Evaluate the economy with ‘common sense’, not indicators, Jomo says

When asked about his growth projections for the country, the former CEP member is rather cynical

By ALIFAH ZAINUDDIN / Pic By MUHD AMIN NAHARUL

Malaysia needs to assess its current state using “common sense” and not depend on financial indicators that do not reveal the real economic situation of the country, said economist Prof Dr Jomo Kwame Sundaram.

The former Council of Eminent Persons (CEP) member said indicators tend to be manipulative and reactive to speculations, rather than reflecting realities on the ground.

“I think there are two things the government is concerned about, namely to get rid of corruption and cutting down debt.

“However, that does not amount to a positive growth and development agenda. This is what frustrates Prime Minister (PM) Tun Dr Mahathir Mohamad,” he told a media briefing in Kuala Lumpur on Wednesday.

According to Jomo, productivity in the public sector has been growing following the increase in people’s earnings.

“You know how productivity is measured in services? Why has productivity in the public sector been rising so much? Because salaries and emoluments have been increasing.

“It is very difficult to measure productivity in services, so you measure it by what you are paying the workers. It is a self-referential process. The numbers can conceal as much as they can reveal,” he said.

The government’s decisions to review several mega projects, scrap the unpopular Goods and Services Tax and pay off its debts have seen the country’s 2018 growth forecast being revised downwards to 5%, in addition to external risks.

When asked about his growth projections for the country, Jomo was rather cynical.

“I don’t have a crystal ball. Who knows what is going to happen? What does it mean? Malaysia’s unemployment rate is low. Why? (It is because of the number of) civil servants. When former PM Datuk Seri Mohd Najib Razak first took office, it was 850,000. When he stepped down, the number was 1.7 million. In 10 years, it doubled in size.

“He said we should not worry about de-industrialisation and agriculture because we are going into services. Look at the jobs in services. The majority of the jobs are in so-called traditional services. The majority of jobs in modern services are in the government. We are kidding ourselves.

“This economy has been floating on oil and we don’t even recognise it,” he said.

Despite the challenges, Jomo opined that Malaysia is not heading towards a recession.

However, he said if the country is not prudent, the likelihood of a financial crisis due to external origins would be greater.

“When you are reckless with your economic management, you are more vulnerable,” he added.