Friday, December 12, 2014

New 'Dr. M' On Inequality And Getting Lost In The Waves

“We’ve achieved unparallelled success with the NEP (New Economic Policy), but there are new challenges that need to be addressed,” he said

Sunday, December 7, 2014

Reply to a libertarian

 "...without the NEP, Malaysia could have grown faster and that the NEP caused Malaysia to grow only as fast as experienced"  

Betul ke?

Thursday, December 4, 2014

In Defense of Zeti

It must have been some miscommunication with her staff that led Tan Sri Zeti Aziz, the Bank Negara Governor, to make that remark last week about bank accounts reflecting Malaysian household savings.  When we set out the clarification on how we treated and measured households' precautionary savings and differentiated them from investments in the Malaysian Human Development Report 2013, readers' response to her were what I thought, on reading through them, somewhat misplaced

Monday, December 1, 2014

ASB, KJ and UMNO Youth

"It is common knowledge that our economic status is still at a lower level compared to other races – that’s a reality. Until today, the income of the Malays is lower than other races. Many say; Malays have Amanah Saham! But according to the latest research by Dr. Muhammed Abdul Khalid in his book Colours of Inequality, it’s ironic that our average investment in ASB is only RM 600 when the limit is RM 200,000"

NEP : The Scarlet Letter

“Critics argue that the NEP is a failure, citing that it impedes investments, retards growth and benefits only a small number of well-connected bumiputras. Their arguments are not supported by data.

Boosting wealth generation of Bumiputeras : A Jalil Hamid

ECONOMIST Dr Muhammed Abdul Khalid argued in his book, The Colour of Inequality: Ethnicity, Class, Income and Wealth in Malaysia, that age cohorts, educational level and occupation helped contribute to the wealth disparity between Malays and Chinese.
Data that he produced showed that Bumiputeras had the least wealth compared with other ethnic groups. For example, in 2009, the average Chinese household had 1.38 times and 1.25 times as much income as Bumiputeras and Indians, respectively, but in terms of wealth, the gap widens: 1.9 times and 1.5 times, respectively.
How can we close the gap?

Zero household savings is staggering, and true

We refer to statements by the Governor of Bank Negara (BNM), Tan Sri Dr Zeti Akhtar Aziz, reported on various print media on November 28, 2014, on portions of the Malaysia Human Development Report (MHDR).
She disputes our finding that over 90% of Malaysians have no savings, claiming that the analysis is "partial" and "misleading".
We thank Tan Sri Dr Zeti Akhtar Aziz for engaging with the MHDR, and for providing this opening to reaffirm our findings. Allow us to clarify the points raised by Tan Sri Zeti.

Thursday, November 27, 2014


"Ramai yang cakap, Melayu ada Amanah Saham! Tapi mengikut kajian terkini Dr. Muhammad Abdul Khalid dalam buku Colours of Inequality, ironis sekali bila pelaburan purata orang kita dalam Amanah Saham hanya RM 600. Bayangkan hanya RM 600 sahaja, sedangkan kita tahu had pelaburan RM 200 ribu" - KJ

DEB bukan dasar yang menyekat pelaburan

"Dasar ini dibentuk supaya ekonomi berkembang dan pengagihan berlaku secara adil dan saksama. Banyak kajian ilmiah yang menunjukkan bahawa semua kaum mendapat manfaat daripada pelaksanaan DEB. Ini termasuk kajian mutakhir Dr Muhammed Abdul Khalid yang diterbitkan di dalam bukunya 'The Color of Inequality' yang membuktikan DEB memberi manfaat kepada semua kaum dari segi pembasmian kemiskinan, peningkatan pendapatan, peluang pekerjaan dan pemilikan ekuiti"

Malaysia Needs An Equitable Economic Model

Malaysia Needs An Equitable Economic Model - Muhyiddin

KUALA LUMPUR, Nov 25 (Bernama) -- Malaysia needs an economic model which can ensure economic growth that is accompanied by fair distribution of wealth, said Umno Deputy President Tan Sri Muhyiddin Yassin.

He said the inequality that existed in the society currently was frightening with the economy of the Malays still at a critical level, apart from various challenges facing them in continuing with their economic agenda.

