The statistics don't look good. Malaysia is seeing a growing gulf between rich and poor and the inequality is highest among bumiputeras compared to the Chinese and Indians.

It is so bad that Malaysia has the distinction of being the country with the worst income disparity in Southeast Asia.

According to United Nations Human Development Report 2004, the richest 10 percent in Malaysia earn 22 times more than the poorest 10 percent, resulting in the country having one of the worst income disparity in Asia.

The 9th Malaysia Plan report released today said that the country's Gini coefficient - a measurement for income disparity - has worsened from 0.452 in 1999 to 0.462 in 2004.

"The income share of the bottom 40 percent of households decreased from 14 percent in 1999 to 13.5 percent in 2004 while the top 20 percent of households increased from 50.5 percent to 51.2 percent."

It described the trend as "worrisome" and added that the divide between the rich and poor has widen in all ethnic groups, with inequality among the bumiputera being the highest.

"While Malaysians enjoy a much higher quality of life now than in the past, income inequality among ethnic groups and between urban and rural areas is still sizeable and has increased in recent years."

According to the report, the progress to bridge the income gap has been "slower than projected due to the general economic slowdown arising from external shocks as well as some leakages".

"Economic growth has been a driving force for raising income and living standards, but it does not by itself ensure that the benefits of growth are equitably shared among all in society," it said.

"New evidence suggests that persistently high inequalities can negatively affect the prospects of future growth of an economy. Essentially, persistent inequity is inimical to development while equity and prosperity are complementary."

Mission impossible?

Identifying the problem is easy. Fixing it is more difficult.

In the next five years, the government plans to increase the bottom 40 percent share of income from 13.5 percent in 2004 to 20 percent in 2020.

Share of income of the rich - top 20 percent - will be reduced from 51.2 percent to 40 percent.

However, slashing the income of the top 20 percent share of income by 11.2 percent in five years will be near impossible without a major restructuring of the society.

The 9MP does not spell out such a radical plan. Moreover, the government is hampered by the policy of not redistribution existing wealth.

"All groups must recognise and appreciate that the (re)distribution ... does not mean the redistribution of existing wealth of the country, which is protected by the federal constitution, but the gradual and incremental distribution of future economic growth which all Malaysians will together contribute through genuine and active participation in the production process."

Furthermore, existing tax policies are helping to increase the income gap rather than narrowing it.

Nevetheless, the government has identify one area which could bridge the gap.

"Measures to reduce leakages will increase the full impact of development programmes and projects supporting economic growth and inequality reduction."

But it is not clear how such leakages could be stemmed if institutions such as the Anti-Corruption Agency is not truly independent.

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