GEORGE TOWN: Malaysia is on track to achieve high-income nation status by the end of the decade.
Still, many may not experience the benefits equally due to widening income and development disparities between states, says World Bank economist Deisigan Shammugam.
Describing the milestone as a significant national achievement, Deisigan said the celebration could ring hollow for many citizens who continue to face stark differences in income levels and access to opportunities depending on where they live.
"It is a big achievement. The government and the country should celebrate. But when it celebrates, most will be wondering what they are talking about as they don't feel this high-income status that Malaysia achieved," he said.
Speaking at a forum organised by Penang State Assembly Select Committee on State-Federal Relations and Penang Institute: "Interstate Forum on State-Federal Relations', Deisigan pointed to the vast gap between the country's richest and poorest states, citing Kuala Lumpur and Kelantan as examples.
He said household and business incomes in Kuala Lumpur are about eight times higher than those in Kelantan.
"If Kelantan's income is like Sri Lanka's and Kuala Lumpur's income is like Portugal's, can you imagine them being in one country? What kind of tensions would that create?" he said.
According to Deisigan, the disparity is not merely an economic issue but one that also has political and social consequences.
"What we have seen in Malaysia is that there is a big gap between the richest states and the poorest states, the gap is widening over time, and it is bigger compared with many other countries around the world," he said.
However, Deisigan said research conducted jointly by the World Bank found that less-developed states generally have higher potential growth rates than wealthier states, though many are unable to realise that potential.
"The poorer the state is, the more it cannot live up to its potential. As a result, the divergence happens between the states," he said.
Deisigan said a deeper analysis at the district level showed that development challenges were often localised, requiring targeted solutions rather than broad state-wide policies.
He noted that Malaysian states collectively account for only about 21% of total government revenue, a figure that is significantly lower than in many other federations.
As a result, states have limited capacity to drive economic development, invest in human capital and compete for investments.
"If states are struggling to generate surpluses and are running deficits, how are they able to compete for investments?" he said.
He argued that Malaysia's next phase of growth would depend heavily on empowering states to develop their own strengths, particularly in high-performing cities and districts, while ensuring federal transfers are distributed through a more transparent and rules-based system.
Deisigan said balanced development should ensure that a child born in Sarawak or Kelantan enjoys the same access to quality education, healthcare, utilities, internet connectivity and public services as one born in Kuala Lumpur or Penang.
"When Malaysia crosses the high-income threshold, will it cross as one nation or as several? Will all Malaysians reap the benefits of this high-income status, or only a few?" he said.
