Many can still remember the “GST saved Malaysian economy” remark made by our Prime Minister and echoed by many other Barisan Nasional members. We were told that “without GST, Malaysian economy will collapse”. Recently, members from the Barisan Nasional even seem to be proud of the GDP growth that Malaysia achieved.
Is our economy really doing well?
It is in the interest of Barisan Nasional to keep assuring the people that our economy is improving and doing fine. We were told that the Gross Domestic Product (GDP) of Malaysia for the period of April to June 2017 witnessed strong growth of 5.8%. The growth had of course been added to Barisan Nasional’s basket of defense amidst one of the largest financial scandals on a global scale that has been haunting them for a while now which could possibly lead to their defeat in the coming general election – something that had never happened to the Malaysia’s 60-year-old ruling government.
But just how meaningful or relevant is the 5.8% GDP growth to the ordinary Malaysians on the street? Anyone with knowledge in economic studies will be able to tell that GDP is never a comprehensive measure for many things: it doesn’t measure happiness, distribution of wealth in a society, living standard, efficiency in management of resources, productivity or technological advancement. The way GDP was computed was also sometimes questionable with regards to the denomination it used or the segmental differences it doesn’t account for.
A good example which is widely applied to explain the inadequacy of GDP as a measurement of well being is the “car accident” example. Imagine two cars involved in an accident where the two cars were totalled. Car insurance, healthcare insurance, out-of-pocket expenses, public funds in repairing damaged facilities, possible lawsuits, administrative costs in processing all of the above, they all create GDP, possibly in the region of hundreds of thousands in this particular example. But does this increment in GDP reflect anything about our well being?
To put that into context, we must ask more fundamental questions: did our salary increase to at least overcome the price hike due to GST? Did Ringgit Malaysia improve? Was our purchasing power increased? Was the issue of rising cost of living addressed? Was the petrol price stabilised? Are the graduates getting employed now?
The Economic Planning Unit has in its report titled “The Malaysian Economy in Figures 2017” stated that unemployment rate in Malaysia has increased from 2.9% to 3.4% from 2014 to 2016, and it’s expected to further increased to somewhere between 3.6% to 3.8% in 2017. Notably, unemployment rate among youths in Malaysia has stayed stagnant at above 10% for few years now.
One direct way to measure the wealth of the people is to look at the purchasing power. While the growth for mean household income has been well for the past 9 years (from RM3,686 in 2007 to RM6,958 in 2016, according to Department of Statistics Malaysia), general Malaysians just don’t see their purchasing power improve. Few reasons to that is because the persistent increase in property prices, high housing debt to GDP ratio (88.3% in 2016), weakened Ringgit, as well as increase in commodity prices.
Therefore, we cannot simply rely solely on the GDP growth to assess if our lives or the economy have improved.
In addition, to look at the well-being of the Malaysian society as a whole, it will be meaningless if we only look at the quantitative arguments but not the qualitative ones.
In the presence of a responsible governing body and sustainable public policies, being in the higher wealth bracket of the society could mean the ability and capability to own bigger house with swimming pool, sports car, diamonds and all sort of luxuries that do not reduce our rights to decent public goods. In Malaysia, being wealthy makes a vast difference of whether you’re able to obtain desirable education, whether you have access to satisfactory health care system, and whether your drinking water is filtered – things that belong to Malaysians who have the financial capability but are supposed to be fundamental responsibilities of the government.
To summarise, we have been made poorer both quantitatively and qualitatively. Due to the inefficiency in management of resources in our economy, even the rich in Malaysia are being made poorer.