Well... do allow me to share my opinion why employer is asking your current salary and expected salary...

I was once annoyed with such questions too. but when i start becomes the employer side. That is important for a company to know the budget they need to hire someone for that position.

Besides, if everyone is get 40% jump on every time they change jobs... Guess who is at the losing end??? the employers, not a single company but the industry as a whole. In order to keep the competition in term of cost, they will want to keep a certain % of increase from your previous salary.

As the area and industry that i'm working for, the employer will offer max 20% more from your previous salary. of course there will be exceptional cases. But in general that's the real job market.

Try change your perspective from employee to employer, you get to know all the reasons for them to ask. i would say not only Malaysia asks for current and expected salary, i believe the Asia culture works that way.

That's just my experience and opinion. One day you have become the Employer... you feel the pain... for paying too much for someone...

This is already a law (PDPA 2010) that has been passed and gazetted within the laws of Malaysia. For more information please click HERE. Please refer the Section 8. Disclosure Principle in regards with the personal data disclosure. Anyone has the right not to disclose his or her personal information to any third party other than the authorities.
That is the one and only reason for interview, to look for suitable candidates to fill the posts and solve the problems. Why do employers have to worry about overpaying when they are already paying within their budgets in the first place? If the employers come clean with their expectations, I don't think it would be an issue to find a candidate that is willing to work within the employers expectations, and saving both sides the pain of heartaches. If no one is willing to apply for the post, the employer should know what is happening in the market.
I repeat. That is the whole point of the interview process. You judge the candidates' values and capabilities through interviews, not on their previous salaries. If employers are having issues judging that, I highly doubt their abilities to lead the team and steer the company direction.
You kinda mixed both points together, thus creating some confusions here. First, I do agree the point that it doesn't matter how much work you do. They might be some kind of works that are of little value to the companies. Someone might be working 24/7 and yet the values he churns out can be negligible.
However, you completely missed the point why companies hire in the first place, which is to help the company make more money or contribute some values in some senses. If you ignore the ones who helped you to earn monies, the peril is yours and your company to suffer if the bottom lines get affected in the end.
This is not relevant to the topic. However, as many pointed out here, you hire for the work that you need get done with the range of values that are worth the range of those who are willing to accept the offers. 
You are partly correct to say that job interview is to see the suitability of the candidates to fill the posts. As we all know, the employer already has a budget for hiring. Why is it so hard for them to select or reject a candidate if they already know the candidate's expectations? The request for salary slip is completely irrelevant here.

Well... if you think running a business and sustain it are just as simple as you think then... may be you should start a business and share with me how to certain your company growth and future forecast.

Employer is not low-ball the candidates, but just to get the best out of the budget they can. When the candidate proved that he is capable, we do not hesitate in adjusting his salary after his probation. That's most HR is doing.

Just because I have a budget of RM 2,000 doesnt meant I want to pay someone "perfect" for the job RM 2,000. That is why HR always have a range for a position, like RM 1,500 to Rm 2,500.

Maybe I meet a worker A who has perfect pointer, prior work experience (impressive previous work resume), smooth talker, polite, convincing, I would surely like to offer him the highest range of my budget RM 2,500 to try and attract him.

Then I meet a worker B who isnt that good, so i offer him RM 1,500.

Both will be able to do that job, becos my company so stronk that sales automatically keep rolling in bla bla bla, But worker A obviously has the capability to maybe even exceed my expectations, or have the potential to rise in my company. While I feel worker B does not have such potential. Yes, both can do the entry level job I am advertising for RM 2,000. But human beings have different capacity, and so I lowball B in order to have the budget to hire A.

Asking for payslip is just part of my evaluation, like many have already said in this thread, it IS NOT MANDATORY for you to show it, but employer IS ALLOWED to ask for it. It is up to you whether you want to give or not. There is no right or wrong here. Saying the employer is wrong to ask for it (unethical/lowballing) is false. Payslip reflects a persons value quite accurately, especially the longer you work.

Going back to my example:

Let say I ask for worker A's payslip and I notice that his pay always around RM 1,000 to RM 1,500 for the past 10 years, while job hopping around. Suddenly I might have to rethink my evaluation. Why was he always paid so low? Was there a problem in his previous company? Has he perfected the art of interviewing after 10 years and is trying to con me now?

Then worker B refuse to give and I immediately hire worker C, who just come in, roughly same standard as worker B and is willing to show his payslip.

Clearly, whether or not you show your payslip is up to you, and can be good or bad depending on the circumstances. It is part of your evaluation, and is another form of the question "tell me more about yourself". You can tell them, or you can choose NOT to tell them. Problem is when you choose not to tell them, what will they think?

Bottom line:

Employer is RIGHT and SHOULD ask for your payslip. You CAN CHOOSE whether you want to give or not.

In most circumstances, showing your payslip means you are on the losing end of negotiations, but please also consider what you lose by choosing not to show your payslip. Right or wrong, it all depends on the circumstances and how you handle the situation.

What about in terms of "expected salary"? If you answer the expected salary in specific, does that means sealing your negotiating card and what should be the wiser answer to this?