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Malaysia recently released our first National Transfer Accounts, and the data offers a different lens through which to understand the Malaysian economy. Not just through growth or inflation, but through the way generations support themselves financially across different stages of life. On this episode of #ConsiderThis Melisa Idris speaks with economist Professor Emeritus Datuk Norma Mansor, Director of Universiti Malaya’s Social Wellbeing Research Centre, Former Secretary of the National Economic Advisory Council in the Prime Minister’s Department, and former Dean of the Faculty of Economics and Administration at UM.
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00:00Music
00:11Hello and good evening, I'm Melissa Idris. Welcome to Consider This.
00:14This is the show where we want you to consider and then reconsider what you know of the news of
00:19the day.
00:19Malaysia recently officially released our first national transfer accounts
00:24and the data offers a different lens through which to understand the Malaysian economy.
00:30Not just through growth or inflation but through the way generations support each other and themselves
00:37financially across different stages of life.
00:40So today on the show, joining me to discuss this further, I have with me economist Professor Datuk Nurman Mansok
00:45who is the director of University of Malaya's Social Wellbeing Research Centre.
00:50She's former secretary of the National Economic Advisory Council in the Prime Minister's Department
00:55and former dean of the Faculty of Economics and Administration at UM.
01:00Welcome to the show, Prof Nurman. Thank you so much for joining me.
01:04So the national transfer accounts, let's talk a little bit about that.
01:07Can you describe or explain to us what the significance of this is?
01:12And as an economist, how should we see this compared to, say, other economic measures like the GDP and such?
01:22Thank you so much, Melissa, for having me on the show.
01:26The typical GDP data would show the economic output, the productivity, the growth and also other variables,
01:35those are the imperatives of the GDP. But what NTA can do with the national transfer account is to complement
01:42the GDP data.
01:46What it does is it shows exactly how the economic output is generated, how it is consumed
01:53and how it is distributed along the life cycle.
01:56So the life cycle is divided into three groups, three different ages, the young age, the adolescent and the older
02:07or the aged group.
02:10So the ages of 0 to 17 is considered the young, 17 to 56 is the adolescent and 56 and
02:18older is considered the older group of the life cycle.
02:23So what is produced by the middle group, which comprise of currently is about 70% of the working age
02:33adults,
02:35is distributed and consumed at the three levels.
02:39But how they are consumed and how they are distributed, because not everything is consumed by that age group.
02:46It is also distributed to the young, it is also distributed to the old.
02:49What percentage will go to the young and in this case, the data has shown that this is based on
02:55the 2022 HIES data shows that 55% goes to the young,
03:01excuse me, 55% goes to the old, 75% goes to the young, which means that about 70%, excuse
03:09me,
03:1070% of the consumption of the young is managed or is spent by private transfers, which is the parents.
03:21So only about 30% comes from the government.
03:25Whereas for the older group, 55% comes from family transfers and only, so 50% comes from government.
03:33So what this data does is it shows exactly how the government spent and how family or household spent for
03:43each category of the citizen's life cycle.
03:47So it speaks to me, it is something I feel like is that we know of, the data confirming that
03:57we have to support generations as throughout the life cycle.
04:02But talk to me about the nuances, because there is a, the data was interesting in terms of when we
04:10hit peak surplus,
04:12that's when we move from deficit, from young deficit into a surplus age in our adulthood.
04:18And then when we move back into a deficit in our older age.
04:22So that period seems awfully short to me that we are in surplus.
04:29Prof, what do you think?
04:30It's not so much, yes.
04:32Number one is the number of years that you spent in the, in the productive age, so-called.
04:38We can, we can, we can do something about that.
04:41We can review our retirement age and we can also encourage those who have left the workforce to return and
04:49to generate from what we call the longevity dividend or the silver dividend.
04:54That can also be done.
04:55But on the other, what the other important or the key areas that we need to look at is also,
05:00what do we do during the two things here?
05:03One is about the income, the labour income that we have during those productive years.
05:10And what we have now is about RM14,000, which is very low compared to South Korea, compared to the
05:17OECD countries, is very low.
05:19And that's important because if you have that income, you can then invest into assets and all that.
05:29The other aspect of it is also that what do you do with these assets or with this labour income?
05:34Do you, do you spend? Because if you are spending to support your children, which I mentioned earlier, that a
05:42lot of the expenditure on children comes from transfers as opposed to OECD countries that it comes from public transfers.
05:50In our case, like 70% was from parents.
05:53Exactly, yeah. So if you can reduce there, for instance, then that income can also be into building assets because
06:01that will be what you call, what we would call the second demographic dividend.
