Revision of GNI, investment and job creation numbers — Pemandu
JULY 6 — The team at Pemandu strives to be accurate with our data. This has been explained in the foreword of the ETP Annual Report 2011 (page 9), which can be found at etp.pemandu.gov.my/annualreport/.
To quote :
“For the 2011 Annual Report, we engaged PricewaterhouseCoopers (PwC), an independent audit firm, to conduct a series of Agreed-Upon-Procedures (AUPs) to ensure the accuracy of our reporting. During the course of the AUP, we recalibrated the committed investments, projected GNI contribution in 2020 and projected jobs created.
“The revision of the investment and job creation numbers is primarily due to changes in business plans over the next five years, in tandem with changing business dynamics. In addition, there is a significant revision in the GNI forecast.
“Being a relatively new concept, most corporations struggled with it.
“Simply put, GNI is defined as income of Malaysians. It is the Gross Domestic Product (GDP) net of corporate and personal repatriations, which is a better measure of actual income for Malaysians. Some errors include:
• Using revenue as GNI: cost must be stripped out to ensure that we do not double count across sectors
• Using cumulative GNI figures: we look at the impact in the year 2020 as an end-point to determine the achievement of high-income nation status
• Inaccurate projections: corporate planning cycles tend to be five years long and some projections assumed an unrealistic growth rate
• Assuming GDP equates to GNI: some corporations e.g. subsidiaries of Multinational Companies (MNCs) or companies in joint ventures with foreign companies, repatriate a substantial amount of their profits”
Similarly, in calculating job creation numbers there have been exceptions and revisions. For example, while we focus on new job creation, several projects involve the expansion of existing plants or production lines and the existing workforce was not discounted. This has since been corrected.
In order to avoid spurious conjecture, we would like to categorically state that the investment value of the MRT has not changed — the tender process is still ongoing and once fully awarded the actual cost will then be announced.
The AuP was conducted on a voluntary basis; likewise the decision to release the amended figures. Where exceptions are discovered, the data is amended and made public.
Targets and selection of EPPs
If fully implemented, the 131 Entry Point Projects (EPPs) are expected to contribute towards a Gross National Income of RM1.7 trillion in 2020. The EPPs were selected as areas or opportunities for growth. A detailed explanation of how these EPP projects were selected can be found on our website.
Each EPP is supported by multiple projects and organizations with individual business plans and models. New project owners are added as and when they surface. A revision of GNI contribution from an individual project is not reflective of the entire EPP.
The ETP is a living document
The ETP Roadmap was conceived almost two years ago in the NKEA Labs. Some of the assumptions and projections have changed or are no longer valid as a result of the current turmoil in the global economy. Where projects have proved impractical or unfeasible, they have been discontinued; some of these incidences have been highlighted in the ETP Annual Report 2011.
In some cases further refinement has resulted in greater GNI projection. As an example, under the Healthcare NKEA, a lab was run for the Medical Devices Business Opportunity which was then converted into seven new EPPs. Their combined GNI was appreciably higher than that of the original Business Opportunity.
The NKEA teams and their counterparts in various ministries and agencies strive to be as dynamic as possible. The evaluation process for new EPPs and projects is constantly improved to reflect changing global conditions.
Project implementation is tracked closely, as is investment and job creation as well as feedback from the industry. Where it is warranted, new labs are run in collaboration with the private sector to refocus on sector strategy, taking into account new conditions or considerations.
The ETP is a living document and it is constantly updated to reflect latest developments.
We are cognizant that while much progress has been made, the ETP has been in implementation for just over 18 months. Through the National Key Economic Areas and Strategic Reform Initiatives, we are focused on creating the conditions to ensure that the private sector has confidence to invest in the economy and lead the way in driving economic growth.
* The Performance Management and Delivery Unit (Pemandu) is part of the Prime Minister’s Department.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.