We are fast heading towards a divided Malaysia – not so much by religion or ethnicity as we are being constantly reminded, but by income and wealth distribution, observes Wandering Malaysian.
Abdul Taib Mahmud, the former chief minister of Sarawak (1981-2014), has never appeared on any international wealth ranking list. Yet according to the Bloomberg Billionaires Index, he presides over a family fortune exceeding US$1bn.
Sarawak is the third poorest state in Malaysia with an average household income that is about half that of Kuala Lumpur and with some of the poorest and most marginalised communities in Malaysia. So when the former chief minister of the third poorest state has amassed a huge fortune, it reads like a clichéd story.
But he is in good company. The total wealth of the richest 40 Malaysians (you don’t need me to list them, just Google) is equivalent to 22 per cent of Malaysia’s total GDP and their share has been increasing continuously. In relative terms, these fine gentlemen (unfortunately there are no women yet amongst their ranks) are in fact much wealthier than the top 40 richest individuals from the US.
The richest 10 per cent of Malaysians take home 32 per cent of the total income of the country while the poorest 10 per cent have to manage with a measly 2 per cent. In terms of wealth ownership (assets, savings, investments), the disparity is even more striking. The top 10 per cent own 40 per cent of the total wealth of Malaysia while the top 20 per cent own 60 per cent.
The bottom half of Malaysians own only 14 per cent of the nation’s wealth. The top 1 per cent of Malaysians (our top 40 friends) earn 8 per cent of the total income which is almost equal to what the bottom 25 per cent earn. They also control more than 10 per cent of the nation’s wealth. That has not changed much in the past 25 years.
I can rattle off more boring statistics that pretty much all tell the same story. Malaysia has a problem of persistent income and wealth inequality that will affect its long term growth prospects unless specific measures are taken.
Despite overall household incomes increasing on average, the relative income gap between the top 20 per cent (rich) and the bottom 40 per cent (poor) has remain stuck at 7.0 since 1990. The relative income gap between rural and urban households in 2012 is the same as at independence in 1957! The richest state in Malaysia has about three times more income than the poorest state.
This is of course not to say that there has been no progress. Incomes have increased overall, but the rich are getting richer faster than the poor are getting less poor, irrespective of ethnicity. Some states have progressed while others are languishing. Rural households are at risk of being left behind.
We need new policies in place to address the growing gap between the rich and the poor. We are fast heading towards a divided Malaysia – not so much by religion or ethnicity as we are being constantly reminded, but by income and wealth distribution and the accompanying access to power and opportunitie – unless the government gives everyone a hand up without pushing others down or out and making sure no one gets left behind.