06:08Because the first demographic dividend was transitionary, which is automatic.
06:13Once the fertility and the population growth declines, then you get it automatically, right?
06:19But the second demographic dividend is when if you are able to invest, if you are able to get more
06:27out of what you are producing and you are earning, then you can build it to support you in the
06:33later years, in the post-retirement years.
06:36Yes. So this is the one or two things that the government can do is to look into investments, into
06:45education, into healthcare, so that the out-of-pocket expenses will be reduced.
06:51So you mentioned a bit earlier that for the younger band, the younger age group, the younger generation, majority, so
06:5870 plus percent is from family transfers.
07:01You mentioned that other countries, it's not like the OECD countries is more balanced?
07:05It's lower. It's lower because they rely on public education, public health, healthcare, etc.
07:13So that is one way.
07:15And while you are still in the productive age, the policies there could also support you.
07:22Number one, of course, now wages is very low.
07:26Over, it's about 30% of Malaysians, of the Malaysian workforce earns what we call the lower income, which is
07:35less than two-thirds, that's the definition, less than two-thirds of the median wage.
07:40So that restricts the ability or the capacity for Malaysians to earn and save and also invest in assets, for
07:53instance, or in other kinds of instruments.
07:56So if the wage can be increased, that can also increase the building of assets that can be used later
08:05for old age.
08:06So that's number two.
08:08Number three is that if the government or housing would actually take a big chunk or about 30% or
08:1840% of the asset, at the moment, the cost of housing is actually four times more than the average
08:29income.
08:30So if price of housing can be brought down, that can also support the savings and also towards the later
08:40consumption.
08:41Prof, you and your centre have done so much work with addressing or bringing to light the sandwich generation in
08:51Malaysia.
08:51The realities for many working Malaysians today.
08:56Can we talk a little bit more about that and how the NTA data, I guess, confirms or supports the
09:04discussion around sandwich generation?
09:07Yes, I agree with you.
09:09I mean, this data further supports what we have been saying all along,
09:13that the sandwich generation in Malaysia is suffering with the current increased cost of living and all that would definitely
09:22pose a challenge to the current generation or the younger generation.
09:29The sandwich generation is when they have to support their children who is going to high schools and universities also,
09:37not just young children, and also supporting their parents.
09:41From the MARS data, our Malaysia Aging and Retirement Survey data, which is a nationwide survey, and it's ongoing now.
09:47This is wave three.
09:48That's a bit of a commercial.
09:49Yeah, so the data shows that over 85% or over 80% of our respondents have multi-generational household.
09:59So when we measure, we ask the respondents of how much do you transfer to your parents, they will give
10:07a certain amount, like 500 ringgit to 700 ringgit, right?
10:11But they also live in the same household where it is beyond that.
10:15So, because you have to support them, not just giving the transfers monthly, but also in terms of food, healthcare,
10:24and all that.
10:24Utilities and all that.
10:25Exactly, yeah.
10:26So this is where our current generation, our working age population is facing the burden, the stress that you mentioned
10:38earlier.
10:39So how do we think about that?
10:40How do we address some of these stresses?
10:42You talked about looking at what we do with labour income and how much we earn and what we do
10:48with it.
10:48When we think about that and the sandwiched middle, so to speak, how do we address the many families who
10:58have not been able to build wealth,
11:00who social class shapes their lives, their realities, the inequality of different households, and how that spills over into different
11:11generations.
11:12Can you talk a little bit about what that means for opportunities and also for aging outcomes?
11:19Malaysia is definitely suffering from this, what you call inherited poverty.
11:25Inherited poverty.
11:26Yeah, intergenerational poverty.
11:28Intergenerational poverty.
11:28That you will get if you are from certain, as you mentioned, I sometimes, I'm not too fast to talk
11:36about social structure and social class, but it is happening.
11:40Yeah.
11:41That if you are from a low income, I think from birth or even from maternity, you have already been
11:48penalised.
11:50You eat less healthy food, although it is not in all cases, but so that from what you call conceive
11:59to the first 1000 days of a child, which is very important.
12:03So there you are already behind compared to other your peers because of the nutrition that you are not getting
12:12or lack of nutrition, the right nutrition that you should be getting.
12:15And beyond that, the circles, the kind of kindergartens that you go to and the kind of care that you
12:23get.
12:23Yeah. But to me, what's important that you can measure is the stunting issue.
12:27So, in fact, it's been documented that among the evidence is that among the agrarian or the rural agricultural community,
12:37the stunting is about 44%.
