Don't Leave Our Problems to the Next Generations

"Malaysia has the HIGHEST Income Disparity
between the rich and poor in Southeast Asia,
greater than that of Philippines, Thailand,  
Singapore, Vietnam and Indonesia."

  ---   According to the UNDP 1997 Human Development Report,^[1] and

 the 2004 United Nations Human Development (UNHDP) report

When I read the above on wikipedia. I got concerned and decided to look into the statement on income  disparity or income inequality further. I found the World Bank to have also said that income disparity of Malaysia is greater compared to our neighbours. Malaysia is a country rich in natural resources, such as oil  and gas, agricultural produces, minerals, etc. In natural resources, we are probably the richest country in Southeast Asia on per capita basis, save for Brunei.

Highest Income Inequality-  1st in SEA, 3rd in Asia

Our Barisan Nasional (BN) government have been implementing New Economic  Policy (NEP) since 1971 which has stated goal of poverty eradication and economic structuring by redistributing the wealth to increase the ownership of enterprise by Bumiputras. NEP is aimed at having a more equal income distribution among Malaysians. After more than 40 years of vigourous implementation of NEP, how can we be the worst among Southeast Asia countries in terms of income inequality or disparity?

Many Malaysians seem to be unaware of the problem of income inequality in our society. It is not a commonly known fact. Perhaps, mainstream media has been too shy to publish the problem of  income inequality in this country. Our government has made  no effort in explaining the problem that we are facing despite of NEP. In accordance to Gini coefficient, which is a measure used to calculate income inequality, Malaysians have a wider disparity of income levels among the countries in this region. Listing on income  inequalities of countries is made available for comparison.

The World Bank noted that income inequality 'appears to have stagnated at internationally high levels' despite having knocked down the national poverty rate by 10 times, from an average headcount of 37.7 percent in 1976 to 3.8 percent in 2009. Malaysia Economic Monitor April 2011 report further confirmed the failure of NEP by saying despite “vast improvements” in its socio-economic situation, the benefits did not spread out evenly with the bottom 40 percent of households accounting for only 14.3 percent of total income as at 2009. This information by the World  Bank and Malaysia Economic Monitor clearly reveals the failure of NEP and other BN government policies over the years.


It was further indicated by the World Bank that poverty in Malaysia retains “a strongly regional flavour”, with Sabah topping the list where nearly 20 percent of its population are living below the poverty line. Shockingly, Sabah is one of the state within Malaysia that is high in oil reserves. It is probably not wrong to say that Sabahans might have been short-changed. 

Further evidence of income inequality can also be found in Malaysian govt publications which are unfortunately not  widely disseminated. According to the Economic Planning Unit (EPU), 20 per cent of the high-income group received a monthly income of RM9,987 in 2009, as compared to 40 per cent of the low-income group who only received RM 1,440 per month. There is also criticism that efforts by Malaysian government to reduce income inequality seem to be too focused on achieving equality of results instead of equality of opportunity. Hence, the goals of NEP have not been achieved after more than 40 years. 

Dr Lim Ewe Ghee is one of the believer that income inequality is permissible and inevitable in a free market economy. There may be some truth to what he says, although there are others who are in disagreement with him. He has however went on to state that "income inequality propagated by ill-gotten wealth through theft, force, corruption, crony capitalistic favours, discrimination or discriminatory government policies cannot be justified. It leads us perhaps to a more general, deeper principle we have yet to make explicit. A market economy can indeed be subverted by crony capitalistic forces and other political distortions, which then subvert a principle implicit in — meritocratic fairness."

I can derive that even if income inequality may be justified in certain ways by free market principles. It can never be justified on the ground of corruption, abuse of power, discrimination, cronyism or injustices.

Malaysia has developed over the years unfortunately into a country with the highest income inequality among Southeast Asian countries. This is most regrettable. The original goals of NEP can not be entirely faulted. The implementation of NEP and other BN government policies are perhaps the reason behind the sad state of affairs on income equality that we are in now. It is widely known that corruption, abuse of power, discrimination, cronyism and injustices have got in the way of NEP and other BN government policy implementation. We have seen how wealthy a young crony can be from the way he splashes his money. There are BN leaders who are adamant and try to argue their way out despite ample evidence of their corruption practices. Their arguments could be ludicrous at times.

Corruption practices in Malaysia are evidently described in this Wall Street Journal news:

 

This level of income inequality is unsustainable and should be corrected. Income inequality can be a source of social unrest and ills. We can see that crime rates in our country are on the high side despite what the authority has been trying to claim. It is paramount that we  must do what we can to reduce this inequality of income. 

We know that BN govt is incapable of reducing income inequality after more than 50 years in power. They have made it worse. Our income inequality is the worst in Southeast Asia now. We have to choose another govt which is serious in tackling this problem. We do not have many choices. There is only Pakatan Rakyat that is the most promising. Their administrations in Penang, Selangor, Kelantan and Kedah have shown accountability, transparency and fairness so far. They have done well in improving the living standard of people in their states within the limited budget of a state government, especially in Penang and Selangor.

Income inequality is created and perpetrated by BN government during our lifetimes. We have to do what we can to reverse it during our lifetimes. It is only right that way. We must not leave our problems to the next generations!

 

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 ^[1] - Asian Analysis 1998 by Asean Focus Group, Professor Michael Leigh Director Institute of East Asian Studies University Malaysia, Sarawak.