The Malaysian Insight

THE widening income gap between affluent Malaysians and their poor fellow citizens have increased 10-fold in 20 years.

In 1989, the income gap between the average B40 household and a T20 family was RM1,935 per month.

By 2016 that gap widened 10 times to RM10,148 per month.

This stark disparity is an example of the widening inequality in Malaysian society that is driving the Pakatan Harapan (PH) government’s Shared Prosperity Vision 2030 (SPV2030), which is launcehd by Prime Minister Dr Mahathir Mohamad in Kuala Lumpur today.

Tackling inequality – between the rich and the poor, rural and urban, and ethnic groups – is the core thrust of SPV2030, PH’s 10-year economic plan.

In slides released to the media, Putrajaya said in the past 23 years, income disparities between Bumiputera and non-Bumiputera communities have also widened.

In 1989, the difference between the median income of a Chinese household and that of a Bumiputera one was RM497 per month.

In 2016, the gap was RM1,736 per month.

In Indian households, the gap between their median income and that of a Chinese family was RM1,154 per month as of 2016. 

Despite comprising more than 60% of the country’s population, Bumiputera still lag behind in most private sector professions, except dentists and quantity surveyors.

For instance, in 2014, Bumiputeras made up 46% of all doctors, 36% of all engineers, 41% of all lawyers, 39% of all architects and 45% of all veterinarians.

Putrajaya also said the actual contribution of Bumiputera incomes to the national economic output or gross domestic product (GDP) was 28% in 2014.

In terms of regions, development that had been concentrated in certain states in Peninsula Malaysia had led to wide income gaps between urban and rural areas.

The wealth disparity between richest states such as Kuala Lumpur and Selangor, and the poorest, Kelantan and Sabah, grew six-fold in a period of 27 years.

Kuala Lumpur and Selangor contributed 40% of GDP. In comparison, the five poorest states – Kelantan, Kedah, Pahang, Sabah and Sarawak – gave a combined contribution of only 25%.

A bigger share of the country’s economic wealth is also going towards employers and business owners compared to workers.

This is seen in the compensation of employees (CE) to GDP which is 35.7%. In comparison, countries such as Germany, South Korea and Singapore have CE rates of 51.5%, 45.7% and 39.7%. – October 5, 2019.