Tuesday, December 07, 2010

Malaysia's transformation costs

For those who missed the news, read this: McKinsey paid RM36 mil to set up Pemandu

Back in the 90s days when the economy was booming, the stars on the stage were MTEN, EPU and several notable civil servants as well as corporate leaders.

PEMANDU's significance today to Najib is as much as MTEN and EPU was to Tun Dr Mahathir. When PM mentioned that the days where Govt knows best are over, naturally the private sector had to lead the way.

From what I heard and what I was told, PEMANDU consulted many top CEOs, senior Vice Presidents, Group Heads, and industry leaders from across the nation (not the GLCs lah, REAL CEOs).

No doubt, at the same time, there were several professional consultants involved during the Lab phase (these consultants don't exist till today if they are not good or if their recommendations produce crappy results lah).

So what were the actual fees paid to these consultants? Malaysiakini seem to know and they have unnamed sources that pointed out that PEMANDU's operating expenditure is as high as RM 66m.

Let's do some simple mathematics and with simple assumptions. Let's not waste time arguing or guessing if PEMANDU's opex is RM 10m, RM 40m, RM 66m or whatever. We assume that PEMANDU's opex is RM100m per annum, i.e. by 2020 they would have spent RM 1 bil.

If PEMANDU's figures are spot on and we will achieve RM 1.7 trillion GNI as opposed to the approximately RM 660 billion GNI at the moment, that's nearly 3 times the value.

Let's look at two simple cases (I don't have time to explore other cases today, busy!).

Expected Income = RM 1.7 trillion
Hypothetical costs = RM 1 bil
Cost per dollar of expected income (%) = 0.06%

Current Income = RM 660 billion
Hypothetical costs = RM 1 bil
Cost per dollar of current income (%) = 0.15%

If Tony Pua walks up to Anwar Ibrahim to tell him that he can triple Anwar's wealth by paying about 0.06% of his expected wealth or 0.15% of his current wealth, I believe Anwar will kiss him!

Of course, if we pay RM 1, we will get RM 1 results (Dr M: Anwar right person to bankrupt Selangor)


Anonymous said...

income of 1.7trillion, mimpi ke? how?

amno flers sell backsides ke?

Anonymous said...

This must be one of the best times to serve as a PTD ( Pegawai Tadbir dan Diplomatik) officer. All work undertaken by external think tank All you have to do is to put your signature on the documents. This is in its true sense Wealth Without Work.

You remember when we built the highways and toll were introduced. When the plans were submitted the toll collection was calculated on the basis of number of cars passing the toll booth during peak hours, But when the toll agreement was drawn up the same people calcualted the toll collection based on the number of cars that passed through the toll booth during off-peak hours. You get the drift. And government had to compensate the toll collection company. RM 1.3 Trillion makes your 'kepala pusing.'

As a matter of interest if you spend RM1 Million a day it will take you 2,000 years to finish RM 1 Trillion.