"We (the Malays) are competing in an economy which is more open. We are facing an ideology of equitability which opposes implementation of all the Malay agenda.

"Under the various instruments of international free trade agreement, our country is pressured to no longer practice the policy of protecting the interests of bumiputera.

"Purportedly, a policy like this hampers economic development and retards the market, despite this policy having been used by the developed countries for more than half a century before they achieved the developed status," he added.

He said this in his speech at the simultaneous opening of the Wanita, Youth and Puteri Umno assemblies at the Putra World Trade Centre here on Tuesday night.

Malaysia, he said, was also going against the flow of global capitalism and free market ideology that were increasingly widening the gap of inequality and requiring an approach, policy and strategy that were more effective in narrowing the gap between the races and classes.

Elaborating on the economic gap, Muhyiddin said based on the data by the median monthly household income of bumiputera was only RM3,282 which was still low compared with the Chinese at RM4,643 and the Indian (RM3,676).

He said out of the 40 per cent households with the lowest income, 75.5 per cent of them were bumiputera.

The bumiputera continued to be treated unfairly in the private sector, he added.

"A study carried out by Dr Lee Hwok Aun and Dr Muhammed Abdul Khalid in 2012 found that for every Malay graduate called for an interview in the private sector, an average of 5.3 Chinese graduates were interviewed, although they all had the same qualification.

"The official data also shows a high unemployment rate among the bumiputera workforce, which is 70.3 per cent, including unemployed graduates of 66.9 per cent," he added.

Muhyiddin said based on a study by economic experts, the bumiputera workers received a salary of 20 to 40 per cent lower than the non-bumiputera in the private sector.

Apart from the economic gap among the races, he said, the country was also experiencing a huge gap between the rich and the poor, and among the ethnic groups in the peninsula, Sabah and Sarawak, the urban and the rural community and between company chief executive officers, senior management and workers.

All these, if allowed to continue will adversely affect the country's economic performance, he added.

Hence, he said, the need for the bumiputera agenda to be made a national agenda, and policies and strategies to bridge the economic gap to be made the main thrust of the 11th Malaysia Plan.

"The bumiputera agenda as a national agenda cannot be implemented in a small scale or in isolation from the main frame of the country's economy. It has to be carried out in an inclusive and comprehensive manner, and transcends all economic sectors," he added.

He also recommended that a new National Economic policy to be drafted to drive the equitability initiative.

Muhyiddin said focus and priority should also be given to training programmes aimed at enhancing the skills of bumiputera workers, apart from improving the subsidy mechanism, addressing discrimination in the employment sector, to fine-tune legislation, regulation and enforcement against foreign workers.

He said policies on workers' salaries should be introduced, besides having a more structured taxation mechanism, increasing incentives to enable families to increase their income and providing an conducive ecosystem for the rural students and the urban poor.


True colours through the lens of facts and figures

"That’s the beauty of this book – it is not political rhetoric chasing some selfish agenda. The Colour of Inequality sticks to the facts and available data. The author listed the failures in leadership, policy (crafting and implementation), education, racist stereotypes, business culture alongside what worked and the results of a 57-year long social experiment that is Malaysia."

Fahami, tangani dan cari jalan isu ketaksamaan

Malaysia needs second generation policies

As conditions change, Malaysia needs second generation policies that prioritise inclusive growth to achieve vision 2020

Wednesday, November 26, 2014

Growth, income distribution and poverty in Malaysia

Who should offer insights into how Malaysia has developed and how Malaysia should develop?

Sunday, November 23, 2014


The Heat Online
By Pauline Wong 
11/23/2014 9:02:46 AM

"A meritocratic system penalises the poor, the disadvantaged because opportunity is not the same. If everything is equal then yes, it is fine to have meritocracy. But how can a kid from rural Sabah compete with a kid from urban Damansara? This is the biggest obstacle in upward social mobility because education is key and we’ve closed that door".

