November 5, 2014.

Wealth is concentrating in the already affluent as inequality in property and earnings in Malaysia are rising, a joint study by Universiti Malaya (UM) and the Khazanah Research Institute has found. The study covered the private and public sector, and showed that data from the official Household Income Survey (HIS) yielded opposite findings when compared with data on private sector salaries, public sector employment and the National Property Information Centre (Napic). UM's Dr Lee Hwok Aun and Khazanah's Dr Muhammed Abdul Khalid found that while the HIS reported a decline in inequality of gross household income, the other data sources showed that inequality in terms of personal earnings and house ownership was increasing.

"We find evidence that inequality is growing in earnings in both the private and public sectors and increasingly concentrated at the topmost strata," Muhammed told a seminar titled "Has inequality in Malaysia really gone down?" in UM today. "In terms of wealth ownership, there is also rising inequality in property ownership." According to data from the Employees Provident Fund (EPF), the largest retirement fund in Malaysia, the Gini Coefficient of the savings accounts had risen from 0.643 in 2004 to 0.661 in 2013, the researchers said. (The Gini Coefficient Index measures the distribution of income in a certain country. According to the HIS, the Gini Coefficient of Malaysia's gross household income in 2012 was 0.43.) ‎"The savings of the bottom half of EPF account holders has fallen from 2004 to 2013, while there is a slight increase in concentration at the top 1%," said Dr Lee, a senior lecturer with UM's Department of Developmental Studies. The salaries of workers aged 26-35 had also grown at slower rates from 2004 to 2013, and lagged behind the earnings of those above 40 years of age, they said.

Meanwhile, in the public sector,‎ the rank of managers and professionals have expanded disproportionately‎ faster from 1999 to 2012, according to their compilation from the Employment List of Ministries and Departments in the Estimated Federal Budget. "There is a concentration in the uppermost positions, which is similar to the findings from the EPF. The top management enjoys higher income," said Lee. In 1999, the top management comprised 0.09‎% of the staff, while the management and professionals made up 14.07% of the staff. But in 2012, 0.17% of the staff were top management and 29.80% were of the management and professionals. "The disparity between the top 10% and bottom% may have increased," said Lee. The researchers said the Gini Coefficient of residential properties sold a year had also increased from 0.51 in 1996 to 0.53 in 2011, according to their calculations based on data from Napic. "‎The value of property purchased by high-end buyers has grown more rapidly than property purchased by low-end buyers throughout the years," said Muhammed.

The share of total property value by the bottom 20%‎ from 2006 to 2011 has remained stagnant at 5%, while the top 10% have enjoyed a growth from 35% to 40% of total shares during the same period, according to the data. ‎The researchers also said that passenger vehicle sales data show increasing proportions of luxury cars from 2001 to 2011. "There is a rising share ‎of vehicles sold at the high end and bottom end, and rapid growth in luxury brands and compact cars," said Lee. ‎Data from private unit trust funds such as Amanah Saham Berhad showed that the majority own very little and have seen their shares declining from 2007 to 2012, said Muhammed. The shares of the bottom 50% of ASB share‎holders has dropped from 3% to 2%, while the 80th to 90th percentile have seen an increase from 76% to 77% share ownership from 2007 to 2012, according to the researchers. But the researchers noted that according to the HIS‎, household income inequality has been on a downward trend since 2004.

"The HIS states that Malaysia's Gini Coefficient of gross household income shrank 0.84%‎ per year from 2004 to 2012, while in the 2000s, the bottom 40% enjoyed relatively higher income growth," said Lee. The researchers suggested that the disparity‎ between the HIS and their own study may be due to the fact that the HIS did not take into account the earnings of each individual in a household. "The HIS reports the aggregate gross household income. There is no distinction between earned income and gross income," said Lee. "Gross household income inequality may be declining while personal earnings inequality rises due to transfers and multiple income earners in a household." – November 5, 2014. -