According to a World Bank report, the inequality among ethnic groups in Malaysia only accounts for less than five percent of the overall inequality.

Instead, the report says, most of the income inequality now is within groups.

“While addressing inequality among ethnic groups was critical in the past and gaps remain, most income inequality is currently within groups,” says the report.

The report titled “Malaysia Economic Monitor: Towards a Middle-Class Society” was released by the World Bank on Wednesday.

According to the report, income gaps among ethnic groups have declined, but have not yet been completely eliminated.

However, a breakdown of income inequality between inequality “within” a group and inequality “between” groups suggests that most inequality is within-group.

“Inequality between ethnic groups only explained 3.4 percent of overall income inequality in 2014.

“Even urban-rural differences, which are thought to be a driver of inequality, in Malaysia’s case account for only 10 percent of total inequality,” says the report.

The report also pointed out that the inequality within ethnic groups explains 96.4 percent of total income inequality.

'Broad-based policies better'

Meanwhile, the report also cited the Pew Research Center Global Attitudes survey, showing that 77 percent of Malaysians think the gap between rich and poor is a “big problem”.

“This number even increased from 75 percent in 2013.

“While inequality in Malaysia has declined, including in recent years and is lower than some other Asian countries, it remains high compared to the high-income economies that Malaysia aspires to emulate,” says the report.

The report reminded, although ethnic dimensions to income inequality should be addressed, broad-based policies are likely to have a greater impact.

“It is important to recognise that challenges related to Malaysia’s multi-ethnic society have not disappeared, including in how they affect household income opportunities.

“For example, (a study conducted by) Lee and Muhammed (2014) present evidence that ethnic Malay job market candidates receive fewer calls for interviews than similarly-qualified ethnic Chinese candidates.

“Moreover, the figure shows that the bumiputera group remains over-represented in the poor and vulnerable groups,” says the report.

Nevertheless, the report praised Malaysia, which it says has in many ways, become a success story in shared prosperity.

“In the past 40 years, Malaysia drew on its natural resources to nearly eradicate absolute poverty, from 49 percent in 1970 to 1 percent in 2014.

“The number of Malaysians vulnerable to falling into absolute poverty has also declined in this period,” says the report.