Sunday, November 16, 2014

Drafting of the Constitution

NST. 17 NOVEMBER 2014 @ 8:08 AM

Excerpt from the Attorney General of Malaysia  Tan Sri Abdul Gani Patail's speech at the ILKAP National Law Conference 2014 on Nov 11, 2014 [read here ]

In The Colour of Inequality – Ethnicity, Class, Income and Wealth in Malaysia, at pages 7-8, Muhammed Abdul Khalid summarised the events leading up to the communal riots in 1969 as follows:
“The mutual resentment of Malays and Chinese on the disparity of economic and political representations reached its peak in 1969 after the third general election. The Malays felt that they were not enjoying the fruits of Independence, especially in terms of economic uplifting. The socio-economic status of the Malays had not changed; poverty among the Malays was still rampant …

Wednesday, November 12, 2014

TPPA: Perlu juga dapatkan pandangan pembangkang

12 November 2014 2:37 AM

KUALA LUMPUR 11 Nov. – Kerajaan diminta supaya turut mendapatkan pandangan daripada ahli-ahli parti politik pembangkang sebelum menerima Perjanjian Perkongsian Trans-Pasifik (TPPA) yang kini dalam usaha untuk dimuktamadkan.

Bekas Menteri Kewangan, Tun Daim Zainuddin berkata, panda­ngan tentang penerimaan terhadap TPPA itu perlu supaya isi kandungan dan kesan jangka panjang perjanjian tersebut dapat diperhalusi lebih awal sebelum ia dipersetujui kelak.

“Kita ada masa lagi untuk kaji tentang TPPA. Ramai lagi orang yang mungkin belum tahu atau kurang faham. Sebab itu, perkara itu masih boleh dibincangkan lagi tentang kesan positif atau negatif daripada pelaksanaannya nanti.

“Mungkin kita juga boleh dapatkan pandangan daripada ahli-ahli politik dari parti pembangkang. Setuju atau tidak itu perkara kedua,” katanya selepas melancarkan buku bertajuk The Colour of Inequality tulisan Dr. Muhammed Abdul Khalid, di sini hari ini.

High-income status meaningless if people stay poor, Daim says

By Syed Jaymal ZahiidNovember 11, 2014

KUALA LUMPUR, Nov 11 — Achieving high-income nation status will be hollow if most Malaysians still cannot afford their own homes or put food on their table, former finance minister Tun Daim Zainuddin said today. 

In an indictment of the government’s development plans, Daim said the apparent rise in income inequality in Malaysia showed Putrajaya lacked the right policies to grow household income despite boasting of steady growth.
“It is meaningless that in our drive towards a high-income country, many of our brothers and sisters, sons, and daughters, neighbours still earn less than the poverty level.
“It is meaningless to thump our chest and proclaim that we are becoming a high-income developed country, if many of our brothers and sisters cannot afford to own a decent home,” Daim said in his keynote address on the launch of the book “The Colours of Inequality” here.

Kerajaan perlu jujur, berani menanggani isu jurang kaya-miskin di M'sia - Tun Daim

Syafique Shuib,Astro Awani |Kemas kini:November 11, 2014

KUALA LUMPUR: Kerajaan perlu menanggani jurang kaya-miskin di Malaysia yang semakin melebar dan membimbangkan sebelum negara menjadi huru-hara.

"Kerajaan perlu jujur dan berani menanggani isu ini. Mereka perlu berhadapan dengan realiti untuk kebaikan semua. Campur tangan kerajaan masih diperlukan dah harus dilakukan dengan segera sebelum adanya ketegangan hubungan antara rakyat Malaysia.

Jika dasar-dasar tertentu tidak lagi berguna, ia harus dipinda," kata bekas Menteri Kewangan Tun Daim Zainuddin pada pelancaran buku "The Colour of Inequality" oleh ahli ekonomi Dr Muhammed Abdul Khalid.

Warna ketidaksamaan ekonomi masyarakat Malaysia

Astro Awani |Kemas kini:November 12, 2014
(Diterbitkan pada: November 12, 2014 11:58 MYT)

KUALA LUMPUR: Jurang ketidaksamarataan ekonomi rakyat Malaysia semakin ketara antara golongan berpendapatan rendah dan tinggi.

Apa yang dibimbangkan, ketidaksamarataan itu kekal sebagai status quo jika tiada sebarang dasar segera dilaksanakan untuk mengubahnya.

