FOMCA strongly supports the announcement by Prime Minister Anwar Ibrahim in moving towards inclusive sustainable growth, planning and policy formulation. It must “not only be about numbers” but on the “needs and wishes of the people”. 

Much too often, policy makers base their planning merely on numbers such as the Gross Domestic Product (GDP) or the Consumer Price Index (CPI). 

There is a growing gulf between the statements of policy makers and the lived experience of ordinary consumers. If we rely on indicators that is out of sync with people’s real experiences, this could easily develop into a lack of trust of the government in understanding and acting in the best interests of the people.

Beyond GDP and CPI, what consumers/voters are really concerned about are:
• Employment with fair income for their work
• Employment for their children
• Job Security
• Increasing cost of living especially for food
• Affordable housing and their ability to make the loan payment
• Accessible healthcare
• Decreasing availability of affordable childcare services
• Education opportunity for their children
• Water cuts

Their lived experience will determine their quality of well-being. For example, if the only jobs available for them or their children is in the gig-economy or low-income job opportunities, an improved GDP is meaningless. If a housewife who bought vegetables and fish finds that that the prices in the pasar malam have increased more than double since the previous week, a low CPI means nothing.

In a study by Emir Research on what keeps Malaysians up at night, it was not low GDP or high CPI but:
• Rising prices of daily necessities
• Inability to buy a house because of high housing prices
• Personal debt
• Loss of income
• Youth unemployment
• Lack of job opportunities

This idea is not new. The Organisation for Economic Co-operation and Development (OECD) had formed a high level expert group led by the renowned economist Joseph Stiglitz to lead the development of the metrics for this very purpose, to move away from GDP to an index that is based on the real needs and concerns of the people. It has been suggested that these areas would be particularly relevant in the Malaysian context. FOMCA suggests that the index be named the Consumer Well-Being Index.

Metrics of Subjective Well Being (SWB)
These metrics measures the level of satisfaction of the people in issues impacting their lives such as cost of food, housing and healthcare. It can also measure whether people are positive or negative of their future. For example in a World Bank study in Malaysia from 2012-2018, both rural and urban households state growing hardship in their life conditions. Urban residents those who felt their lives were thriving decreased from 28% in 2012 to 16.2% in 2018, while those who felt they were struggling increased by 12% between 2012 and 2018.

SWB indicators better predict voting behaviour than GDP/CPI. 

Metrics of Economic Security 
This indicator measures how vulnerable consumers feel to the environment that possibly could affect their personal incomes. For example the Covid pandemic destroyed or severely impacted economic life for many workers. Workers would be concerned about the use of digital finance and their impact on workers in the banking sector, online purchasing and their impact on the retail sector, and the use of robotics/technology and its impact on the manufacturing sector. 

Recently there has been great concern of the impact of artificial intelligence and the potential impact on almost every sector. 

Another concern is the constant politicking in Malaysia and its impact on foreign investment and its impact on the future on the employment opportunities for their children 

Trust in Government
This indicator measures the trust in government and institutions and regulators that impact on the well-being of consumers. Trust is vital for economic rowth. 

Trust enables the government to make difficult decisions that may bring short term pain but is necessary for long term benefit of the nation. For example the government implemented the unpopular GST that was eventually accepted by the people. The current government is seeking to reform the subsidy system as well as the healthcare funding system. Does there exist enough trust in the government for people to accept these changes?

International surveys have yielded evidence of large difference in trust levels across countries. For example in an International study in 2014, in Norway, in the sample 68% of the population are trusting of others. In Malaysia, only 9% were trusting of others. The study also suggested that trust was a significant predictor for cross-country variation in income per capita growth.

For Malaysia to move forward, broad measures such as GDP and CPI are useful but certainly not enough. Policy makers need to ensure “real progress” at the level of the rakyat, to understand their perceptions and sentiments and put into policy and practice, measures to enhance their “real well-being.”

Dr. Paul Selva Raj reads The Malaysian Insight
 

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.