Concern over rising inequality in Sabah

This article first appeared in The Edge Financial Daily, on September 6, 2018.

One of our B40 respondents in Lingan. Her husband is bedridden and she is the only breadwinner of the family.

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After the peaceful 14th general election (GE14), all eyes are on the reformation agenda of the newly formed Pakatan Harapan alliance and its ally in Sabah. The 15-year rule of the Barisan Nasional (BN) government in the eastern state saw little progress in terms of road conditions and access to basic services in rural areas.

According to the president of Parti Solidariti Tanah Airku, Datuk Dr Jeffrey Kitingan, Sabah is lagging behind the Klang Valley by at least 40 years in terms of its infrastructure and development. A month before GE14, then chief minister Tan Sri Musa Aman rubbished such criticisms as “lies”. Such denial proved costly — after much drama and a near constitutional crisis, Musa was unseated by Datuk Seri Mohd Shafie Apdal of Parti Warisan Sabah.

It is true that under BN, Sabah’s economy grew steadily in the past 15 years to become the fifth-biggest contributor to the Malaysian economy. The state’s revenue increased manifold during the same period.

It is also a fact that extreme poverty fell from 19.7% in 2009 to 2.9% in 2016. The government’s poverty eradication programme lifted another 30,000 people out of poverty in the first half of 2017. These achievements, while impressive, are puzzling when it comes to Sabah’s record in reducing inequality.  

Recent trends in Income Gini coefficient published by the Department of Statistics highlighted significant regional disparity.

The state in eastern Malaysia still lag behind their counterparts in the peninsula in terms of poverty statistics and inequality reduction. While the Gini coefficient for Malaysia dropped to 0.399 in 2016, it went up in Sabah to 0.402, making it the poorest and most unequal of all provinces in the country.

The growing sense of economic disparity might have affected the outcome of GE14. But what did Sabah’s subaltern rural population think of the inequality?

Sabah is home to many of Malaysia’s millionaires and wealthy timber tycoons. Driving around Kota Kinabalu, there are little signs of destitution and poverty. So, we went to rural areas further from Kota Kinabalu and spoke to Sabahans a month before the polls.

The respondents were asked to share their perceptions of the extent of income inequality. When asked about the problems of income gap between the rich and the poor in Sabah, most of them (72%) insisted that they considered them to be serious.

Moreover, only 74% believed that the gap was widening or remained unchanged over the past 10 years.

Why do rural Sabahans perceive the rich-poor gap to be widening? Based on our preliminary research, we can share some insights into this growing sense of economic injustice.

For decades, income and wealth in the state were concentrated in Kota Kinabalu. In the past years, heavy investments in infrastructure have boosted living standard in the cities and urban centres. Thanks to increased private investments and expansion of the tourism industry, Kota Kinabalu’s economy is booming.

The investors from Peninsular Malaysia and overseas are moving into the city’s property market. The areas surrounding the capital city also benefit from an urban-biased growth. But this pattern of economic growth have not stimulated local economies in the periphery.

Over half of the villagers interviewed in faraway locations such as Sipitang and Kota Marudu perceived income inequality to be a serious problem. While Kota Marudu is still predominantly agricultural and relies on natural resources, Sipitang’s economy has benefitted from large investments by Petroliam Nasional Bhd and a vibrant timber industry. The respondents agreed that compared with 10 years ago, connectivity has improved in Sabah. But greater contact with prosperous urban centres have also heightened the sense of economic disparity. The access to Internet has raised awareness of the divide in living standards within Sabah, particularly between kampungs and cities.

With more Sabahans from previously isolated villages visiting Kota Kinabalu, the perception of absolute distance in income and wealth is growing.

Another reason for rising concern over inequality is the lack of growth in income of the poor, who largely rely on the labour market.

Sabah’s economy is expected to match the national average gross domestic product growth rate in the coming years.

The government also has a long-term strategic development plan — Sabah LEAP 2016-2035 — which aims to achieve zero poverty by 2035. But reducing extreme poverty is not enough to arrest the widening wealth gap in the state. The Warisan-Pakatan alliance would have to address three issues in their fight against inequality.

In the past, much of the growth and developmental spending centred around Kota Kinabalu and a handful of major cities. Over RM2 billion received from the federal government under the ninth, 10th and 11th Malaysia Plans was channelled to Sabah Development Corridor projects. It is time to ask how such projects are benefitting the poor in rural areas where access to clean water supply and electricity remains a major issue.

The appointment of Mohd Shafie as chief minister of Sabah is therefore a welcome change. One of the key points of the Warisan menifesto, “Pilihan Rakyat Untuk Rakyat”, is to fight and empower the basic rights of the people of Sabah.

A former rural and regional development minister, Mohd Shafie is well aware of the extent of inequality and poverty in the state.

In the post-Umno-BN era, ordinary Sabahans would therefore hope that the tide of economic growth during the Warisan-Pakatan rule will no longer leave them behind.

M Niaz Asadullah is Professor of Development Economics at the University of Malaya. Jeron Joseph, a Sabahan, is a research student at the University of Malaya. The write-up is based on an ongoing research study on poverty and inequality in Sabah.