Pengarang buku ‘The Colour Of Inequality’ - Dr Muhammed Abdul Khalid yang juga Pengarah Kajian Intitut Kajian Khazanah dalam Agenda Awani pada Isnin berkata dasar afirmatif perlu segera dilaksanakan bagi membantu golongan berpendapatan rendah.

Developed nation’ label meaningless if wealth inequality remains, says Daim

The Malaysian Insider
Published: 11 November 2014
Warning against growing economic inequality, former finance minister Tun Daim Zainuddin said developed nation status will be meaningless if many of Malaysia's citizens are still earning below the poverty level and are unable to afford their own homes. 

Sunday, November 9, 2014

Affirmative action still needed to boost low-income group

The Malaysian Insider 9 November 2014

Malaysia may have made great strides in reducing poverty levels, but now needs to grapple with inequality in wealth distribution and opportunities for upward mobility, said an economist and author of "The Colour of Inequality".
Muhammed Abdul Khalid said the widening income gap caused by inequality in opportunity for education, income and asset-ownership, will continue to affect upward mobility among low-income households.
Failure to address this was a recipe for social and political instability, and could pose a danger to economic growth, he told The Malaysian Insider in an interview ahead of his book launch next week.

Dasar ‘afirmatif’ perlu untuk bantu golongan pendapatan rendah

The Malaysian Insider 9 November 2014

Dasar ‘afirmatif’ perlu untuk bantu golongan pendapatan rendah, kata ahli akademik  [link here]


Ahad, 9 November 2014



Masyarakat dunia ketika ini sedang berhadapan dengan cabaran yang besar berhubung pengagihan kekayaan. Pertumbuhan ekonomi yang pesat telah melahirkan golongan yang diberi jolokan oleh penganalisis antarabangsa terkenal, David Rothkopf sebagai "superclass" - golongan minoriti tetapi amat kaya dan berpengaruh dalam struktur kekuasaan negara-negara dunia. Mereka menerajui industri dan menghasilkan peluang pekerjaan serta menjana kekayaan peribadi yang luar biasa dalam kadar pertumbuhan yang tidak pernah terlintas separuh abad yang lalu.

Wednesday, November 5, 2014

Book Launch

Date                :     11 November 2014  [Tuesday]

Agenda           :    2:30pm- Welcome Address by Tan Sri Prof Dr. Kamal Salih
                             2:35pm – Discussant by Dato Kadir Jasin
                             3:00pm – Keynote Address by Tun Daim Zainuddin
                             3:30pm – Closing Address by Muhammed Abdul Khalid

                         RSVP  :  

Co-host :  International Institute of Islamic Thought and Civilization (ISTAC) IIUM   & MPH


Friday, October 24, 2014

Unravelling Financial Inequality

NST 25/10/2014 Unravelling Financial Inequality

BY RASHID YUSOF - 25 OCTOBER 2014 @ 8:07 AMlink here

ZULHISYAM, a medical doctor with a private practice in Durian Tunggal; Idris Arin, a semi-retired sea captain with two voyages this year; Kamaluddin, an architect fascinated with timber homes; and Aziz Arshad, who is in business and lives in the vicinity of the famed Sungai Dua prawn noodles on mainland Penang, delivered in unison an assignment to this reporter — “Do get us signed copies of The Colour of Inequality: Ethnicity, Class, Income and Wealth in Malaysia by Muhammed Abdul Khalid.”
This was how the slightly dishevelled 38-year-old think-tanker bantering cheerfully with the photographer, found himself being subjected to rigorous questioning on the premise and extrapolations of a book that has sold 2,000 copies in the first month, a bestseller by Malaysian standards.

Seminar : Has inequality in Malaysia really gone down?

The Department of Development Studies
& Centre for Poverty and Development Studies
University of Malaya, Kuala Lumpur


has inequality in Malaysia really gone down?

