KUALA LUMPUR, June 4 — Malaysians requiring just US$485,000 (RM2.2 million) in net worth to count as the richest 1 per cent in the country was not necessarily an unfavourable situation, economists said.
Universiti Malaya honorary professor in the faculty of business and economics Nazari Ismail told Malay Mail said it could be interpreted as the country having a lower cost of living compared to others with higher thresholds, such as Singapore where it took a net worth of US$3.5 million to be in the same percentile.
“In those countries, for example, houses are costly. You have to have lots of money to live in a bungalow.
“In Malaysia, even a school teacher can afford to live in a bungalow if you live a bit further from big cities,” he said, using the term bungalow typically used here for detached homes or to describe large houses.
In comparison, a school teacher in Singapore would only be able to afford a small apartment, he added.
Another reason for the higher Singaporean threshold was that the island-state welcomed wealthy elites from all over the world to buy property and reside there, he said.
“As a result, property prices in Singapore are beyond the reach of ordinary Singaporeans,” he said.
This has led to ordinary Singaporeans being priced out of comfortable and spacious housing, he said.
“So, there is no need to rush to make our country as wealthy as Singapore or Switzerland. It will only result in a higher cost of living for most ordinary people,” he said.
Financial Alliance's economist and investment director Sani Hamid, who was based in Singapore, expressed similar views.
A higher top 1 per cent threshold was one of the results of a higher gross domestic product (GDP) per capita, he explained.
For example, the GDP per capita of Singapore is around US$70,000 while that of Malaysia is around US$11,000, he said.
“So, from that starting point you already know that the net worth of individuals in Singapore will definitely be much higher than in Malaysia,” he said, adding that it was reflected in the 1 per cent threshold.
There was little point in comparing between the top 1 per cent of different countries, he said.
“I think anybody would agree that being the top 1 per cent earner in any country at any level of economic growth would be quite good,” he said.
Apart from that, one should also consider other less tangible indicators such as happiness and stress, he said.
On Tuesday, property consultancy Knight Frank’s latest edition of its The Wealth Report (Wealth Sizing Model) revealed that Malaysians needed just US$485,000 in net wealth to be categorised as part of the country’s richest 1 per cent.