12:40Yeah. So that shows that it is important that when during the three or four years of a child's life
12:49to get good nutrition, good kind of environment and hygiene, etc.,
12:56that we are also working with UNICEF in this area, that we do it right for Malaysians because that's the
13:03way. That's step one.
13:05Step two is when they go into education, quality education.
13:09Yeah. So there are now, it's almost a dual system in Malaysia, the public school and the private schools.
13:15So the public schools, if you improve the quality of public schools and make it a school of choice, then
13:22you can slowly eliminate the private schools because many parents cannot afford the private schools.
13:29And you talk about health, that too. Yeah. Although comparatively, the Malaysian public health is very good. Yeah. But there
13:39are, if you want to go for certain treatment, you will have to wait.
13:42The queue is quite long. But if we can further improve our investments, increase the investments from public investment into
13:49public healthcare now, it's about 2.4%.
13:54And we have been talking about increasing to 5%. 5%. If we can, yeah, that will help out a lot.
13:59Slowly. Yes, definitely. Okay. I see what you mean in terms of how some of the, there are structural issues
14:05to be discussed, which is wonderful because now we have the data to complement some of the ways we've been
14:11measuring our economy.
14:12Can I ask you what's missing from the national transfer accounts framework?
14:17Number one is the social class that you talk about, yeah, that we don't differentiate because we look at the
14:23national, at the national level, we don't differentiate. So that is not captured.
14:27The other one is the care, the care, the caregiving. Yeah. So there have been talks out there about the
14:37NTTA, the national time transfer account.
14:42Time transfer account.
14:44You account for the time that you spend either to care for your family or you get paid by everything
14:50is accounted for.
14:51Because, because, because family transfers are not just limited to financial transfers, but also time and caregiving transfers. That's brilliant.
15:01That would, that would help us see, yeah, how women, because it's like, it actually falls on women when you
15:10talk about care.
15:12Yeah. Yeah. Yeah. That's true. Women do experience the generational economy differently than men.
15:18Can I ask you, when you look at the data, Prof. Norma, what, what does it, what gives you hope?
15:27And I think I'm going to phrase this as a two-pronged question.
15:31What gives you optimism and what are you most concerned about?
15:36The optimism is this, that we have this window. This is what I call the window of opportunity. Yeah, the
15:45window of opportunity for us to get it right.
15:48Because our working age is still big. Yeah, we are, the median age, median age for Malaysia is about 31
15:56years old.
15:58You compare to Singapore, that's 40 and many other countries, Singapore almost 40 and many other countries are 40 years
16:05old.
16:05So you still have that productive ages. So, as it's been highlighted by NTA, we are, I have a paper
16:15on that as well, that the second demographic dividend is, it can be forever.
16:20It's a potential. It is something that you can work on. Yeah.
16:24As I mentioned earlier, there are a few policies that can be in place to support that. For instance, capitalising
16:31on the longevity economy or the silver economy. Review or re-look at our retirement age or make working, coming
16:42back into workplace easier.
16:44Yeah. So if you keep them longer and we have data to show that if we can bring our beyond
16:5460 back into the workplace, we can increase our GDP growth by about a few percentage points.
17:02Yeah, we have the data on that. So we show that we can reduce our dependency perhaps on foreign labour
17:11and work on our women as well to bring into the workforce.
17:16Because generally, women are not covered by social protection. And also many of our older population are not covered by
17:25the mandatory social protection, including EPF, which is covering only about 57% of the working adults.
17:33Yeah. And only 5.1% of those aged 65 and older still have their savings in the EPF. So
17:41this goes to show that, as you were saying, what is my concern?
17:46That is my concern. But my optimism is still, I still have the optimism because I feel that with the
17:54right policies and intervention, as I said, because our working age is still big, so we can still work on
18:02building, I think I spoke on your show too, about building that multi-tier income security for Malaysians.
18:10Right.
18:10That the government cannot be supporting Malaysians for everything, but they can support for certain things. So for instance, if
18:22you build the fund from now, what we call the pillar or tier one, tier one, if you want to
18:28go the public funded social pension as pillar zero, if that's pillar zero, the foundation, or the floor,
18:37then you can have the tier one, tier one can be contributory that everyone should contribute into that fund. Because
18:44when you reach the age of 60 or 65, you can withdraw or you can pension can be paid from
18:51that account. So everyone contributes to that account.
18:53And for the low income, if the government wants to subsidise, what we are saying is that that fund, that
19:00scheme will become what we call funded scheme, i.e. it is funded from the fund that you have invested,
19:06as opposed to pay as you go, that the government cough out for every year or every month from the
19:13tax funded.
