Asia's Wealth Gap Is Among The Largest in The World - What Can Leaders Do To Fix It

10/28/2018 Asia's Wealth Gap Is Among The Largest In The World: What Can Leaders Do To Fix It?
6,095 viewsFeb 2, 2018, 02:36am
Asia's Wealth Gap Is

Among The Largest
In The World: What 0:14 / 0:49
Can Leaders Do To
Fix It?
Luke Kelly Forbes Staff
I'm a digital producer on the Asia channel, based
out of Hong Kong.
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In Vietnam, the country’s richest man earns more in a day

than the poorest person earns in a decade.
It’s almost as if Asia has forgotten what it did so well for

so many years, and is starting to look more like the growth
we see in Africa or Latin America
https://www.forbes.com/sites/ljkelly/2018/02/02/asias-wealth-gap-is-among-the-largest-in-the-world-what-can-leaders-do-to-fix-it/#63fe3538a436 1/13
A woman carries harvested mustard crop in a field in Palwal

district, Haryana, India, on Thursday, Jan 11, 2018. (Anindito
Mukherjee/Bloomberg)
In Vietnam, the country’s richest man earns

more in a day than the poorest person earns
in a decade. This was just one of the
many startling facts revealed by this year’s
Oxfam inequality report, “An Economy for
the 99%.” The report reflects a broader
trend across the region, which despite
seeing record growth over the past 20
years, has struggled to distribute new
wealth evenly.
Asia’s wealth gap
In recent decades, Asia has become a region

of extremes: China is now home to two
companies (Alibaba and Tencent) which,

between them, are valued at more than $1
trillion; while four of the world’s five most
expensive cities are in Asia, with Hong
Kong topping the list.
In contrast, a wealth gap, driven largely by

wage disparity and differing levels of access
to education, has opened up. “Highly
skilled workers with more education see
their incomes rise, while low-skilled
workers see their wages reduced,” noted a
recent report by the Asian Development
Bank. “This gap accounts for 25-35% of
income inequality in Asia.”
This trend is disproportionately felt by

women, who face discrimination and are
forced into lower-paying jobs than their
male counterparts. “Women’s wages across
Asia are between 70% and 90% of men’s,”
concluded the Oxfam report.
A 2016 IMF report noted that Asian nations

“will need to address inequality of
opportunities, in particular, the need to

broaden access to education, health, and
financial services, as well as tackle labor-
market duality and informality.”
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This trend is in marked contrast to previous

decades, where growth in Asia was more
universally beneficial. "What you had in the
'60s and '70s was Asia as a poster child for
equitable growth," says Max Lawson, one of
the chief authors of Oxfam’s inequality
report. "I think that’s stopped
happening. It’s almost as if Asia has
forgotten what it did so well for so many
years, and is starting to look more like the
growth we see in Africa or Latin America
, with high headline rates of growth,
but the amount trickling down to the

majority is rather small.”
The countries making a difference
There are a few Asian nations that have

historically managed to minimize the gap
between rich and poor. The Asian nation
ranked highest in Oxfam’s Commitment to
Reducing Inequality (CRI) Index, published
in 2016, was Japan. According to a
2016 Credit Suisse report, Japan has a
more equal wealth distribution than any
other major country, as reflected in a Gini
coefficient of 63%.
South Korea is also a leading light in this

regard, ranked as 4th on the CRI Index.
Recent years have seen an increase in
poverty, particularly among South Korea’s
elderly. President Moon Jae-in was elected
on a wave of outrage over this growing
inequality, and has begun work to reverse
the trend in the coming years. “The steps
that President Moon has taken to rapidly
increase the minimum wage and increase

taxation on the richest are
encouraging,” says Lawson.
Men fishing are silhouetted as the sun sets in the background in

South Korea. (SeongJoon Cho/Bloomberg)
More on Forbes: South Korea Election:

New Liberal President, Old Foreign Policy
Playbook
Developing economies, meanwhile, have

faced challenges of their own. Given the
global growth of automation, as well as
intense competition for investment from
neighboring nations, inequality is a
particularly thorny issue for those reliant
upon low-cost manufacturing. Among these
nations, Lawson highlights Vietnam and

Indonesia as two countries that have taken
steps to reduce the wealth gap.
Income disparity has been a persistent

problem in recent years for Indonesia,
which has the sixth-worst inequality in the
world, according to Oxfam. Indonesia’s four
richest men have more wealth than 100
million of the country's poorest people.
President Joko "Jokowi" Widodo has made
reducing inequality is a top priority for his
government. Corruption and squabbles
over land rights have plagued his
government’s efforts to reduce the wealth
gap, but his popularity remains high.
Vietnam faces similar issues, with rural

residents and ethnic minority groups
bearing most of the burden of inequality.
Although the country’s poverty rate has
declined rapidly (falling from 58% in 1993
to below 5% in 2015) there is still plenty to
be done for those who remain below the
poverty line. “We’ve worked very closely
with the government in Vietnam,” says