Lee Hwok Aun
University of Malaya
Muhammed Abdul Khalid
Khazanah Research Institute
    5 November 2014
    3:00 – 4:30pm

  Conference Room (3rd Floor)
  Postgraduate Building (Block H12)
  Faculty of Economics & Administration
  University of Malaya

This paper investigates economic inequality in Malaysia, which poses a puzzle in recent years. While official figures indicate declining household income inequality in the past decade, public discourse and popular perception maintain that inequality has risen, or at least stayed persistently high. Surveying public and policy discourses on inequality, we observe that perceptions of rising inequality plausibly derive from concerns over cost of living and economic exclusion, and discontent toward wealth accumulation by the upper classes. Due to inaccessibility of the Household Income Survey (HIS), the database for official inequality estimates, we assemble data from a range of sources besides the HIS to compute earnings and wealth inequality patterns over time. We obtain evidence of steadily rising earnings inequality in both private and public sectors in the 2000s. Private sector wage inequality has grown, especially at the uppermost segments, while the ranks of managers and professionals have expanded disproportionately faster in the public sector. Passenger vehicle sales data show increasing proportions of luxury cars. Property sales also show rising concentration in the upper rungs. Distribution in the largest unit trust funds offer glimpses at financial wealth, and show varying trends depending on individual funds, and particularly their maturity. Inequality tends to grow over time, but increases in inequality are driven not by concentration in the top decile, but increasing shares of the second highest decile. Overall, our findings are consistent with general perceptions of rising personal inequality, while also highlighting how inequality is multi-faceted. Discrepancies with the officially estimated fall in inequality need not impugn the validity of either data source, but urge critical evaluation of the HIS.


Tuesday, October 7, 2014


Utusan Malaysia 8 Oct 2014 
link here

Dr. Muhammed dan The Colour of Inequality

Oleh Zaini Hassan

SAYA mengenali Dr. Muhammed Abdul Khalid semasa beliau menjadi penyelidik di ISIS beberapa tahun lalu.
Beliau juga adalah pengikut setia kolum ini. Dan saya turut mendapat banyak input daripada beliau dalam hal-hal berkaitan sosial, ekonomi dan politik.

Baru-baru ini, beliau telah menerbitkan sebuah buku, yang antara rakan-rakannya ternanti-nantikan. Saya diminta beliau mengulas bukunya.

Friday, October 3, 2014

Coloured discourse on inequality in Malaysia

TMI: Coloured discourse on inequality in Malaysia

"The inequality discourse in Malaysia has just left the ivory tower and gone mainstream"

Tuesday, September 30, 2014

Taking the Bull by the Horn

Inequality: Taking the Bull by the Horn

AS I stated in my Other Thots column in the Sept 16 issue of the Malaysian Business magazine, I am lucky to be in the company of many illustrious economic gurus and commentators.

Among them Ungku Abdul Aziz Ungku Abdul Hamid, the iconoclastic former Vice Chancellor of University of Malaya, Kamal Salleh, the late Dr. Mokhzani Abdul Rahim, the late Dr Ismail Md Salleh, Rama Iyer, Thong Yaw Hong, Dr Rais Saniman, the late Dr Mahani Zainal Abidib, Dr Jomo Kwame Sundaram and the Datuk Dr Zainal Aznam Yusof.

They were committed to their craft and were willing to be unpopular with the establishment by telling the truth. Despite that, many were co-opted into government committees and commissions, especially during the periods of the late Tun Abdul Razak Hussein and Dr Mahathir.

But these days I hear that economists and private sector managers who are engaged by the government are behaving as badly as their political masters. They are more concerned with protecting the government’s image than telling the truth about the state of the economy.

Thursday, September 25, 2014

Sinar Harian : Prejudis kaum di sektor swasta
SATU kajian empiris menunjukkan wanita di Malaysia umumnya adalah 18 peratus lebih kaya daripada lelaki. Satu sebab ialah wanita lebih pandai menyimpan duit atau pendapatan berbanding lelaki.

