the national transfer account (nta) - …asia.ntaccounts.org/doc/repository/sstbkk2015-mys.pdf · 2...
TRANSCRIPT
2
THE NATIONAL TRANSFER ACCOUNT (NTA) FOR MALAYSIA
3
1
MALAYSIAN DEMOGRAPHIC PATTERNS
CONCLUSION & THE WAY FORWARD
6.23 6.03
4.56
3.73
3.42
2.45
1.98 1.85 1.78 1.76 1.76
0
1
2
3
4
5
6
7
0
5
10
15
20
25
30
35
40
45
1950-1955 1960-1965 1970-1975 1980-1985 1990-1995 2000-2005 2010-2015 2020-2025 2030-2035 2040-2045 2050-2055
Tota
l Fe
rtili
ty R
ate
Cru
de
Bir
th &
De
ath
Rat
e (
pe
r 1
,00
0)
Period
Crude Birth Rate Crude Death Rate Total Fertility (Children per Woman)
1 MALAYSIAN DEMOGRAPHIC PATTERNS
Source: UN, 2013, World Population Prospects (The 2012 Revision)
Fertility, Mortality & Total Fertility Rate, Malaysia, 1950 - 2050
Pro-natalist policy (1980’s)
1 MALAYSIAN DEMOGRAPHIC PATTERNS
Age-Sex Pyramid for Malaysia, 1970, 2010, 2040
Source: UN, 2013, World Population Prospects (The 2012 Revision)
10 8 6 4 2 0 2 4 6 8 10
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90-94
95-99
100+
Percent
Ag
e G
rou
p
1970 1970
Male Female
10 8 6 4 2 0 2 4 6 8 10
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90-94
95-99
100+
Percent
Ag
e G
rou
p
2010 2010
Male Female
10 8 6 4 2 0 2 4 6 8 10
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90-94
95-99
100+
Percent
Ag
e G
rou
p
2050 2050
Male Female
1 MALAYSIAN DEMOGRAPHIC PATTERNS
TFR, Median Age and Life Expectancy for Malaysia, 1970 - 2050
Year TFR (children
per women)
Life expectancy at birth
(yr)
Life expectancy at
60 (yr)
Median
age (yr)
Male Female Male Female
1970 5.94 57.8 61.0 14.3 17.2 17.5
1980 4.16 63.5 67.1 15.5 18.2 19.7
1990 4.00 67.5 71.6 16.1 18.4 21.5
2000 3.10 69.6 74.5 16.7 19.0 23.6
2010 2.14 71.9 76.6 17.9 20.1 26.2
2015 1.91 73.5 78.2 n/a n/a 28.2
2020 1.85 74.4 79.0 n/a n/a 30.3
2030 1.78 76.2 80.5 n/a n/a 34.0
2040 1.76 78.2 81.9 n/a n/a 37.4
2050 1.77 80.0 83.2 n/a n/a 39.8
Source: DOSM, various years; United Nation (2013); Saw, 1988
1 MALAYSIAN DEMOGRAPHIC PATTERNS
Age Composition of Malaysian Population, 1970 - 2050
Year Number of Persons (million) Percentage of total
population
0-14 15-59 60+ Total 0-14 15-59 60+
1970 4.89 5.44 0.59 10.91 44.8 49.8 5.4
1980 5.39 7.66 0.78 13.83 39.0 55.4 5.6
1990 6.76 10.43 1.03 18.21 37.1 57.3 5.6
2000 7.80 14.17 1.45 23.42 33.3 60.5 6.2
2010 7.83 18.26 2.19 28.28 27.7 64.6 7.8
2015 7.74 20.14 2.78 30.65 25.3 65.7 9.1
2020 7.82 21.52 3.52 32.86 23.8 65.5 10.7
2030 8.17 23.46 5.22 36.85 22.2 63.7 14.2
2040 7.67 25.18 7.01 39.85 19.2 63.2 17.6
2050 7.32 25.05 9.75 42.11 17.4 59.5 23.1
Source: United Nation (2013)
Dependency Ratios and Ageing Index, Malaysia, 1950-2100
17.8 14.1 11.6 10.6 12.1 12.7 14.4 14.6 15.1 16.0 18.6 20.5 25.4
33.0 42.2
52.2 61.0
70.0 79.5
90.9
103.0 114.1
127.0
139.4 150.3
160.2 170.1
178.2 185.9
192.0 197.5
0.0
50.0
100.0
150.0
200.0
250.0
0
10
20
30
40
50
60
70
80
90
100
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
20
35
20
40
20
45
20
50
20
55
20
60
20
65
20
70
20
75
20
80
20
85
20
90
20
95
21
00
Age
ing
Ind
ex
(60
+/<1
5)*
10
0
De
pe
nd
en
cy R
atio
s
Year
Total Dependency Ratio Child Dependency Ratio Old-age Dependency Ratio Ageing Index
1 MALAYSIAN DEMOGRAPHIC PATTERNS
1 MALAYSIAN DEMOGRAPHIC PATTERNS
The Speed of Ageing
France (1865 - 1980)
Sweden (1890 - 1975)
Australia (1938 - 2011)
United States (1944 -…
Hungary (1941 - 1994)
United Kingdom (1930 -…
Japan (1970 - 1996)
115
85
73
69
53
45
26
Developed countries
Azerbaijian (2004 - 2037)
China (2000 - 2026)
Sri Lanka (2002 - 2026)
Malaysia (2020 - 2043)
Thailand (2002 - 2024)
Columbia (2017 - 2036)
Singapore (2000 - 2019)
South Korea (2000 - 2018)
33
26
24
23
22
19
19
18
Developing countries
Source: Kinsella and He, 2009;
U.S. Census Bureau, International Data Base,
accessed on October 20, 2014.
