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Malaysia losing out in real wage increases to neighbouring countries like Thailand, Indonesia and Philippines highlights the fact that Malaysia has the highest income inequality in South-East Asia


Press Statement

by Lim Guan Eng


(Petaling Jaya, Wednesday): Malaysia in losing out in real wage increases to neighbouring countries like Thailand, Indonesia and Philippines, highlights the fact that Malaysia has the highest income inequality in South-East Asia. The United Nations Human Development Report consistently list Malaysians as suffering the worst income inequality between the rich and poor in South-East Asia is ignored.

Real wage increases in 2007, which represent workers' annual salary rises after taking inflation into account, are expected to climb an average 3.6% in Asia this year, a 50% jump from 2.4% in 2006, according to a survey by human resources firm ECA International. ECA International, the world’s largest membership organization for international human resources professionals, establishes actual and predicted salary increases in local markets around the world. It is used by multinational organisations to help them determine future wage increases at home and in other markets.

According to the survey, which compares 45 countries, workers in India enjoy the sharpest jump in real wages in the world this year at 7% followed by Indonesia and China with real wage increases forecast at about 6%. Philippines and Thailand, with forecasted real salary increases of 4% each are 4th and 5th respectively. Malaysia is eighth at less than 3.5%. Clearly inflation has either risen much more compared to other countries or salaries not increased high enough.

The top 10 countries in the world with highest forecast 'real' wage increases in 2007 are as follows:

  1. India

  2. Indonesia

  3. China

  4. Philippines

  5. Thailand

  6. Slovakia

  7. South Korea

  8. Malaysia

  9. Egypt

  10. Russia

For Malaysia to lose out to Indonesia in real wage rises is the second time we have lost to Indonesia, when for the first in history Foreign Direct Investment to Indonesia exceeded Malaysia in 2005. In 2005, Malaysia’s FDI inflow contracted by 14.21% to only US$3.97 billion (RM14.63 billion) last year from US$4.62 billion (RM17.02 billion) in 2004.

In contrast overall FDI inflows into Southeast Asia increased 44.7% to US$37.14 billion (RM136.83 billion). Never before has the FDI for Malaysia fallen when the total FDI for the entire region has increased. More alarmingly, Malaysia lost out to Indonesia, whose FDI increased by five-fold to US$5.26 billion (RM19.38 billion) from US$1.89 billion (RM6.96 billion) in 2004.

Of more immediate impact to the people is that real wages are rising slower in Malaysia than our neighbouring countries. The Ninth Malaysian Plan (9MP) shows the share of income of the bottom 40% of the population declined from 14.5% in 1990 to 13.5% in 2004 whilst the share of the top 20% of the population increased from 50% in 1990 to 51.2% in 2004. This only proves that BN’s failed economic policies such as the New Economic Policy centered on cronyism, hostility towards transparency and accountability as well as “piratisation” instead of privatisation of public utilities have failed to redress the growing imbalances where only the few benefits greatly at the expense of many.

If we are to maintain our standard of living compared to neighbouring countries, then BN must ensure that every Malaysian has equal opportunities and equitable share in our country’s resources. A good start is to admit that inflation is eating into our standard of living or that our salaries have not gone up fast enough.

Totally relying on the rise in stock market is misleading and has no relevance to improving the livelihood of the general Malaysian population. The time has come to improve the people’s income like distributing oil revenues earned by Petronas from our oil resources. Better for the people to enjoy such oil revenues directly than to watch the few well-connected companies benefit.


* Lim Guan Eng,  Secretary-General of DAP

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