KUALA LUMPUR, Feb. 5, 2025—Malaysia has made impressive strides in economic growth and poverty reduction over the past few decades, setting the stage for its transition to high-income nation status between 2028 and 2030. A new joint report between the World Bank and the Ministry of Economy, A Fresh Take on Reducing Inequality and Enhancing Mobility in Malaysia [Download] highlights the importance of building on this progress to ensure that everyone benefits. Strengthening access to quality education, healthcare, and employment opportunities will be key to ensuring that economic prosperity is shared by all.
“To address inequality, we have to adopt a holistic assessment, early intervention on opportunity gaps, and commit to creating a dynamic labour market,” said Dato’ Seri Rafizi Ramli, Malaysia’s Minister of Economy.
Ensuring equitable growth remains a priority for many Malaysians, according to a survey conducted for this report. Although Malaysia has reduced poverty and improved living standards, inequality remains higher than in many high-income countries, including those that became high-income countries in the last fifteen years. Opportunities start to diverge early in life, and the gap widens over time. More than half of people who start in the bottom 20 percent of income distribution tend to remain there indicating limited upward mobility.
“Malaysia has already done very well in terms of economic growth and poverty reduction. Now is the opportunity to make the economy more inclusive in order to achieve both economic and human development objectives,” said Zafer Mustafaoğlu, World Bank Country Director for the Philippines, Malaysia and Brunei.
The report suggests five policy areas for Malaysia to consider in order to reduce inequality. These include: i) enhancing opportunities by boosting productivity, prioritizing quality education and skills training, and investing in broad-based human capital development, especially for young children; ii) strengthening social protection through increased spending, improved targeting for efficiency, and reduced fragmentation; iii) financing inclusive investments by expanding health and education investments, creating more fiscal space for equity-enhancing initiatives, and communicating the benefits of equitable policies; iv) addressing spatial inequalities by implementing place-sensitive policies to reduce regional disparities; and v) monitoring inequality using a range of metrics, including systematic tracking of both inequality and mobility.
