Volume 5 / June 2018

The Colour of Inequality: Ethnicity, Class,

Income and Wealth in Malaysia
Mohd Zul Alwi bin Mat Adam

Title : The Colour of Inequality: Ethnicity, Class, Income and Wealth

in Malaysia
Author : Muhamed Abdul Khalid (2004)
Publisher : Kuala Lumpur, Malaysia, MPH Publishing
No. pages : 249
Price : RM40.00
ISBN Publication : 9789674152147

Does anyone recall the heart-breaking While t he many e c o no m i c

scene of William Defoe as Sgt Elias achievements seem to be very positive,
missing the helicopter rescue while we can see their direct impact. But one
running away from the battlefield also notices the divergence of the result
in Vietnam in the movie Platoon? Or in which the inequality also widens.
maybe the opening scene from the So, these are the overwhelming issues
movie Dunkirk? The scenes reflect that need to be discussed further as
exactly what I felt after reading the presented in the book.
book The Colour of Inequality written
by Dr Muhammed Abdul Khalid. Chapters 1 and 2 set the foundation
to our comprehension of the inequality
Someone is missing the boat. That is issue, which is the history of why it
the theme of the book. happened. At first, I was astonished
to read how eloquently the author
This book is about economic
put everything in pieces, not just
inequality. Malaysia has progressed a lot
the numbers but the background to
since the early days of its independence
the issue. The immigrant mindset
in 1957, and to date has overcome
of temporary living for the Chinese
many challenges in the transformation
and Indians, and largely the Chinese,
towards becoming a developing nation.
influenced the accumulation of wealth
Malaysia has made a lot of progress
by ethnicity. This, while the Bumiputera
in the shift from an agriculture-
settled comfortably on their own land
based economy, then to an industrial
felt no pressure to accumulate wealth,
economy and later to a service-based
having the “having enough” mindset or
economy. The question is, how has all
“kais pagi makan pagi, kais petang makan
this benefited the people? Some might
petang” mindset. While the immigrants
enjoy the fruits, but the majority have
were accumulating wealth to bring
missed the party.

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back to their original homeland, their an Indian has 1296 times the amount of
next generation did not share the same the Malay. Although it is a known fact,
goals. When they were absorbed to the numbers are indeed worrying. 72%
become citizens of Persekutuan Tanah of those who have no financial assets
Melayu and Malaysia later on, they are Bumiputeras, followed 21% Chinese
were already ahead in terms of wealth. and 7% Indians.

This is very important to understand However, within ethnicities, the

why inequality occurred in the early disparity continues. It is shown that
days and as to determining what to do those who have zero financial assets are
next. The New Economic Policy was 66% Indians, 64% Bumiputeras and 56%
introduced to close the inequality gap. Chinese. The numbers show that the
Although it was quite impactful, it still majority of Malaysians have no savings,
failed to close the gap. no investment assets, and no financial
assets. It is within ethnicities that the
Another point that needs to be wealth is unequal, the rich minority
highlighted is the connection between having most of the wealth while the
the usage of income and wealth poor majority lack it.
inequality. As the book clearly explains,
wealth is transferable while income is Chapter 4 tries to find the answer
not. And wealth has a compounding as to why the gap occurs in a more
effect. Second, ownership of wealth also comprehensive manner. Age, education
significantly contributes to income. level, and occupation are used to get a
Hence, the better parameter to use is clear picture. As for education levels and
wealth compared to income, and it occupation, it is very much expected
is proven valid because the wealth that the wealth is proportional. An
inequality Gini coefficient is higher than interesting fact lies where the age
income Gini coefficient. The author cohorts, where the disparity actually
supports the arguments with another starts very early at age 20, in which the
factor, which is leverage accessibility, ethnic Chinese possesses RM163,000
political and economic power, and which is on average 3.31 times more
socio-political related problems. than a Bumiputera. Since it is quite
impossible to attach such wealth at
Chapter 3 provides the details of the such a young age, inheritance might be
arguments in Chapter 2. The discussion the factor.
revolves around the depth of inequality,
by ethnicity. One of the glaring facts Another interesting fact is the
is the fact that the ethnic Chinese has education level comparison which
2135 times the amount of financial shows the same pattern, but the author
assets than their Malay counterpart, and suggests and proves with World Bank

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economic research that it might be Chapter 5 discusses the way forward

the hiring policy and unexplained and solutions to the issues. The review
premium of wages for the Chinese that of the current existing policies was done
contributed to that result. to study the impact of the inequality,
both between classes and ethnicity.
The author then discusses the reason The strongest factors that encourage
why some existing government policies the inequality were identified as tax
are unable to close the gap. While the structure, education policy, and asset
NEP somehow achieved some success prices.
in improving Bumiputera wealth
and well-being, the implementation The tax structure argued to favour
was somewhat of a failure. The the rich more than the poor by the
author provides interviews with the means of the relaxation of the Real
Implementation Coordination Unit (ICU) Property Gains Tax (RPGT), zero cost
at the Performance Management and transfer for inheritance, and the ceiling
Delivery Unit (PEMANDU) where the limit for income tax brackets. I feel the
responses given were quite surprising. author opines that acquiring property
There was no initiative to combat the is seen as rich people accumulating
issue of the widening wealth gap issue wealth activities rather normal property
among Bumiputera as now the policy ownership. That is why he includes the
was not in place any more and could exemption of RPGT for the first time
be said to have been abandoned. For and between families as part of the
the purpose of clarification, PEMANDU argument.
ceased to exist with the formation of
the new Malaysian government in May However, I do agree that zero

2018. inheritance cost and capital gains tax

do give advantages to the rich and
This failure however is further contribute to the inequality. However,
amplified by a few other factors such things should not only be assessed from
as the weak pressure groups of political one point of view in order to plan for a
parties. The author highlights that these sustainable fiscal policy for the nation.
political-based parties championing the Perhaps there are reasons why it was
rights of the Malays had no solid plan decided this way before.
and strategy on how to tackle the issues.
Another factor is the implementation Asset prices show no sign of

failure at GLC level, as GLCs faced retreating, with the last 10 years

the conflict in terms of managing showing a very sharp rise in the

with absolute corporate governance or property market. Homes are becoming

having Bumiputera friendly policies in unaffordable to many Malaysians, thus

place. favouring the rich and marginalising

the poor even more.

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Another factor is the education faceted approach comprises institutional

policy. With the abolishment of the reforms, easing asset acquisition for the
quota system and the implementation of bottom social structure, and addressing
meritocracy, the inequality will remain the massive concentration of wealth in
if not widen even more. Because many the richest Malaysians. Other key action
Bumiputera cannot afford the cost of items are tax reforms and educational
higher education, scholarships and policy change.
loans were introduced. But the issue to
This book must be read with a
be faced later on is that fresh graduates
prerequisite. You must have a clear
will have to pay debts, while their rich
heart and mind to accept the fact
friends have no debt, thus again not
that is presented with the passion to
solving the wealth inequality problem.
help further close the inequality gap.
Nothing is to be taken personally when
CONCLUSION any ethnic group is mentioned because
The book has successfully clarified if Malaysians are passionate enough to
the issue of inequality through solid help solve our nation’s problems, then
root cause analysis; in-depth factual Malaysians must do the necessary
comparison by classes and ethnicity; things regardless of background. As
proof of existing, underlying, and many Malaysians now have indicated
emerging problems; and suggestions hope through the new Malaysian
to solve the issues practically by using government, it is my view that the
a three-faceted approach. The three- future could be more promising and
the issue of inequality will be given
proper address.

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