THE plunging ringgit in the past two years has pushed Malaysia’s gross national income (GNI) per capita to 2012 figures, reflecting the rising living costs that many complain of despite Putrajaya’s insistence of a healthier economy.

According to the latest World Bank data released on July 1, GNI per capita is now US$9,850 (RM42,330), lower than 2012’s US$10,200.

In tandem with the decline of the ringgit, GNI per capita has fallen steadily since hitting a peak of US$11,120 in 2014.

Serdang MP Ong Kian Ming, who studied economics in Cambridge University and the London School of Economics, said the slide is not surprising given that the ringgit had depreciated significantly in 2015 and 2016.

“Just like how Malaysia benefitted from an appreciating Ringgit in 2011 to 2014, which inflated our GNI per capita figures in US dollar terms, we also suffer when the ringgit falls.

“What is more important than the GNI per capita numbers is the actual Ringgit that is in the pockets of the average Malaysian,” said the Serdang MP.

Although the drop in Dollar terms is only US$350 or 3.4% the effects are felt by Malaysians as the ringgit was 3.09 (2012) before it depreciated 34% to 4.14 over the past four years.

Pandan MP Rafizi Ramli said yesterday that the ringgit is now at a worse state compared to other Asian currencies.

The PKR vice-president said the ringgit was at its lowest against Singapore, Thailand, the Philippines and South Korea compared to in 2007, before Najib Razak became finance minister.

“With rising prices and cost of living, even with the increase in average incomes and the seemingly healthy economic growth, the average man on the street is feeling the pinch and not enjoying the full benefits of a rising GDP,” Ong added.

Processed food, apparels and footwear, electronic and electrical products, optical equipment, chemical and petroleum products account for 55.6% of the total imports last year.

Government public service delivery unit Pemandu had targeted Malaysia to reach US$15,000 by 2020 when it introduced the National Transformation Programme in 2010.

Using the Atlas method, World Bank defined in 2016, lower middle-income economies as those with GNI per capita between US$1,026-US$4,035, upper middle-income (US$4,036-US$12,475) and high-income economies as those with GNI per capita of above US$12,476.

World Bank’s GNI per capita, however, is 11.5% higher than estimates by the Economic Planning Unit in May 2016 (US$8,821).

US$15,000 still within reach

Socio-Economic Research Centre executive director Lee Heng Guie said the 2020 target of GNI per capita of US$15,000 is still attainable if the Malaysia’s gross domestic product (GDP) continues to grow between 5%-5.5% for the next four years.

“GDP for the first quarter of 2017 has been encouraging at 5.6%. So it will be interesting to see if we can keep it up. The GDP forecast for 2017 remains optimistic at 5%-5.3%.

“So if we keep those numbers for the other quarters it will be alright. But that will be challenging,” said Lee.

Lee, however, felt that there are headwinds against the Ringgit.

“There are some who are predicting that it may strengthen to RM4.1 to the US Dollar by the end of the year but I think the Ringgit has stabilized at the 4.2-4.3 range. A lot still depends on US Federal Reserve and the strength of their economy,” he added. – July 4, 2017.