Better governance still needed to help lower-income group

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PETALING JAYA: Although Malaysia’s economic growth is on the rise, Putrajaya needs to do more to improve governance and heighten transparency so that funds meant for the B40 (bottom 40% household income group) can have their desired impact, an economist said today.

Universiti Kebangsaan Malaysia Associate Professor Madeline Berma said this was crucial in order to lessen the disparity between the rich and the poor.

“Yes, we have rapid economic growth and poverty numbers are very low, but we still have pockets of poverty, particularly among the Orang Asli communities in Peninsular Malaysia and Orang Asal in Sabah and Sarawak,” she told the Malaysia Freedom Summit here.

“The role of the government in reducing the disparity is to achieve economic growth so that wealth can be redistributed. That’s why a bigger economic pie is important,” she said.

She said it was also important to prevent leakages.

“If you don’t have leakages and wastages, then the B40 group can truly benefit from the programmes aimed at helping them,” she added.

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Associate Professor Madeline Berma at the Malaysia Freedom Summit

She said the increase in average income appeared to have reduced the income gap between the rich and the poor on paper.

“But if you look deeper, what is apparent is the inequality between different people in different states, the urban and rural divide.

“For example, if you look at the average Malaysian income in 2016, it stood at RM6,958. But if you break it down by state, the average income in Kuala Lumpur was RM11,692 while that in Kelantan was RM4,714,” she said.

Even these figures did not necessarily provide an accurate picture of the reality on the ground, she added.

“If you include the incomes of Malaysia’s billionaires when calculating average income, the data will be skewed,” she said.

“Imagine if you included the income of a multi-millionaire based in Kedah or Kelantan when calculating the average income there. It could make the number seem higher.”

According to a recent New Straits Times report, Malaysia’s Gini coefficient fell from 0.46 in 2002 to 0.401 in 2014, while average monthly household incomes grew from RM3,011 to RM6,141 in the same period.

Yesterday, Bank Negara Malaysia announced that the country’s gross domestic product (GDP) grew at a faster pace of 6.2% in the third quarter of 2017 compared to 4.3% in the same period last year.

Malaysia had also seen a growth rate of 5.8% in the second quarter of this year and 5.6% in the first quarter.

It said the economy was on course to register a growth rate close to the upper range of the official projection of 5.2% to 5.7% for the whole of 2017.

Madeline said she was more concerned about inequality within each racial group than inequality between races.

“In the past, the inequality was between the Malays and Chinese. Now the inequality is between rich Chinese and poor Chinese, rich Malays and poor Malays, and so on,” she said.

She also said that while the Gini coefficient was an indicator of disparity, it did not necessarily reflect the real situation as it took into account income and not wealth.

“If we include wealth in the equation, then the disparity between the rich and poor is very likely to be much higher. But data on wealth is difficult to obtain,” she said.

She also said that despite higher income numbers, many Malaysians did not have financial assets or savings.

According to the 2013 Malaysian Human Development Report, 57% of non-Malay bumiputeras, 55% of Malays, 45% of Chinese and 44% of Indians did not have financial assets, while 90% of rural households and 86% of urban households had no savings.

http://www.freemalaysiatoday.com/category/nation/2017/11/17/malaysian-economy-expands-at-fastest-pace-in-more-than-3-years/

http://www.freemalaysiatoday.com/category/opinion/2017/10/22/can-the-middle-class-save-malaysia/

http://www.freemalaysiatoday.com/category/nation/2017/03/23/rise-in-income-of-b40-group-is-good-for-country/

http://www.freemalaysiatoday.com/category/nation/2015/10/27/govt-aims-to-double-b40-income-by-2020/