MALAYSIA must ensure that economic growth translates into higher wages, improved productivity and stronger household incomes by shifting towards a more productive and value-driven economy.
Founder of 27 Group Girish Mavath Ramachandran warned that while Malaysia recorded gross domestic product (GDP) growth of 5.2 per cent in 2025 and 5.4 per cent in the first quarter of 2026, household prosperity has not increased at the same pace, with the median monthly wage standing at RM2,864 in mid-2025.
He argued that GDP expansion should not be viewed as an objective on its own, but as a tool to improve living standards through a "productive economy" built on stronger infrastructure, manufacturing, agriculture, utilities, logistics, finance, education and workforce development.
Girish cautioned that excessive reliance on sectors driven by fees, commissions and financial transactions could create the appearance of economic growth without delivering meaningful increases in productivity or incomes.
Using the housing market as an example, it noted that the sale of an existing property contributes to GDP through commissions, legal charges, banking fees and taxes, but does not increase the country’s productive capacity or housing supply.
He cited that when financial activity grows faster than productive investment, economic indicators may improve while household incomes remain under pressure.
His analysis also compared Malaysia’s economic challenges with those faced by neighbouring Indonesia and Singapore, highlighting the difficulty of ensuring that national growth benefits ordinary citizens.
For Indonesia, the report noted that Southeast Asia’s largest economy expanded 5.61 per cent in the first quarter of 2026, its strongest quarterly performance in more than three years.
However, he found that much of the growth was supported by a 21.81 per cent increase in government expenditure, while trade reduced overall GDP growth by 1.2 percentage points.
Girish’s analysis warned that government spending could support short-term expansion but could not serve as the main driver of long-term economic prosperity.
Citing World Bank data, it noted that Indonesia created around 1.9 million jobs between August 2024 and August 2025, reducing unemployment to 4.9 per cent.
However, nearly half of the new jobs were concentrated in lower-productivity sectors such as agriculture and food services, while employment growth in higher-skilled industries remained largely stagnant.
Girish said: “Indonesia’s rising underemployment rate, which reached 32.7 per cent, suggesting that employment numbers alone do not fully reflect the quality of jobs created.
"The lesson: the headline number tells you how fast. It does not tell you what kind."
Turning to Malaysia, he examined the distribution of the country’s RM2.03 trillion economy in 2025.
Workers received 33.9 per cent of national income through wages and employment benefits, amounting to approximately RM688 billion, while business owners and shareholders received about 62 per cent, or RM1.26 trillion. The Government accounted for the remaining 4.1 per cent through net taxes.
Although workers’ share improved slightly from 33.6 per cent a year earlier, supported by wage increases, the RM1,700 minimum wage and civil service pay reforms, the analysis said Malaysia remained below the 40 per cent labour income target under the 13th Malaysia Plan.
Attempts to close the gap could channel an additional RM124 billion annually into workers’ incomes, equivalent to around RM7,300 per worker each year or more than RM600 monthly.
"RM600 a month is the difference between a household that borrows and a household that saves," Girish says, highlighting Malaysia’s household debt burden, which stood at RM1.73 trillion, equivalent to 84.4 per cent of GDP
He opined that high debt commitments could limit the benefits of economic growth, saying: “Many households were already allocating around one-third of their monthly income towards debt repayments, reducing their ability to save and absorb rising living costs.
He added that Malaysia’s economic success should no longer be measured solely by GDP growth, but by whether expansion creates higher-paying jobs, strengthens productivity and improves the financial wellbeing of households. - July 31, 2026
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