High Income Nation, Low Income Rakyat

My business mentor shared this article with me a week ago, which I find very intriguing.

"Malaysia: High Income Nation, but Low Income Rakyat" by Anas Alam Faizli
Link: http://blog.limkitsiang.com/2013/10/22/malaysia-high-income-nation-but-low-income-rakyat/#more-25515

Here are 3 excerpts which I find most compelling:

"...even if most of this nation’s income in year 2020 accrued to say, only 100 of the richest people in the country, we can achieve that $15,000 per capita target because it is grossly divided by the whole population..."

My take: Our government's vision of a high income nation may prosper few, but definitely not the majority. Are you positioning yourself in the correct financial quadrants in order get a piece of the wealth distribution? In my opinion, the self employed (including traders), business owners and investors are the ones who will stand to gain.

"...there is the grave issue of purchasing power. High income alone does not necessarily translate into better economic well-being and quality of life if that high income cannot purchase much. A simple analysis would show how a fresh graduate in 1980 could purchase more compared to today’s graduate. With an estimated pay of RM1,000 a graduate could afford an Opel Gemini costing RM12,400 or about 12 months of his salary and purchase a decent house, perhaps even in Taman Tun, costing at RM62,000 or 56 months of his salary. Today, a graduate can have a basic pay of RM2,500 which is only 2.5 times higher than a graduate in 1980. But a comparable Mazda 6 now costs RM178,000 or about 71 months of his salary and a decent house far outside Kuala Lumpur, say in Nilai, would cost RM350,000 or 140 months of his salary. The cost of living has spiraled viciously upwards and the purchasing power of the average salary man has slumped..."

My take: No matter how well they play around with statistics to come out with a deceiving number, we cannot run away from the impacts of true inflation in price of goods. When petrol and sugar price go up, everything else goes up except an employee's salary. When petrol price increases by 10%, the price of goods and services will go up by 20%, because if I were to be a goods and services provider, I will definitely make my customers pay for the 10% increase in cost of raw materials plus the 10% increase in my cost of living. Again, fixed-pay employees are the ones who will suffer the most.

"Earning RM10,000 a month on a household basis will already put you as the top 4 percent of Malaysian households, and essentially in the same group as even tycoons like Ananda Krishnan. 73 percent of households earn less than RM5,000, with an average of 2 income earners or workers per household. This alone shows how much disparity there is. Furthermore, it renders our $15,000 High Income Nation target achievable in form, yet void in spirit and substance."

My take: Are you earning RM10,000 a month now? If not, are you going to wait? Or are you going to do something?

"Rakyat didahulukan, pencapaian diutamakan." Really?