The Malaysian Insight

THE perception that all Chinese in Malaysia are wealthy is wrong as data from government agencies indicate that a majority are wage-earners in this community, said economist Dr Muhammed Abdul Khalid.

The DM Analytics founder and chief economist said wealth inequality among the Chinese is also highest compared with the Bumiputeras and Indians.

“When we talk about inequality or poverty, the gap between the races has actually decreased, compared with 40 years ago.

“Many people think the Chinese are rich. But that is not quite right. Yes, some of them are rich, but the majority of Chinese Malaysians is working class.

“The percentage does not differ much from the Bumiputeras, who are also working class,” he told The Malaysian Insight.

Muhammed is the author of the bestselling The Colours of Inequality: Ethnicity, Class, Income and Wealth in Malaysia, published in 2014. The book has been translated into Bahasa Malaysia, Antara Dua Darjat: Agihan Pendapatan di Malaysia, and published last year.

Muhammed, who holds a doctorate from a leading university in France, said government data showed about eight in 10 Chinese were wage-earners. 

“Data from the Statistics Department in 2016 showed that 70% of the Chinese were working class, compared with 72% Bumiputera and 83% Indians.

“However, there are more Chinese employers at 8% than Bumiputera and Indian employers, which are both 3%,” said Muhammed, who was formerly economist at Khazanah Research Institute (KRI) and the Institute for Strategic and International Studies (ISIS) 

The income of wage-earners is not growing because owners and employers tend to keep a large portion of the profit for themselves instead of distributing it among the workers,  Muhammed said

“Income distribution to workers is still low. From every RM1 that we earn, how much does the government take through taxes; how much does the government earn; how much do the corporations profit? 

“Income for workers is still low compared to capitalist countries, such as the United States, Britain, and Singapore. In Singapore, the workers’ share of the economy is bigger. Here, not so much,” he said.

Near poverty

As with the other ethnic groups in Malaysia, absolute poverty rates among the Chinese have dropped, to just 0.1%. The rate for Bumiputeras is 0.5%, and Indians, 0.1%. The country’s overall poverty rate is 0.4%.

The problem, said Muhammed, is that although there are comparatively few who were impoverished, there are many living on the brink of poverty.

“This is the situation Malaysians are in, regardless of race. 

“Among the Chinese, half of those who work earn a monthly salary of less than RM2,350. This is a difference of only about RM400 from Malays who work. The majority earn low salaries, not between RM5,000 and RM6,000.”

The Chinese are adjudged wealthy because people make assessments based on what they see, Muhammed added.

“Sometimes, we sit in Bangsar and we see the Chinese and their Mercedes cars. That is an inaccurate picture. There are many more out there who are financially straitened.” – January 20, 2018.