2 CONSUMPTION PROFILE
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95
Pe
r C
apit
a, R
ingg
it (
RM
)
Private other Private Health Private Education Public Health Public Education Public other
Public Education
Private
Education
Public other Public Health
Private
Health
Per Capita Consumption Profiles for Malaysia, 2009
2 INCOME PROFILE
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
22000
24000
26000
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94
Pe
r C
apit
a, R
ingg
it (
RM
)
Earning Self employment Labor Income
Per Capita Labour Income for Malaysia, 2009
Phase1:
Phase2 Phase3 Phase4 Sharp increase (19-33)
Slow growth (Peak=44)
Sharp decline till around 60
Gradual dissipation till around 90
The self-employed continued to work even after age 70s.
Many shifted from wage-based to self-employment upon retirement– self-employment peak around age 57/58
Note: Small proportion of total LC income earned was contributed by those under 20 (1.4%) and over 60 (4.38%)
Small proportion of employee continued working after 70
2 THE LIFE CYCLE DEFICIT FOR MALAYSIA
The Most Important Graph for Malaysia, 2009
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
22000
24000
26000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95
Pe
r C
apit
a R
ingg
it (
RM
)
Labor Income Consumption
2 LIFE CYCLE DEFICIT FOR MALAYSIA
The Life Cycle Deficit for Malaysia, 2009
-12000
-10000
-8000
-6000
-4000
-2000
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94
SURPLUS: A productive/surplus period of 31 years (between 26 to
57 years old)
DEFICIT: Child dependency: the first 26 years of
life; Older person dependency started at 57 and over
Most critical issues on financing the lifecycle deficits:
Planning: How the inter-temporal re-allocation can benefit the economy with good investment.
Choice of system: Efficient public transfers consider the efficient re-allocation system from the public taxes to the government services that can benefit development of human capital, reducing poverty or inequality.
Choice of Institution: Private transfer from family is critical, especially if there is no other means of the elderly to finance their consumption.
2 LIFE CYCLE DEFICIT FOR MALAYSIA
The productive/surplus period is 31 years (26 to 57 years old) 1. The average duration of education is relatively long;
2. A relatively high number of persons aged 55 and over are outside the labour force.
Recent extension of the retirement age to 60 has improved the life time income for wealth accumulation.
But, what is our wealth accumulation trend/behaviour during productive years? Is it worrying? EPF fears that many Malaysians in retirement will be in poverty due to
insufficient saving (The Malay Mail, 5 October 2014) which mainly caused by:
1. Premature withdrawal for housing, health and education;
2. The relatively low income of the employees which affects the amount that could be saved for their old age.
2 LIFE CYCLE SURPLUS FOR MALAYSIA
2 NTA APPLICATION: DEMOGRAPHIC DIVIDEND
First Demographic Dividend • Changes in the economic support
ratio
• Declining fertility leads to a larger share of effective producers, (More production and higher economic growth)
• Transitory: Continual decline in fertility leads to population aging (Smaller share of labor force, lower production, slower economic growth)
Second Demographic Dividend • Changes in lifecycle wealth • The growth in productivity induced by
an increase in the demand for lifecycle wealth.
• Compositional effect: population is concentrated at older, high wealth ages
• Behavioral effect: increase in duration of life and retirement lead to greater accumulation of wealth
Changes in population age structure interact with the economic lifecycle, affecting economic growth – Thus, taking the advantage of
demographic change to achieve rapid economic growth
Countries in the later stage of demographic transition: changes in age structure is not favorable as the share of working age population declines
Countries that rely on transfers (both public and familial): in meeting the retirement needs of the elderly, the 2nd demographic dividend may not emerge (Ogawa, Maliki & Matsukura, 2006).
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
First Demographic Dividend, Malaysia 1950-2050
By 2015, Malaysia has about
23 years to prepare by
taking advantage of the first demographic dividend Note:
Growth rate of the support ratio is the demographic
dividend
2 FIRST DEMOGRAPHIC DIVIDEND
2 THE DEMOGRAPHIC DIVIDEND
Demographic changes that brought economic growth is
approaching the end of the (1st dividend) period
The second demographic is:
More important to the economic growth than the 1st dividend
Not automatic; it requires policy that encourages capital
accumulation rather than relies on pension wealth to finance
consumption during the retirement ages
Thus, declining fertility and population aging could lead to a
higher economic growth if there are policies that
Encourage capital accumulation during working ages to support
retirement consumption
Stimulate human capital investment so as to raise productivity of the
future labor force
The Malaysian Government is heavily investing in its people through
public expenditure on health and education:
The amount of both deficit and surplus (LCD) raised these questions:
1. The possibility of bad financial behaviours and lack of
preparedness of Malaysian for their retirement. Thus, the need to
intensify financial education intervention programmes for all ages to
rectify the financial misbehaviour and improve the financial
wellbeing of Malaysians
2. The sufficiency of efforts in capturing the second demographic
dividend
3. The sustainability of public expenditure on health and education
4. The adequacy and effectiveness of the current social protection
system in Malaysia.
3 CONCLUSIONS AND WAY FORWARD