19:14Okay. So the savings or the wealth accumulation that you build throughout while during your productive years, that is largely
19:25to fund your later years in life, that fund the older generation through private transfers and wealth asset allocations.
19:34Can we talk a little bit about the role of family and private transfers? How do we think about that?
19:42Because there's a lot of, I don't know, maybe resentment from the working population who feel squeezed, the sandwich generation
19:52who think, oh, I'm funding or transferring a lot of my income to the younger and older generation.
19:57Where does the government step in? Where does the government step in? What role do we say this is public
20:02policy versus household support?
20:06Yes. Okay. I better mark this down as public policy because there are two facets to it.
20:14One, the government can act as a role of policymaking that policies are used to induce behaviours. That's one.
20:23Yeah. You have the guidelines, you have incentives and all that. That's one that the government can do.
20:28Now, with regards to social protection in terms of the services and the services and the scheme for or the
20:38sectors such as health, housing, they are part of social protection as well.
20:43That, at the moment, the government is playing what we call the residual role.
20:47Okay.
20:48Yeah.
20:49So, it is still largely individual, largely family.
20:53And this is riding upon what we call the Eastern Asian culture, ophelia piety, etc.
21:01But you have to know that this is also breaking down.
21:04The network or the family, the extended family.
21:10Families are getting smaller.
21:11As getting smaller.
21:12And plus, among the family members too, they would have children who are autistic or whom they need to support.
21:20So, that is slowly fraying.
21:24So, unless we have the public policy or the government taking up this role, which is happening in many of
21:34the developed, wouldn't say developed, but OECD countries.
21:38So, put it as OECD countries and Malaysia is nearing becoming a high-income nation.
21:44And if that is so, the government can divert or we can collect more and improve on the revenue side.
21:50Always think of the revenue.
21:52Yeah.
21:52The revenue side.
21:53We can improve on the revenue side and start investing in all this that can support later public policy in
22:00the long run.
22:01So, if you have, for instance, if you invest more in quality education, quality healthcare, that's for the young and
22:10for the old.
22:11Build that social protection, as I mentioned, the social protection floor, if that can be built.
22:16And now, it would also include the long-term care.
22:19So, all of this has to be taught out now.
22:22And I think this is the time that we can do so while we still have the surplus in the
22:28life cycle deficit graph that I always mention.
22:32You mentioned that there is a window of opportunity.
22:36And on that note, can I ask you, within this window of opportunity, if policymakers were to really use this
22:44data effectively and to complement some of their current frameworks,
22:48what would you like to see, Prof. Nurma, as specifically, and how might that improve the social well-being of
22:56all generations?
22:58I think maybe the one policy that could also address is the stress for the sandwich generation will be building
23:09that multi-tier savings or multi-tier pension system.
23:15Because the remittance or the transfer that children are giving to their children, 500 or 600 ringgit, if that can
23:23be taken up by public transfers.
23:26Because at the moment, public transfers is about 4%.
23:29It's only 4% of the older population is receiving the public transfer.
23:35Only 4%?
23:37Yes.
23:37Only 4% of the...
23:39We can increase the coverage of that, right?
23:40We should increase the coverage of that so that it covers more people and that 500 or 600 ringgit that
23:48the children are transferring to their parents,
23:50that they can buy asset with that per month towards their housing loan, for instance, that can build their assets.
23:58But that is coming directly from the tax funded, as I mentioned.
24:04But we can build, because of this window of opportunity that I mentioned earlier, we can build the next layer,
24:11the next tier of pension that I was saying funded.
24:17So it's not publicly funded.
24:18It's funded from that fund that you're collecting every month.
24:22And that should be invested the way we invest EPF funds.
24:27And then later, within the next 15 years, by our calculation, next 15 or 30 years, it depends on how
24:34much you want to pay the payout,
24:36you can already start paying.
24:38And slowly, the government can remove some of the people who are, they are probably currently doing the transfers or
24:45receiving the transfers,
24:46can remove them and slowly pass it to the layer or tier one that I described earlier.
24:54So we can do that.
24:56Is that in the works, Bro?
24:58Yes, we have proposed.
25:01And I think...
25:02It's very exciting.
25:04It's EPF and also Co-op and many others, the like-minded institutions, I think, are talking about this.
25:13And I hope it gets picked up soon.
25:15Definitely within the window of opportunity, we need to leverage on that.
25:19Thank you so much for joining on the show.
25:21Thank you for having me.
25:22And shedding some light on this, on the NTAs.
25:24I appreciate you.
25:26That's all the time we have for you on this episode of Consider This.
25:29I'm Melissa Idris signing off for the evening.
25:31Thank you so much for watching and good night.
25:45And I'm worded.
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