Mungkin ada yang mempertikai, tapi inilah hasil kajian Dr Muhammed Abdul Khalid yang dicetak dalam buku The Colour of Inequality: Ethnicity, Class, Income and Wealth in Malaysia.
Beliau memperoleh doktor falsafah (magna cum laude) dari Institute d’etudes Politiques de Paris dan ijazah sarjana ekonomi dari Universiti Malaya. Beliau juga mendapati pasangan berkahwin secara purata memiliki 37 peratus lebih banyak harta berbanding perseorangan.
Logiknya, gabungan pendapatan suami dan isteri meningkatkan kemampuan mereka untuk memiliki harta atau aset berbanding individu. Tapi tidak semua orang yang berkahwin adalah kaya. Dalam kalangan pasangan berkahwin kategori miskin, mereka secara purata adalah 41 peratus lebih miskin daripada yang tidak berkahwin.
Tanggungan keluarga, kekangan kewangan dan tanggungjawab yang lebih mengehadkan keupayaan mereka untuk mengumpul harta. Menariknya, kajian beliau menunjukkan mereka yang telah bercerai (janda atau duda) masih memiliki 25 peratus lebih banyak harta berbanding orang bujang.

Kajian Dr Muhammed, mantan felo penyelidik di UKM dan penganalisis kanan di ISIS, mendapati 90 peratus penduduk negara ini tidak mempunyai sebarang simpanan, manakala 60 peratus tidak memiliki apa-apa aset pelaburan. Kemiskinan dan kekangan kewangan adalah puncanya.

Tidak seperti golongan kelas pertengahan dan tinggi: kajian menunjukkan kenaikan satu peratus pendapatan boleh meningkatkan kekayaan isi rumah pada kadar lapan peratus. Perbandingan kekayaan berdasarkan etnik menunjukkan kaum Cina dan India umumnya adalah masing-masing 45 peratus dan 39 peratus lebih kaya daripada kaum Melayu.

Kajian Dr Muhammed, kini pengarah penyelidik di sebuah organisasi pemikir, mendapati orang Cina pada 2009, secara purata, sudah memiliki 2.5 kali ganda lebih banyak harta menjelang umur 25 tahun berbanding Melayu, kemungkinan besar melalui pewarisan harta pusaka.

Walaupun ini tidak meliputi semua orang Cina, kajian menunjukkan antara 52 dan 81 peratus kekayaan terkumpul orang Cina yang dikaji adalah berpunca daripada pemindahan harta daripada ibu bapa mereka.

Satu lagi faktor ialah diskriminasi terhadap kaum Melayu dalam sektor swasta. Perkara ini mempunyai kesan besar ke atas pendapatan (sekali gus, kekayaan dan kemampuan memiliki harta) Melayu kerana 90 peratus pekerjaan adalah di sektor swasta yang dikuasai kaum Cina.

Tindakan majikan Cina menetapkan kefasihan berbahasa Mandarin sebagai syarat kerja dalam negara yang mana bahasa Melayu adalah bahasa kebangsaan dianggap prejudis. Bagi majikan Cina, faktor kaum lebih penting daripada faktor kelayakan.

Kajian Lee Hwok Aun dan Muhammed Abdul Khalid mendapati: “Overall, Chinese are 5.3 times more likely than Malays to be called for an interview despite both having the same characteristics such as CGPA, education level etc meaning that, while grade or academic qualifications matter, race matters more.
Interestingly, (we) also find that even crucial skills such as proficiency in Chinese dialects only marginally increase the chances of Malay applicants in securing a job interview. (It cannot be discounted that) racial prejudice is a motivating factor.” (Kertas kerja dibentang di Universiti Malaya pada 2 November 2012).
Pemerhatian dan konklusi Lee dan Muhammed memperkukuhkan kenyataan Branco Milanovic yang mendapati “being Chinese, with all other attributes the same, resulted in almost 23% wage premium compared to being a Malay.” (Dalam Inequality and Determinants of Earnings in Malaysia 1984-1997, Asian Economic Journal, Jun 2006 hal 19). Ini adalah satu keadaan yang tidak adil dan perlu diberi perhatian berat oleh semua pihak berkaitan.

