High-end property, cars show inequality on rise
Inequality in household incomes may be going down on the whole, but a closer look shows that wealth is still concentrated in the topmost strata of the nation’s population, a study finds.
Inequality in household incomes may be going down on the whole, but a closer look shows that wealth is still concentrated in the topmost strata of the nation’s population, a study finds.
The joint study conducted by Lee Hwok-Aun of Universiti Malaya (UM) and Muhammed Abdul Khalid from Khazanah Research Institute (KRI) argues this is so due to the higher rate of purchase of luxury real estate and vehicles.
Lee and Muhammed argue that the data shows inequality of income, as loans taken to secure loans for luxury properties are contingent to income.
"We find evidence that inequality is growing in earnings in the private and public sectors, and (wealth) is increasingly concentrated at the topmost strata," Muhammed, who is director of research at KRI, said at UM yesterday.
Presenting their paper titled 'Is inequality in Malaysia really going down?', Lee and Muhammed said data compiled by the National Property Information Centre (Napic) may indicate those in the lower income brackets are priced out.
"In terms of property sales, the value of property purchased by high-end buyers has grown more rapidly than property purchased by low-end buyers," they said.
In 2011, the top 10 percent of income earners held the total value of more than 40 percent of real estate property. A decade earlier, the top 10 percent held less than 35 percent.
In contrast, the lowest 20 percent income earners have always, from 2001 to 2011, held less than 10 percent.
Luxury vehicles
Similarly, Malaysian Automotive Association data shows that the purchase of luxury vehicles is on a sharp rise, while lower-to-mid range buys have held steady between 2006 and 2011.
Purchases of vehicles costing RM100,000 to RM200,000 made up eight percent in 2006 but shot up to 11.4 percent in 2011.
In comparison, purchases of vehicles worth RM60,000 to RM80,000
rose only slightly, from 15.5 percent to 16.3 percent.
While admitting that they cannot exclude multiple ownership of a single property, the duo stress that the findings still show “rising inequality”.
"We are unable to confirm multiple ownership or multiple sources of income. But, our findings are consistent with rising wealth inequalities," they said.
They said that this is even more so when salary data from the Employees Provident Fund is brought into the equation.
More than half of EPF contributions are from...
The study found that in 2013, the top one percent of salary earners contribute more than half of EPF contributions.
In contrast, the bottom 50 percent of salary earners share less than 10 percent of total EPF contributions.
Correspondingly, the study finds that the highest salaries are concentrated in the top ranks.
The study also finds that salaries of workers aged under 35 grow at a slower rate from 2004 to 2011, compared to salaries of those above the age of 40.
However, the researchers said Amanah Saham Bumiputera holdings indicate that more from the middle class are investing in the unit trusts, bringing a slight decline in inequality.
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