Comprehending Ethnic Inequality in Malaysia: Going Beyond the Stereotypes

Tun Mahathir Mohamad has stirred up controversy again by saying that the incomes of urban Chinese have outstripped those of Malays in rural areas. Rather than using false generalisations to score easy popularity points, the political and policy discourse should move from a focus on income to issues of capability and participation.

View of Sembulan, Kota Kinabalu, Sabah, from the Sutera Avenue condominium and shopping complex. (Photo: Lee Hwok Aun)

Lee Hwok Aun

21 July 2020

Ethnic inequality is the third rail of Malaysian politics. Still, it recently got another jolt of controversy – and small doses of clarity. On 26 June, Tun Mahathir Mohamad told the Asia Times that Malaysia’s Chinese “have become extremely rich in Malaysia and they own practically all the towns in Malaysia.” He added that “the disparity between town and country is amplified by the disparity between the Chinese in the towns and the Malays in the rural areas. We need to correct that.”

Political adversaries and allies alike reacted. Wee Ka Siong, the president of the Malaysian Chinese Association, a component of the Perikatan government, decried Mahathir’s remarks as factually wrong and harmfully promoting “rich Chinese” stereotypes. Lim Guan Eng, a leader of the Democratic Action Party and Pakatan Harapan coalition which sits with Mahathir on the opposition bench, exhorted people to reject viewing income through the lens of colour.

The statements, capturing popular sentiments and carrying salutary messages, are well-received. Combating the “rich Chinese versus poor Malay” stereotype is easy, but it only constitutes part of the picture.

A timely data trove furnishes material for a broader engagement on inequality. On 10 July, the Department of Statistics released the 2019 Household Income and Basic Amenities Survey Report, based on a nationwide representative survey of 85,000 households conducted twice every five years.

Besides Mahathir’s reckless remarks about rich Chinese dominating the towns, he also erred in comparing urban Chinese versus rural Malays. In rural economies, households receive lower than average incomes but also experience lower cost of living. Indeed, we should examine urban and rural populations separately – that is, juxtapose the incomes of urban Malay households against that of urban Chinese and urban Indian households. These are the key dimensions of ethnic inequality, since the minorities are concentrated in Malaysia’s cities and towns.

The household income statistics permit such comparisons. Nationally, Chinese households receive 36.4 per cent more income than Bumiputera households, but this disparity is significantly overstated by the much larger share of Bumiputeras residing in rural areas. The more valid comparison of urban Chinese households and urban Bumiputeras shows that the former receive 23.1 per cent more income than the latter. There is a gap, but a smaller one than perceived.

The Indian to Bumiputera income gap has always been narrower. But again, when we focus on the urban population, we find that 2019 statistics maintain an established pattern of the past decade, in which the urban Indian and urban Bumiputera medians are basically equal. Notably, Indian-Bumiputera income is close to parity in the low-income segments of both communities, but Indian households receive less development assistance from the government.

These data should spur more dialogue on specific programmes for Indian Malaysians, but such concerns get drowned out by voices speaking largely to Malay and Chinese galleries. The same applies for the Orang Asli and Bumiputera groups in Sabah and Sarawak, who lag the predominantly Peninsular-based Malays in economic opportunity and advancement.

The critical – and rarely highlighted – shortcomings are deficiencies in developing capability and competitiveness, and consequent failure to imbue sufficient confidence within the community to undertake reforms.

There are further omissions. Trumpeting the “not all Malays are poor, not all Chinese are rich” tagline tends to fuel a popular opinion in urban bubbles which holds that, since the myth of poor rural Malays is debunked, it is also a myth for Malays to feel economically disadvantaged and anxious. This stance is intertwined with a misguided presumption that declining inter-ethnic income disparities demonstrate that the Malay majority are ready for privileges to be dismantled.

The system endures for many reasons, especially its extensive outreach to Bumiputeras to promote upward mobility and bolster income. The critical – and rarely highlighted – shortcomings are deficiencies in developing capability and competitiveness, and consequent failure to imbue sufficient confidence within the community to undertake reforms.

This batch of income statistics is a precursor to the 12th Malaysia Plan, which will extend the Bumiputera agenda. It has become harder to defend continuity of pro-Bumiputera policies on the grounds of inter-ethnic income differentials. Political and policy discourses must broaden the focus beyond income toward capability and participation.

In the run-up to the 12th Plan, Malaysia must grasp inequality more systematically, acknowledging persistent disparities in capability and participation, most acutely the preponderance of micro and small businesses among Bumiputera-owned small and medium enterprises, with a small sliver attaining medium scale. The community also relies on a raft of preferential policies across different domains: in residential schools, technical colleges, university admissions, government contracting, public sector and government linked company (GLC) employment, microfinance, business support and unit trust schemes. Taking these into account, the special access that Bumiputeras enjoy do not just confer status but also, emphatically, sustain opportunity and livelihood. The fear of “losing out” is real and rational – yes, despite narrowing income gaps.

Of course, not all Chinese are rich, some are actually poor; not all Malays are rural and poor, most are urban and many are rich. Shooting down such false generalisations claims moral high ground and scores popularity points, without adding much policy insight.

Dealing with the myriad manifestations of inequality – spanning income, participation and capability – and the future of ethnically-targeted policies requires effort that Malaysia’s political establishment, both government and opposition, chronically neglects. It remains convenient to play to ethnic vote banks on all sides.

Dr Lee Hwok Aun is a Senior Fellow and co-coordinator of the Malaysia Studies Programme at the ISEAS-Yusof Ishak Institute.

ISEAS Commentary — 2020/97

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS – Yusof Ishak Institute. No part of this publication may be reproduced in any form without permission.