Teori baharu mengenai pertumbuhan berhujah bahawa pendapatan (dan pemilikan aset) juga bergantung pada tahap pendidikan, pengalaman, kemahiran dan teknologi. Jika ini diambil kira, jelas kaum Cina tetap memiliki kelebihan berbanding kaum lain di negara ini kerana kekayaan dan penguasaan sumber ekonomi meningkatkan peluang dan keupayaan mereka untuk mendapat pendidikan, kemudahan dan peluang perniagaan yang lebih baik.
Disebabkan majoriti masyarakat Cina tinggal di bandar, mereka mempunyai akses yang lebih luas kepada teknologi, infrastruktur, jaringan perdagangan dan pelbagai kemudahan.

Wednesday, September 24, 2014

24/9/14 Ex-NST editor urges Putrajaya to give true picture on income gap

source here 

Veteran journalist Datuk A.Kadir Jasin has cautioned Putrajaya against relying on the law of averages when determining income and wealth distribution in Malaysia.
Writing in the September 16 issue of the Malaysian Business magazine, he said using the law of averages was flawed, in referring to a recent survey on the rise in the household income of the average Malaysian.
Kadir’s remarks came following a statement by Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar who said that people were now enjoying a better standard of living as average household income had risen from RM5,000 per month in 2012 to over RM5,900 this year.
Wahid had cited a preliminary report of the 2014 Household Income Survey as the basis. Wahid then said he was referring to the mean average household income.
"I am more than certain that Wahid is aware that the law of averages is a flawed one," wrote Kadir Jasin.
"Former Prime Minister, Tun Dr Mahathir Mohamad often warned about the perils of relying too heavily on the law of averages.
"He had said that a person could drown in a puddle with an average depth of two inches, which was totally possible if the victim falls face down, loses consciousness and is not helped," Kadir wrote in the “Other Thots” column of the bi-monthly business magazine.
Kadir (pic, left) also said that although average income might have surpassed RM5,900, it was a fact that the bottom 40% of Malaysian households had very low income, in the region of  RM1,600 to RM1,800.
He also used the example of the recently released statistics on Amanah Saham Didik, an inheritance fund of Permodalan Nasional Berhad, to illustrate the flaw of the law of averages.
Kadir wrote that based on its 2014 annual report, the average investment was about RM14,500 an account holder, adding that this figure looked good and would be able to finance an undergraduate at a local public university.
The figure also reinforced the belief that Malaysia has one of the highest savings rates in the world, and in the case of Didik, it also showed how well-off and conscientious Malaysian parents were.
"But the true picture is vastly different and totally uncomplimentary, where the bottom 86%  of account holders have savings of only RM980 while the top half percentage average around RM1.5 million.
"The same trend applies generally to other savings instruments, voluntary and mandatory," he wrote in his column titled “Stick to Growth with Distribution”.
Kadir also quoted from a new book by economist Mohammed Abdul Khalid titled "The Colour of Inequality – Ethnicity, Class, Income and Wealth in Malaysia", which the newsman credited as having explored well the issue of uneven income and wealth distribution in the country.
Kadir said the author had noted after analysing 2009 wealth figures that "as expected, the distribution of wealth is extremely skewed".
The book also said that overall distribution of wealth holdings showed that the gross wealth per capita of the bottom 40% was RM123,428 and they owned less than 7% of  total household wealth.
The poorest 20% fared worse. Their wealth average was about RM11,666, and they cumulatively owned less than 0.2% of the total wealth in Malaysia.
Kadir said that young economists and economic thinkers should participate actively in research and discourse on socio-economic matters, especially now when traditional welfare-based economic planning was under eminent threat from the reactionist, market-driven model.
"Yes, the market is important, but the market is not always the best indicator of the success of an economy.
"The market does not care about the well-being of the people. That is the role of the government." – September 24, 2014

Is Inequality Color Blind?

