PETALING JAYA: Malaysia is making strides towards achieving high-income nation status before the decade’s end, according to experts.
However, a closer look at national income data reveals a persistent challenge: significant income inequality that risks undermining the goal of shared prosperity.
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Economists are urging the government to look beyond simple growth metrics and focus on systemic policies to ensure the transition benefits all Malaysians, not just a select few.
Sunway University economics professor Dr Yeah Kim Leng is confident that under its current growth trajectory, Malaysia is on track to attaining high income status as defined by the World Bank before the end of the decade. However, he points out that growth alone does not guarantee equity.
Data from the Statistics Department of Malaysia (DOSM), which indicates that only 10% of Malaysians earn more than RM9,200 a month, highlights that income disparity remains pronounced.
“Achieving high income does not necessarily translate into a more equitable distribution of income,” Yeah cautioned.
He said based on 2024 data, Malaysia’s Gross National Income per capita was US$11,670, which is still lower than the World Bank’s current high-income threshold of US$13,935.
When addressing why top wages remain relatively “low” and the wealth gap persists, Yeah points to two key areas of concern, such as the concentration of economic opportunities in both the private and public sectors in a small circle of beneficiaries.
“This wealth concentration in large corporations and wealthy families occurs through bona fide efforts in a free market and competitive environment,” he said.
Yeah also cites “crowding out” effects by government-linked companies and politically-linked awards of government concessions and public procurement contracts as contributing factors.
Yeah said future development efforts must increasingly “tilt towards equity” while maintaining a focus on economic growth.
“Without economic growth, there is nothing to redistribute fairly,” he said.
Social and Economic Research Initiative managing director Rashaad Ali said there needs to be a radical shift in industrial policy to address the wage gap.
Firstly, he said, the government needs to stop giving incentives for industries to use cheap labour and start introducing progressive wage policies instead.
“The problem of wage inequality is systemic, stemming from decades of industrial policy that has incentivised low skill, low wage labour,” he said.
Rashaad said successive governments have tried creating high-value industries, but rarely has this is efficiently coupled with improving the local talent pool.
“The government has attempted to address this by ‘raising the floor’ by improving minimum wage and introducing various progressive wage policies to incentivise companies to pay their employees better.
“However, our talent pipeline also needs fixing to ensure that high value, technical jobs go to Malaysians,” said Rashaad.
