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Many things have changed since 1963. From a British colony to an independent nation, Malaysia has charted its own path into the modern world with its own unique identity.
Since then, the personal finance landscape for Malaysians, too, has changed. Here are six areas that have shifted since the swinging ’60s, using data drawn from, among others, the department of statistics Malaysia (DOSM), the Inland Revenue Board, and the World Bank.
1. Household income
It is always fascinating to see how much Malaysians’ salary has grown throughout the years.
Data on this in the 1960s is scarce, so we are relying on data by British economist Anthony B Atkinson, who estimated that in 1963, Malaysian households earned a monthly income of RM386, which translates to RM4,632 per year.
As of last year, that monthly number was RM9,428 (or an annual income of RM113,136), which implies a 4.2% growth rate annually.
2. Spending
“Oh look, a new coffee place!” Words that would not have crossed the minds of most Malaysians in the 1960s.
Research platform MacroTrends estimated that Malaysians in the ’60s would have spent RM2,874 per year, or RM240 per month. Today, they spend RM2,568 per month, suggesting growth of about 4% every year since 1963.
It could also be inferred that, as of last year, Malaysians are spending less of the overall percentage of their income (27%) compared with 1963 (62%).
3. Poverty rate
In the 1960s, Malaysia recorded a Human Development Index (HDI) of 0.33, which means the country was in a stage of low human development. It isn’t surprising, then, that the poverty rate was around 40% in 1957, rising to about 50% in 1970.
Malaysia has since embarked on an aggressive programme to uplift most of its citizens from poverty. Last year, DOSM reported that the poverty rate was at 6.2% – a significant decline.
While Malaysians are experiencing higher costs of living owing to increased global food prices, we are most certainly better off now: Malaysia has a HDI score of 0.81, which indicates “very high human development”.
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4. Loan interest rate
Loan interest rates rose in 1969 from 9.1% and to as high as an astonishing 12.6% in 1985. Can you imagine paying those kinds of rates on your home loans back in the day?
Fortunately, interest rates have since declined to 4.1% as of last year. Loans are now easier to obtain as banks are more well-equipped to process paperwork, while personal income has also risen considerably.
5. Savings
With the savings rate having increased from 20.8% in 1963 to 30.8% in 2022, Malaysians are certainly saving more nowadays. This is consistent with point No. 2, where Malaysians’ spending is proportionate to their income.
Compared with 1963, you will likely have more money stored up for emergencies, and be able to pass on more of your wealth to the next generation.
6. Tax rate
In 1963, with a yearly income of RM4,632, Malaysians would likely have paid taxes to the tune of RM299, which implies a tax rate of 6.5%.
You would have been charged 6% on your first RM2,500 and 7% on the remaining RM2,132.
Last year, you would have paid RM12,684 – or a 11.2% tax rate – on a yearly income of RM113,136. Those in the RM70,000-RM100,000 income bracket would have paid RM5,700 in taxes, at a rate of 19%.
While nobody likes to pay taxes, the good news is that the government channels most of this money to provide Malaysians with education, transportation and healthcare – services that, back in those days, would have been scarce.
This article was written by Su-Wei Ho for MyPF. To simplify and grow your personal finances, follow MyPF on Facebook and Instagram.
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