The Malaysian Insight

THE widening development gap between states was shown by lower GDP per capita for four states, said the 12th Malaysia Plan (12MP) report.

The report, which was tabled in Parliament today, showed Kelantan, Sabah, Kedah and Perlis registering low GDP per capita due to excessive reliance on commodity-based sectors. 

“Kelantan recorded the lowest GDP per capita (RM14,083), just 32.5% of the national average (RM43,378), with Kuala Lumpur registering the highest (RM120,600),” said the report.

It added that wide regional disparity continues to prevail with Selangor and Kuala Lumpur contributing 40.4% to the national GDP.

The central region recorded the highest GDP per capita (RM62,886) in 2020, while the Sabah region is the lowest (RM22,858), 36.3% of the central region.

As a solution, the 12MP said that it would prioritise bridging the development gap among states to ensure balanced development. 

“More equitable distribution of socioeconomic benefits from balanced development across states and regions will narrow regional disparity and increase the wellbeing of Malaysians, in line with the national economic performance.

“The states with the lowest GDP per capita – Kelantan, Sabah, Kedah and Perlis – are anticipated to record faster growth and narrow income disparity.”

Meanwhile, compensation of employees in Malaysia continues to lag behind developed countries at just 35.9%.

“Although higher compensation is crucial in providing a decent standard of living to all Malaysians, its contribution to GDP is still low compared with most of the high-income countries, such as the US (53.7%), Australia (46.9%), South Korea (46.8%) and Singapore (40.2%) with the highest in Germany (59.4%),” said the 12MP report. 

The lower compensation is a result of continued reliance on low-skilled workers, which suppresses wages and salaries, said the report. 

“The structure of the economy remained at the lower end of the value chain, limiting its ability to create skilled and high-paying jobs. This is reflected by the low composition of skilled jobs, averaging 27.6% during the 2016-2020 period. 

“In addition, the income received by employees did not correspond with the value of output produced, which restricted the growth of compensation.” – September 27, 2021.