KUALA LUMPUR (Feb 5): Bumiputeras in East Malaysia have seen slower income growth compared to their counterparts in Peninsular Malaysia due to limited access to quality health and education services, according to the World Bank.

The World Bank’s latest report, A Fresh Take on Reducing Inequality and Enhancing Mobility in Malaysia, notes that spatial inequality remains persistent, with economic mobility lowest among Bumiputeras in East Malaysia, comprising Sabah, Sarawak, and Labuan.

Bumiputeras make up nearly 70% of Malaysia’s population and hold 62% of total income, a modest improvement from 2004, when they accounted for 67% of the population and 55% of the income.

“The Bumiputeras in Sabah and Sarawak have the lowest mean income of all subgroups of ethnicities and regions (East Malaysia and the peninsula). In contrast, Chinese and especially Indians in East Malaysia fare much better,” said the report.

The report also noted that the contribution of the inter-ethnic inequality to overall inequality is relatively small.

"Differences in average incomes across ethnic groups have fallen slightly over time, from 15% to 13% of the total inequality. On the other hand, when making groups that combine ethnicity and region, the contribution of intergroup inequality is 20%, which means this is the most important source of average differences across groups,” said the World Bank.

While Bumiputeras in Peninsular Malaysia are the second poorest group on average, their income levels are comparable to those of Indians in the peninsula and Chinese in East Malaysia.

The World Bank said a crucial element of reducing inequality is enhancing equality of opportunity by investing in foundational human capital, such as health and education, early in the life cycle.

World Bank senior economist Dr Ririn Purnamasari, in her presentation of the report, emphasised the need for broad-based policies to ensure that children are not only educated but also adequately prepared for tertiary education or vocational training. Such policies, she said, would increase labour income and enhance economic mobility by improving productivity.

“Take for instance education. First, children need the foundational skills such as reading, writing and comprehension, and only then can they advance further in school and complete higher levels of education successfully,” she said.

“Intervening early is key to [addressing] spatial, ethnic and income gaps because human capital outcomes are lacking for disadvantaged groups and are the most important cause of later disparities,” she said. “So alongside the remarkable economic and social progress that Malaysia has seen, there has been a substantial increase in access to many basic services. So closing the quality gap is what is most important in Malaysia today. This means focusing on policies that are broad-reaching.”

Such policies could help lift poorer households, enabling them to catch up with the national average while directly supporting disadvantaged Bumiputeras, who remain overrepresented among the poor, she added.

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