Malaysia's income inequality has measurably declined, with the Gini coefficient improving to 0.390 in 2024 from 0.404 in 2022, according to the Household Income and Expenditure Survey released by the government.
The improvement suggests that economic recovery from the pandemic has distributed gains more broadly than the initial shock, which disproportionately affected low-income and informal sector workers. But regional, ethnic, and urban-rural disparities remain significant.
Deputy Economy Minister Datuk Mohd Shahar Abdullah told reporters that the government employs multiple analytical tools beyond the Gini coefficient to assess inequality comprehensively and target policy interventions.
The Theil Index declined to 0.287 in 2024 from 0.303 in 2022, measuring income distribution with sensitivity to transfers among different population segments. The government also tracks the Atkinson Index, percentile dispersion ratios comparing the top 10% to bottom 10%, and the Palma ratio examining the top 10% relative to the bottom 40%.
These metrics allow evidence-based policymaking that accounts for ethnicity, geography, and urban-rural differences. Malaysia's inequality is not uniform—Peninsular Malaysia has lower Gini coefficients than Sabah and Sarawak, and Bumiputera households have lower median incomes than Chinese and Indian households.
The improved Gini coefficient reflects several policy interventions: minimum wage increases, expanded targeted subsidies for lower-income groups, and pandemic relief programs that continued into 2023 and 2024. The government raised the minimum wage to RM 1,500 monthly in 2023 and implemented a progressive electricity tariff structure.
But economists caution that Gini improvement from a 2022 base—when pandemic disruptions were still acute—may overstate structural progress. The question is whether inequality continues declining during normal economic conditions or whether the improvement reflects temporary policy interventions.
Prime Minister Anwar Ibrahim has made inclusive growth a rhetorical priority, arguing at the Malaysia Economic Forum 2026 that GDP statistics mean nothing if citizens don't experience improved living standards. The Gini coefficient data provides some evidence that policy matches rhetoric.
Regional comparisons are instructive. Thailand's Gini coefficient is approximately 0.435, significantly higher than Malaysia. Singapore reports around 0.458 before government transfers and 0.398 after, reflecting the city-state's redistribution through public housing and healthcare. Philippines stands at approximately 0.427. Indonesia is around 0.381.
Vietnam has seen Gini coefficients rise from 0.35 in the early 2000s to approximately 0.40 currently, as rapid growth generated wealth concentration faster than redistribution mechanisms could offset. China's Gini exceeds 0.45, among the highest in Asia.
The comparison suggests that Malaysia's inequality levels are middling for Southeast Asia—better than Thailand and Philippines, worse than Indonesia and historical Vietnam, similar to Singapore after transfers.
The policy challenge is whether Malaysia can continue improvement while maintaining growth. Redistribution requires fiscal capacity, which depends on tax collection and economic expansion. Corruption and leakage reduce the efficiency of spending, meaning that money allocated to targeted programs doesn't reach intended beneficiaries.
Lim Wei Jie, an economist at Universiti Malaya in Kuala Lumpur, noted that Gini improvement is "encouraging but must be sustained over years to reflect structural change rather than temporary factors."
Ten countries, 700 million people, one region—and for Malaysia, data that suggests growth is becoming slightly more equitable, with the emphasis on "slightly."
