Gerakan has a poor understanding of statistics and economics

Ong Kian Ming

Modified 17 Oct 2016, 8:25 am

MP SPEAKS I refer to the reports in The Star of Oct 13, headed 'Ask Rahman Dahlan for help, Penang told' and the other report, 'Learn economics from Rahman Dahlan, Gerakan tells Guan Eng' from last week.

These reports are in reference to Gerakan secretary-general Liang Teck Meng’s press conference on the GDP per capita figures for Penang, where Liang criticised the Penang government for the low percentage growth rate in the state’s GDP per capita figures since 2007.

Liang also suggested that Penang Chief Minister Lim Guan Eng should learn economics from the mnister in charge of the Economic Planning Unit (EPU), Rahman Dahlan.

I want to make the following three points in response:

1) The Gerakan secretary-general should learn how to use the correct figures and calculations.

The calculations in Figure 1 below were used by Liang in order to show that the percentage growth in GDP per capita for Penang from 2007 to 2015 was the lowest among all the states in the country.

I am not sure why Liang used the Department of Statistics (DOS) data from 2011, rather than the updated DOS data from 2014, shown in Figure 2 below. I want to highlight, in particular, the GDP per capita figures in 2007 for Terengganu and Sabah were RM19,476 and RM14,104, which are higher than the RM17,284 and RM13,067 figures used by Liang.

When the DOS statistics in Figure 2 were used, the state with the lowest percentage growth in GDP per capita from 2007 to 2015 was Terengganu (36.2 percent), followed by Sabah (40 percent) and not Penang (43 percent).

Indeed, one wonders why Liang (photo) didn’t use the starting year at 2008 (rather than 2007), since this was when there was a change in the state government in Penang. If the GDP per state growth rate from 2008 to 2015 was used, then Sabah would be clearly at the bottom of the rankings at 13 percent, followed by Sarawak at 19 percent and Terengganu at 26 percent, with Penang coming in at 33 percent.

2) Gerakan should praise the Penang government for leading the state out of a serious economic recession in 2008.

Liang also fails to acknowledge that one of the main reasons why the GDP per capita in Penang did not grow, in percentage terms, as fast as some of the other states is due to the 2008 global financial crisis that hit Penang particularly hard.

In 2009, Penang’s economy contracted by 10.5 percent as a result of the 2008 global financial crisis, of which the Penang government had no control over. Penang’s economy was the worst hit out of all states because of Penang’s much higher exposure to global trade.

The overall Malaysian economy only contracted by 1.5 percent in comparison (See Figure 3 below).

The Penang state government had to work hard to recover from this serious crisis, which it did with impressive results.

From 2010 to 2015, Penang’s GDP growth rate was higher than the Malaysian growth rate in all the years, except for 2012 (See Table 1 below). Penang’s GDP growth rate was also higher than Sabah’s growth rate in all the years from 2010 to 2014.

3) Gerakan should ask Rahman Dahlan why Sabah’s GDP and GDP per capita growth figures rank among the lowest in the country

The GDP per capita figures post-2008 global financial crisis tell a very different story. The GDP per capita growth rate for Penang from 2010 to 2015 was 33 percent, or an absolute increase of RM11,250 from RM33,597 in 2010 to RM44,847 in 2015.

Penang ranked sixth out of all states. In contrast, at the bottom of the pile was Sabah, with an absolute increase in GDP per capita of only 11 percent, from RM17,831 in 2010 to RM19,734 in 2015 (see Table 2 below).

At the same time, Penang’s GDP per capita was the third highest in the country in 2015 – after the Federal Territory of Kuala Lumpur at RM94,722 and the Federal Territory of Labuan at RM58,577 – while Sabah was third from the bottom, after Kelantan at RM12,075 and Kedah at RM18,249.

Rather than asking Lim Guan Eng to take economics lessons from Rahman Dahlan, Liang should ask Rahman Dahlan to explain why the GDP and GDP per capita growth figures for his home state of Sabah ranks at the bottom or near the bottom of the pile.

It is sad to see Gerakan, which used to pride itself as being an ‘intelligent’ party, use bad statistics and poor economics to criticise the Penang government on its economic performance when the facts on paper and the situation on the ground tell a completely different story.

If the people in Penang were not satisfied with the performance of the state government, they would not have given the Pakatan state government an overwhelming level of support (67 percent) in the 2013 general election.

I suggest that Liang attends a basic Economics 101 lesson before he issues any further statements on economic issues. I would be happy to give him and his Gerakan leaders a free lesson.

ONG KIAN MING is the MP for Serdang.

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