Lawson. “They are very worried about their
rapidly growing gap and are started to
really think about ways that they can close
that gap between rich and poor.”
Joko Widodo, Indonesia's president, speaks during an interview

in his office at Istana Merdeka, the president's official residence,
in Jakarta, Indonesia (Dimas Ardian/Bloomberg)
Despite the gloom, Lawson says there’s

reason to be optimistic, and that
governments, particularly when working
together, have the means to narrow the
wealth gaps within their own borders and
across the region. “If you look at tax to GDP
ratios for many Asian countries they’re very
low -- South Asian ones in particular -- so
the redistributive nature of government is

actually relatively weakened compared to
say Latin America or some parts of Africa.
For example, Indonesia is only collecting
12% of GDP as tax, whereas a country like
Senegal manages to collect 20%."
Preventing a race to the bottom
It isn’t enough for a handful of smaller

nations to bridge this gap if others are
allowing it to widen. Lawson stresses there
must be a collective effort to combat
inequality. Companies that attempt to pay a
living wage, for example, are often
competing against companies that don’t,
putting them at a distinct advantage from
the first step. Similarly, high levels of
corporation tax can drive companies away
from ethical nations and create a race to the
bottom in terms of taxation.
Workers labor on the construction of a highway in Indonesia.

(Dimas Ardian/Bloomberg)
“What we’re saying in the report is that

corporations shouldn’t be paying out
massive dividends until they can show that
everyone in their supply chain is getting a
living wage," Lawson explains. "We
shouldn’t have a situation where countries
and companies are able to reduce their
margins by employing slave labor.”
Some nations are keenly aware of this issue,

and have begun to pave the way toward
cooperation with the aim of greater equality
between neighbors. At the ASEAN World
Economic Forum in June 2016, for
example, Indonesia proposed an ASEAN-
wide minimum wage, with Cambodia and

Vietnam expressing their support for such
an idea.
Hope for the future
Preventing this “race to the bottom” is

critical to ensuring growth is spread as
evenly as possible. Threats such as
automation will undoubtedly present
challenges to developing nations, for
example. “You may have a negative trend
where the impact of automation won’t be to
eliminate jobs but to drive down wages
even lower in the short term as countries
try to out-compete the robots, which is a
deeply concerning trend,” says Lawson.
The only way in which developing nations

can stand against threats like these is to
work together, continuing the work that has
already been done to bridge the widening
wealth gap.
“There are governments that are doing the

right thing in every region of the world,”
says Lawson. “That stands to highlight

what’s not being done by others. Inequality
is effectively a policy choice, and if leaders
choose to they can really effectively narrow
the gap between rich and poor.”
More on Forbes: Asia's Five Most

Corrupt Countries
I'm a digital producer with Forbes Asia.

My work has appeared on DigitalRev and
Discovery Magazine. I'm also a host and
producer of '80 Days: An Exploration
Podcast', where each new episode explores
an obscure location around the world. I
love to talk tech, entrepreneurship ... MORE
Follow me on Twitter @thelukejkelly
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10/28/2018 Asia's Wealth Gap Is Among The Largest In The World: What Can Leaders Do To Fix It?

6,095 viewsFeb 2, 2018, 02:36am

Asia's Wealth Gap Is

In Vietnam, the country’s richest man earns more in a day

It’s almost as if Asia has forgotten what it did so well for

A woman carries harvested mustard crop in a field in Palwal

In Vietnam, the country’s richest man earns

Asia’s wealth gap

In recent decades, Asia has become a region

companies (Alibaba and Tencent) which,

In contrast, a wealth gap, driven largely by

This trend is disproportionately felt by

A 2016 IMF report noted that Asian nations

opportunities, in particular, the need to

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This trend is in marked contrast to previous

but the amount trickling down to the

The countries making a difference

There are a few Asian nations that have

South Korea is also a leading light in this

increase the minimum wage and increase

Men fishing are silhouetted as the sun sets in the background in

More on Forbes: South Korea Election:

Developing economies, meanwhile, have

nations, Lawson highlights Vietnam and

Income disparity has been a persistent

Vietnam faces similar issues, with rural

with the government in Vietnam,” says

Joko Widodo, Indonesia's president, speaks during an interview

Despite the gloom, Lawson says there’s

the redistributive nature of government is

Preventing a race to the bottom

It isn’t enough for a handful of smaller

Workers labor on the construction of a highway in Indonesia.

“What we’re saying in the report is that

Some nations are keenly aware of this issue,

wide minimum wage, with Cambodia and

Hope for the future

Preventing this “race to the bottom” is

The only way in which developing nations

“There are governments that are doing the

says Lawson. “That stands to highlight

More on Forbes: Asia's Five Most

I'm a digital producer with Forbes Asia.

Site Feedback Tips Corrections Reprints & Permissions Terms Privacy

82,565 viewsOct 15, 2018, 03:50pm

Grubhub's Sam Hall:

Here’s a scenario you may be familiar with.

It's almost dinner time, it's been a long day

You might also like