‘FOCUS ON REDUCING INCOME DISPARITY’
Move can help government create more sustainable and resilient economic policies, says expert
THE government should focus on reducing income disparity between the rich and poor regardless of race in its pursuit to eradicate poverty, said economists.
The New Economic Policy (NEP 2.0) must be amended based on the gains of the old NEP that has substantially closed the gap between the majority and minority ethnic groups.
Sunway University Business School economics professor Dr Yeah Kim Leng suggested that a propoor, or inclusive NEP, should be emphasised to strengthen Malaysia’s socioeconomic foundations.
“This could help to shape more sustainable and resilient economic policies for Malaysia to attain high-income status by 2024, as envisioned in the mid-term review of the 11th Malaysia Plan,” he said recently.
Yeah said the government’s intervention programmes like education, employment and business quotas and fiscal, as well as financial incentives, would raise the income of the bottom 20 per cent (B40) group.
“The attention on growth with equity should still be the primary policy focus. Without growth, restructuring of the economy and raising the living standards will be much harder and less sustainable,” he added.
Yeah said greater transparency and accountability will be important for the people to eliminate the identification of race with government policies. He noted that steady economic growth over the years has strengthened labour demand, which in turn has increased the ethnic diversity of employees in most organisations across sectors and industries.
“An inclusive and pro-poor NEP will foster national integration and equitable income distribution between and within each ethnic group.
“It will also lead to a more confident, cohesive and resilient multi-ethnic society without the country being labelled as one of the very few where affirmative policies are needed for the majority rather than the minority group as seen elsewhere,” he added.
Malaysian Institute of Economic Research (MIER) executive director Professor Dr Zakariah Abdul Rashid, meanwhile, said socio-economic development in the current context of Malaysia was all about growth with equity as outlined by Prime Minister Tun Dr Mahathir Mohamad.
“Now everything lies on the implementation of good strategies. Bumiputera should also get its equal share of the prosperity of economic growth and development of the country,” he said.
Zakariah said the country’s largest Bumiputra population cannot be left behind economically for sustainable and stable economic growth in Malaysia.
“While subscribing to the principle of a free market, the strategy should be equally friendly to the major racial groups, which have significant political and economic presence,” he said.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the NEP 2.0 seems to be a delicate balance between promoting an equitable economic growth and instilling financial discipline.
“The government is committed to reducing the level of its debt and plugging any loop holes in spending,” he said. “In this regard, the development of Waqf asset such as land and cash can be the right policy tools, which can be harnessed to complement the fiscal policy.”
Afzanizam said through Waqf, redistribution of income and wealth can be more equitable and effective, and would lessen the need to introduce new taxes as the wealthy could be more than willing to take part.
MIDF Research chief economist Dr Kamaruddin Mohd Nor concurred that NEP 2.0 should make way for the poor to better themselves and improve their livelihood.
“Education, training and income generating programmes with direct assistance and guidance are vital to raise their income. Assessing the effectiveness of existing programmes and their respective weaknesses are key elements to ensure the success of the programme,” he said.
Kamaruddin said the improvement of the rakyat’s wellbeing, regardless of social orientation, should be the government’s primary objective.
“Equitable distribution of wealth should be promoted via various skill-enhancement programmes to enable faster social mobility. More customised social economic programmes are essential to address unique characteristics of various categories of the rakyat,” he said.