by SYAHMIE FAYYADH JAAFAR / pic TMR

THE current economic system has failed many Malaysians in terms of wages, jobs, wealth creation, and opportunity. This failure is manifested through rising inequality and the widening gap between the haves and have-nots, especially among the Bumiputera demographic, which is concentrated in rural areas.

According to Zouhair Rosli, Senior Researcher at DM Analytics, the current policy framework needs to be revised. He says that the government should implement a series of reforms aimed at reducing income disparity, creating better opportunities for young people, improving the quality of public infrastructure, and investing heavily in human capital development.

However, he also pointed out an abstract form of poverty, which cannot be measured using traditional metrics such as gross domestic product (GDP) or employment figures. According to him, this form of poverty can best be described as “soul poverty”—a condition where individuals lack basic moral values and ethical standards, which affects economic productivity and overall wellbeing.

“Take, for example, how one particular institution is given too much honour when entering the mosque; with red carpets and all. And how a thief of a massive amount of money could be celebrated as a hero,” said Zouhair.

He added that the Vision 2020, which was proposed by former Prime Minister Tun Dr Mahathir Mohamad, included several objectives, such as achieving a free-spirited society guided by high morals and ethics. But despite these goals, the reality on the ground today paints an entirely different picture.

In regards to the Bumiputera agenda, Zouhair said that although the initiative had its fair share of successes, the fact remains that it has created a sense of entitlement among certain segments of the population, which has subsequently resulted in cronyism and corruption.

“Many policymakers believe that abolishing the Bumiputera agenda would solve all problems, but I think it’s not true. We can acknowledge that there are issues related to the Bumiputera agenda, but it doesn’t mean that we should scrap the whole thing,” he explained.

Zouhair suggested that instead of scrapping the Bumiputera agenda completely, the country should balance a need-based approach while simultaneously maintaining the spirit behind the Bumiputera agenda.

On the issue of poverty, Zouhair argued that despite the growing economy, income distribution continues to widen and become increasingly skewed towards the richer segment of the population, with Bumiputeras taking the brunt of this imbalance.

Analysing the COVID-19 pandemic, Zouhair highlighted that while the disease has caused more households, regardless of ethnicity, to slip below the poverty line, it has also exacerbated existing social inequalities within each group.

For instance, he noted that the highest levels of poverty were observed among Bumiputeras in rural areas, followed by Indian communities, whereas Chinese populations experienced relatively lower rates of poverty, albeit still significantly elevated compared to non-ethnic groups.

“The highest poverty incidence is recorded in poorer states dominated by Bumiputera, namely Sabah, Kelantan, Sarawak, Kedah, and Terengganu.”

In addition, the poorest members of each community are disproportionately affected by the pandemic, with many falling victim to malnutrition and other associated diseases. As such, the effects of the pandemic on each individual household vary depending on their location and socio-economic status.

As for the impact of the pandemic on national growth, Zouhair believes that the decline in productivity may cause significant disruptions to the labour market and lead to increased unemployment.

He added that the implementation of the Shared Prosperity Vision 2030 would prove challenging considering the projected rise in pension costs over the next decade. However, the pandemic has hindered the achievement of key targets set forth and delayed the wage parity between Bumiputera and Chinese until 2043, 13 years later than planned.

He also touched on wages and pointed out how they should be raised higher than the inflation rate in order to keep pace with the cost of living.

“Household income needs to grow faster than the cost of living; otherwise, households will suffer financially and will not be able to purchase daily necessities,” said Zouhair.

“Workers are working hard; company sales are increasing, but wages remain low and workers are not being paid accordingly, especially for the bottom 40 percent. Wages need to increase faster than the CPI index,” he added.

For a dignified life, Zouhair recommended implementing policies that will help improve access to affordable healthcare and education, as well as provide financial support for those who are unable to work.

“The government must ensure that retirees are provided with sufficient funds to enjoy a decent old age, including adequate pensions,” he concluded.

“The ongoing trend of withdrawing Employee Provident Fund (EPF) contributions, particularly among Bumiputeras, will severely affect their ability to build up enough savings during their lifetime.”

Because of this withdrawal, “we can forecast that there will be less money available for retirement savings and more reliance on the state pension scheme, which will further exacerbate the problem of insufficient retirement savings,” he explained.

“Knee-jerk withdrawal of EPF contributions without proper consideration of alternative options will only worsen the plight of Malaysians in general and the poorer ones in particular,” he added.

He proposed that instead of pulling out their EPF accounts altogether, the government should consider alternatives to supplement their retirement savings, such as quality investment schemes, a dignified minimum wage, expanding welfare assistance eligibility, and progressive taxation.

“Can we afford the programs? Absolutely, total cost is less than 1% of GDP, about 2% of total budget, and less than 20% of debt payment. Hence, the government can easily fund these initiatives,” said Zouhair.

He went on to explain that the debt burden of the country will only increase unless urgent steps are taken to reduce it through responsible fiscal management.

“We are wasting our revenues to pay more debt. Revenue is declining. But despite all that, we continue to take more debt and end up allocating more of our revenue to service our debts. We are not spending for the majority of the Rakyat. For example, fuel subsidies, which only benefit the rich,” he concluded.