Focus on closing the disparity gap

  • Nation
  • Thursday, 10 Oct 2019

The SPV 2030 report sheds light on the rough edges that exist in Malaysia’s development.

A widening economic gap between income groups, ethnic groups as well as rural and urban areas is a major challenge faced by the country.

The Shared Prosperity Vision 2030 report sheds light on these rough edges that exist in Malaysia’s development, including how the gap between the rich and the poor has grown over the past two decades.

Citing data from the Department of Statistics Malaysia, the report said the difference between the median monthly incomes of the T20 group (top 20% households) versus the B40 group (bottom 40% households) increased five-fold from RM1,935 in 1989 to RM10,148 in 2016.

The report stated that the average monthly salary of more than 60% of Malaysia’s low-skilled workers was below RM1,947.

In comparison, a skilled worker earns an average monthly salary of more than double the figure or RM4,573.

On the widening income gap between ethnic groups, it said in 1989, the income gap between bumiputras and Chinese stood at RM497 per month.

That figure grew by 3.5 times to RM1,736 in 2016.

The report added that while the overall contribution of the bumiputras to the country’s gross domestic product (GDP) was recorded at 46%, the actual figure was in fact 28% after deducting

the contributions of government-linked companies.

The bumiputras, the report noted, were also lagging in selected professional occupations as well as the contribution of the community’s small and medium scale enterprises to the economy.

For example, all professional occupations with the exception of dentists are dominated by non-bumiputras.

The gap between Indians and Chinese has also grown from RM286 per month in 1989 to RM1,154 in 2016.

A growing disparity can also be seen between the incomes of people living in rural areas versus those in urban areas.

In 1989, the difference between the median income of rural households versus urban households was RM419. That figure grew more than five-fold to RM2,389 in 2016.

A disparity also exists between the contribution of Malaysian worker incomes to the GDP compared to those in other countries.

For example, the SPV 2030 noted how the contribution of Compensation of Employees (CE)

to Malaysia’s GDP was still low compared to developed countries.

The CE refers to the total gross wages paid to employees for work done in an accounting period, such as a quarter or a year.

Last year, Malaysia recorded a CE of 35.7 compared to 39.7 in Singapore and 51.5 in Germany.

There is also a gap in the supply chains of businesses operating in Malaysia, added the report.

Quoting the Malaysia Competition Commission (MyCC), it said some foreign companies were charged with lower duties compared to local firms, especially those in the construction industry’s building materials sector such as steel.

It added that a study on the food sub-sector done by MyCC found that the main wholesalers of fish raised prices up to six times throughout the supply chain.

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