Monday June 18, 2012
Transformation is about achieving high income and development for all
Transformation Blues - By Idris Jala
THE entire transformation programme is anchored on one over-riding aim – to become a high-income, developed nation by 2020. That is our true north. Everything that is being done and will be done in future is to enable us to get there.
We all, and that includes you, have a job to do – to focus unwaveringly towards this goal. For that we need to set targets – numerical targets – and measurement, as accurately as we can, to track our progress and fine tune as we go along.
That is why we set out our eventual goals and our yearly targets in terms of numbers. That is why in our annual reports, we reiterate these and then show what we have achieved and whether it is on target. We identify, we track, we monitor and then provide feedback and recommendations to those who implement the various programmes. That is our role at the Performance Management and Delivery Unit (Pemandu).
As we do these, all kinds of allegations are made about us. We are open to constructive criticism because no one has a monopoly on ideas which we believe come from everywhere.
Sometimes, despite our repeated clarifications and explanations, we notice that the same point of view is repeated and repackaged over and over again.
These myths and lies give us the blues, because we don’t quite understand what motivates those who perpetrate them. Perhaps it is politics, perhaps it is something else. Regardless, it is critical that we remain focussed on the job and it is even more critical that we don’t get distracted by the biased chatter that is being created.
I list below 10 of these allegations and hope to dispel them so that we can move forward.
Allegation 1: Pemandu “manufactures” all its statistics and data to show progress and achievements.
The data and statistics that are reported are collectively gathered by all relevant parties. Let me give some examples: Data on economic performance of the country originates from the Department of Statistics and Bank Negara. Data on completed rural roads is from the Ministry of Rural and Regional Development and JKR. Data on oil and gas production is collected from Petronas and all the oil and gas companies. Data on crime is from incident reports submitted by all victims of crime. Data on education is from the Education Ministry.
Pemandu does not “manufacture” these data.
The data that show achievements reported in the annual report for the Economic and Government Transformation Programmes are validated by external auditor, PriceWaterhouse Coopers and an international panel.
Allegation 2: Pemandu is taking credit for what isn’t their work.
We are an agency of the Government and we manage performance, monitor it and help the Government deliver. We are part of and work with Government – every department. Any achievement is the achievement of all, not just the Government but also everyone who participates, including the private sector. In the role that we have been appointed to do - lead and facilitate the economic transformation of the nation – we must communicate updates and highlight progress. How does this mean that we are taking the credit for what is not ours?
When the Government completed the construction of rural roads at an all-time high record of kilometres under the Government Transformation Programme, the credit goes to the Rural and Regional Development Ministry. Not Pemandu. When crime rates come down, credit goes to the police, Rela and all parties directly involved. Not Pemandu.
Allegation 3: Our methodology is flawed, we do not know how to set targets, our monitoring mechanism is wrong and everything else we are doing is flawed.
Our transformation programmes are developed via labs by more than a thousand people from both the public and private sectors. We ran Open Days to get feedback from more than 20,000 members of the public. This work is validated by a reputable international panel, who did not find our methodology flawed. On the contrary, they commended us for it. More than 15 countries have now visited Malaysia to learn from us.
We have never claimed to be perfect. Our methodology may not be infallible but that does not mean it is flawed. For example, we have robust and rigorous methods for calculating our targets, especially for per capita income in 2020 to achieve developed status. We take into account population growth and other factors. Our methodology is supported by independent consultants and measurements are audited independently. We have done everything needed to make it as good as possible.
I seriously wonder about the motives of a group of so called “independent” researchers who seem to criticise everything we do without putting forward alternative workable solutions. This is even after we had made initial efforts to engage with them.
Allegation 4: The 2020 target should be US$16,500 instead of US$15,000 per capita.
The widely accepted worldwide target for high income economies is established by the World Bank. Hence, we have used World Bank benchmarks. I explained this in my first column. Without getting too technical, we used the current definition for high-income countries in nominal terms (that is the income today without inflation adjustment) and then using projected inflation rates, derived what it would be in US dollars in 2020. We used an exchange rate of RM3.20 to the US dollar.
