Are Malaysians Richer by 50%? Applying Audit Techniques (Part 2)

- highly relevant to F8 and P7 candidates

A. If Malaysians Average Income have increased 49% from 2009 to 2012, why MORE qualify for the BR1M payouts?

Pic 01: Original number forecast of poor people needing aid.

When launching the ETP, PEMANDU said, “A key focus will be on ensuring that substantial improvements are made for people with the lowest household incomes.” Ironically, it is another so-called ‘achievement’ of PEMANDU which is really the total failure of the ETP in terms of raising the incomes of poor Malaysians.

The number of Malaysians eligible for welfare has been INCREASING under PEMANDU’s tenure. It was originally estimated that only 3.4m households comprising 53% of total households in Malaysia earned less than the RM3,000 per month threshold for entitlement to the RM500 Bantuan Rakyat 1 Malaysia (BR1M) handout . But ultimately, approximately 4.2 million applications were approved which resulted in RM2.1billion being paid instead of the originally anticipated RM1.8billion. Under the latest BR1M 2.0, which also includes individuals earning less than RM2000 per month, a total of 6.1m applications have been approved.

Pic 02: Malaysian Caretake government were surprised that there were many more poor people.

Applying Substantive Analytical Procedures:

If GNI per capita has indeed soared 48.8% in two years as PEMANDU claims, why has the number of Malaysians who are eligible for welfare handouts increased? Over 20 million Malaysians, or nearly 70% of our population are on welfare while PEMANDU trumpets projects and investments under the ETP.

The average income in Malaysia has INCREASED. At the same time the number of poor income group earners qualify for BR1M has also INCREASED. This could only mean that the poor income level has DECREASED while the rich income group has INCREASED.

If the cities folks income has remained stagnant, then it could only mean that our Malay, Chinese, Indian, Iban, Kadazan & Dusun brothers income in the rural areas have DECREASED. 

B. What is the implications that Committed Investment has fallen 82% from 2011 to 2012 ?

Committed investments slumped 82% from RM179.2b in 2011 to RM32.1b in 2012. Recaling the earlier article ( Part 1 ), the actual investment in 2012 is unknown. This implies that investment is so low that PEMANDU conveniently avoid disclosing it.

Applying Substantive Analytical Procedures:

The ETP experienced a spectacular reversal in its second full year of existence in 2012. The value of committed investments in 2012, their Gross National Income (GNI) impact and the number of JOBS CREATED COLLAPSED compared to the previous year.

Reflecting the low value-added nature of these investments, the number of jobs expected to be created fell too but by a 70% from 313,741 in 2011 to 94,702 in 2012.

C. What kind of jobs are likely created? 

The jobs created are likely to be low-income levels since a substantial bulk of committed investment are unskilled labour intensive industry involving constructions, infrastructure development, schools and hospitals projects. 

Pic 03: Transformation programme were mainly unskilled labour intensive work. The CIMB Group (Cambodia, Indonesia, Myammar, Bangladesh immigrants)  stands to benefit the most.

Applying Substantive Analytical Procedures:

Go ahead please, read The Star paper and caretaker Government’s commitment to deliver their promise to Selangor state. These are mainly low end jobs creation.

D. Did the Year 2011 Committed investment spillover to 2012?

The actual investments in 2011 was only RM12.9b, what happened to the balance committed investment of RM166.5billion?

Applying Substantive Analytical Procedures:

Any reasonable Malaysian would expect to see a large amount of actual investments in 2012 from the RM179b committed by 2011 Entry Point Projects (EPPs). They have had a whole year or more to be rolled out, and would have had the help of PEMANDU cutting red tape and fast tracking processes.

Pic 04: Google Office comprising of Knowledge workers. Malaysia is the World's 3rd best in exporting talents - 1,000,000 members.

The 2012 ETP Annual Report fails to state the breakdown of investments between the public (government) and private sector . Malaysia has failed to retained its top talents, instead these have moved overseas seeking high value and skilled profession. Note that the private sector by its nature motivated by wealth seeking objectives will act faster in implementing committed projects. ETP expects private sector contribute 92% of the investment necessary to drive the ETP.

Pic 05: Hmmm... IAS 24 on Related Parties Transactions says disclosures required in respect of those parties, including the compensation of key management personnel. So that would include the Prime Ministers and his managerial personnel working for Malaysia Incorporated., doesn't it?

The miserable investment, GNI impact and job figures for 2012 coupled with the absence of disclosure on the amount of actual investments and the public-private breakdown suggests the following logical conclusions:

1. That many of the announced EPPs, especially those in 2011, have failed to take off;

2. That the private sector is not driving the EPPs as originally envisioned; and

3. That the private sector is losing confidence and interest in the ETP.

VERDICT : FAILURES by a Spectacular Degree

Conclusion : SUSTAINABLE Solutions

If PEMANDU and the ETP were truly about transforming our nation for the better, there must be far more emphasis on improving education, skills and the social and business environment. They must also have the political will to combat grand corruption rather than just clear red tape and increase competition by dismantling monopolies which are controlled by political cronies. Finally they must be honest and transparent about their achievements rather than resort to manipulating statistics in order to deceive the public. Only then can we take real steps towards a future where all Malaysians can have the dignity of decent jobs, housing and security.

Pic 06: Vote YOURSELF for a better future. Can you graduate as ACCA Affliate or Masters Degree?

These topics belong to P1 (GRE) on Corporate Transparency and Accountability and P3 (BA) on Strategic Re-positioning, don’t they? 

FINAL NOTE TO ALL ACCA Candidates: 

PS: Every Malaysian has the democratic right to cast their vote. No doubt about it. However, do note that if you spend precious time going to home town to do that, statistically your vote is insignificant out of total voters population of 13.3 million. Thus, your vote is unlikely to affect the final election results. I know, I know. You will say we must vote to change for a better Malaysia.

Still, you are better off in voting YOURSELF, invest in ACCA studies in preparation of the real election results – will you be elected as an ACCA Affliate? Just a thought to encourage you to achieve your success. 

Hey, in 5 years time, if you are fed up of the incumbent government of 2013, you can still vote right? 

Sources: 

1) http://www.pemandu.gov.my/gtp/Improving_Rural_Basic_Infrastructure-@-GTP_2@0_Improving_Rural_Development.aspx, 2013

2) http://refsa.org/, 2013