all-time high of 8.5 per cent in August 2008 due to high oil prices.

“As at October 2011, inflation is up 3.4 percent year-on-year while for the period of January to October 2011, it is up 3.2 per cent year-on-year. Based on historical and current data, an assumption of 2.8 per cent inflation over 10 years from 2011 to 2020 is reasonable,” it added.

In his reaction, Anwar stressed that ETP was a continuation of a flawed economic model mired with corruption and rent-seeking culture, resulting in a widening of income gap and benefits of economy being monopolised by corporations.

“Najib does not even deny my analysis that the ratio of workers’ wages to country’s gross domestic income will reduce from 40 percent in 2009 to 33 percent in 2020. In fact, this is the main problem plaguing our country, when a minority group continues to amass wealth while the majority are left to suffer the rising cost of living on stagnant income,” he said.