Read the review  here

Saturday, September 20, 2014

Capturing the essence of the NEP

IN development thinking and practice, no policy has captured the imagination nor created more controversy in its implementation among scholars, politicians and the public alike than the New Economic Policy, introduced some 45 years ago. A generation had debated, lived and benefited from the NEP, until its formal ending in 1990.
Or so it seems in hindsight. The policy debate and the concerns surrounding the policy never really ended, for the issues of inequality along class and ethnic lines in our multiracial country remained stubbornly intransigent, even after its success (a controversial notion in itself) and new incarnations of the NEP in subsequent years.
Emotions, politics and myth-making continue to track the development debate even when statistics were adduced to support its successes (read economic growth, poverty eradication, rising middle class, interethnic distribution).
Now a new post-NEP generation has taken over. Dr Muhammed Abdul Khalid is a member of this second generation of scholars and policymakers. His book is an important scholarly contribution to development economics in Malaysia, in particular, to clarifying the controversies surrounding the NEP.
Employing a historico-statistical narrative, his book, The Colour of Inequality, rightly addresses the core of the NEP debate. This latest entry into the development policy debate, now clothed in the notion of inclusive growth, deals dead-on with the central issue of development in this millennium: inequality in all its dimensions.
Most importantly, as the Latin American economist de Soto had shown two decades ago, that asset ownership and wealth are crucial to success and livelihood in the capitalististic economy. In my view, Muhammed, at some risk of being politically incorrect, has bravely succeeded, by using the latest data at his disposal, to cut through to the core issues of economic and inclusion inequality through the prism of ethnicity and class.
The NEP reincarnations, in particular, the Bumiputera agenda, slowly lost steam towards the end of the Mahathir era, was regenerated under the Abdullah Badawi administration through the Ninth Malaysia Plan and generalised further the distributive mission in the Malaysia Plans through the introduction of the New Economic Model.
In many ways, Tun Abdul Razak Hussein, our second Prime Minister and the main author of the NEP, had launched the first transformation in Malaysia’s development experience. The New Economic Model and the ETP/GTP, introduced by Datuk Seri Najib Razak, a generation after his father, is the second transformation.
For those wanting to understand the history of development policy over the last 45 years, to know what had been achieved, what has failed and what’s next in our drive towards developed status and social justice, Muhammed’s book is indispensible reading.
This is his contribution to the next generation of politicians, policy advisors and implementors, as well as the new millenials.

Wednesday, September 17, 2014

Stick to Growth with Distribution

1st Review

Review by econsmalaysia

The Colour Of Inequality

[Full disclosure: Dr Muhammed is a good friend of mine, so the following commentary should be taken as unbalanced and totally biased. You have been warned]
There’s a new book coming out this weekend on income and wealth inequality in Malaysia, at MPH:
If you’re interested in the dimensions of inequality specific to the Malaysian experience, there are two books you must have on your bookshelf. The first is Shireen Mardziah Hashim’s “Income Inequality and Poverty in Malaysia”, which examines the distribution of income in Malaysia and focusing on the period of the New Economic Policy (1970-1990). It’s a bit on the technical side (i.e. it’s not written for non-economists), but the book has a wealth of data you might not find anywhere else. It also shows how the NEP had at best a peripheral role in East Malaysia.
Dr Muhammed’s book is more general, and covers both income and wealth inequality from ancient times to the present. If I were to contrast the two, I would call Dr Shireen’s book a scholarly work for scholars. Dr Muhammed’s on the other hand, while not lacking in scholarship, is very obviously intended for a very different audience.
In some ways the book echoes Piketty’s “Capital” in approach and structure – not too surprising given his PhD was gained in France. This is a book very specific to our times and tries to address contemporary concerns and criticisms, backed by data and evidence, in a fairly accessible package. More importantly, again like Piketty, it’s really a call to action with an explicit policy agenda for Malaysia.
Some of the data and conclusions will be new to many – I’m not going to quote anything, buy the book if you want the details. While awareness of income inequality among and between Malaysians is fairly widespread, the data on wealth are not. Neither is the level of discrimination in the labour force. There’s also more evidence here that Piketty’s conclusion that inherited wealth plays a major role in perpetuating inequality is a correct one.
There’s always a risk of something like this stoking the fires of social controversy – much of the data in the book would make good political and media fodder. Some of the statements in the book would also make uncomfortable reading both for those in power and in the political opposition.
But to define this work solely on some of its more explosive findings would be to miss the larger point – that inequality transcends race, transcends gender, transcends East and West. We’re all in it, like it or not, and its up to us (all of us) to fix it.

The Colour of Inequality : Ethnicity, Class, Income and Wealth in Malaysia

The book  is now available at MPH bookstores.  Available on line