Our critics do not seem to understand the difference between targets and forecast/latest estimate. The US$15,000 per capita is our target. How did we arrive at this? We took the World Bank’s threshold for high income economy, which is US$12,276 per capita and we used the World Bank’s published historical global inflation figure of 2% to project this to 2020. Hence, the US$15,000. Clearly, in our work, we hope to meet this target and do even better.
At the time of publishing our roadmap, we estimated that we can achieve US$16,500 per capita. It is normal that every year, the Finance Ministry or Bank Negara will issue their latest estimate, taking into account all prevailing factors internally and externally. These are their forecasts and there is every likelihood that the World Bank could change these numbers, higher or lower. If the World Bank revises their target to a higher figure, the target will be revised accordingly.
Allegation 5: Transformation is making the people even poorer today because it doesn’t take inflation into account.
Companies are growing as a result of the Economic Transformation Programme, but at the moment, the challenge is whether this is being filtered down and recognised as salaries to a larger group of people. However, the government should not dictate what salaries should be paid by the private sector. That said, the government has introduced a safety nets such as minimum wage and upscalling initiatives.
As explained in the previous point, we take into account inflation to arrive at the US$15,000 figure. We use US dollar as our benchmark because that is what the World Bank uses. We are not making anyone poorer. Our sincere and honest intention is to do exactly the opposite. We, like you, want Malaysia to succeed. There is absolutely no conspiracy to hide numbers and bring the country down.
Allegation 6: Transformation is only focusing on projects and not structural/strategic reform.
There is no way we can achieve high income without structural and strategic reform. Our strategic reform initiatives are cross cutting and cover areas such as making industry more competitive, liberalisation of services, introducing standards, revamping education and building talent amongst others. In fact structural and strategic reform is a key part of what we are trying to do and is essential for successful transformation.
Allegation 7: We are not doing enough to improve the quality of life.
Again, this is not true. Some of our major aims include bringing down the crime rate and improving the transportation system in urban centres. These are initiatives designed to benefit the public directly. Feedback has indicated that the public wants the Government to do something about both these areas and we have responded accordingly. The latest report by the Economic Planning Unit issued last week showed that the Malaysia Quality of Life Index has improved from 100.0 in 2000, to 104.7 in 2005 and 111.9 in 2010.
Allegation 8: Old projects should not be included because they don’t show achievement.
Transformation is about measurement too. We cannot exclude contribution to income just because it comes from an old or existing project. We must include contributions to income from all projects and we are quite happy NOT to be given credit for that. But we must include the old projects when we calculate to see if targets are being met.
Allegation 9: Transformation does not benefit small businesses.
Large projects will contribute to national income in a big way simply because of their size. We need them. But it is very wrong to think that these projects don’t benefit the small man. If a hotel is built, it provides employment and it offers many opportunities for smaller subcontracts. They all add up. But in addition to encouraging large projects, we have specific projects to benefit small businesses. In oil palm cultivation, there are efforts to increase productivity of smallholdings through efficient use of new harvesting tools. In the retail trade, large retailers are helping to modernise mom-and-pop stores under the Tukar programme.
Allegation 10: Pemandu highlights just the good stories and is silent on the bad.
There are projects which succeed and there are projects which fail. We set clear targets necessary to be achieved yearly to reach our eventual goal of being a developed, high-income country by 2020. If you look at our annual report, we state which projects have met target, which have not and which have over-performed. The figures show that we are, broadly speaking and as of now, on target. That’s a good thing and we all should be proud of that as Malaysians. The fact is, we are on target as far as the road to high income is concerned.
Finally, let me say this. We are a Government agency charged with identifying a strong destination for the nation and charting a route to get us there with help from everyone in Government and in the private sector and whoever else will help us. We may have to change paths as we go along. If we don’t get there in time, all of us fail – collectively. If we do get there, all of us succeed. It’s about all of us and it really is as simple as that.