Let me get this out of the way. I live in Ampang in Selangor, at the heart of Klang Valley. I was born and bred there, and my wife is from Sarawak. Growing up in the city, I didn’t have much exposure to non-city living, until I went to Bario in Sarawak. In a small town that is inhabited by the Kelabits, I truly experienced what it feels like to live.

What I mean by that is to just simply live with nature. We lived in a homestay called Bala Metu Homestay on top of a small hill overlooking the mountains of Bario. Let me tell you, it was the first time that I had seen clouds ‘hang’ over the mountains. The air … just wow … no smoke, no smog, just pure unfiltered air, that makes you feel like the freshest leaf in the most delightful morning sun.

It was here that we sampled Mr. Bala’s pineapples that he grew in his backyard. Sweet isn’t enough to describe Bario pineapples. If I were to give it an accurate description, it’s like these pineapples were grown on honey solutions and they have absorbed all of them into their fruits. He told us that his pineapples are in such high demand that he brings them over to Miri to his friends, and they book from him in advance even before the harvest season. His wife, Mrs. Bala even produces jam from them! To top it off, he even plants his coffee. It is branded as Hill House Coffee.

During the rest of my stay there, I was so glad to get to meet Mr. Paul and Mr. Adib as they brought us for both a mountain and jungle hike. Mr. Paul is an avid photographer and videographer, and he filmed us as he was going up and even took a drone shot of all of us. By the time we were down the mountain, he was done editing the video and he airdropped us the video. He edits videos and has a YouTube channel here.

Meanwhile, Mr Adib is a guide that will take you everywhere in Bario and across Sarawak too. He told us that he is also a farmer and tends to his land when he’s not bringing people on guided hikes. What’s interesting is that he told us that he was the only one out of his classmates who graduated from Bario who came back to work the land and find a living in Bario.

And you know what, all of this got me thinking. What are the things that drive the rural economies in Malaysia? One thing was obvious during my time in Bario. It was the kind of living I wanted for myself and my family. But there were just no jobs for me there or rather any rural areas in Malaysia. Many of the people in rural areas have moved to the big cities in search of jobs and opportunities. It’s not anyone’s fault this happens but I do feel like we need to rethink the urban-rural dynamics in Malaysia.

Being an economist and investment analyst, I want to do my part in researching the economics of rural development in Malaysia to provide everyone with a comprehensive look at the current situation and possibly also suggest what we can do in our parts to develop Malaysia more evenly.

Rural-to-urban migration has continued to increase over the years in Malaysia

Let’s start with the overall situation in Malaysia. Back in 1970, only about 28.4% of Malaysians live in cities. Since then, that number has increased exponentially to 75.1% in 2020. This means 3 out of 4 Malaysians now live in cities in just 50 years. For a scale of this, there were only 3 million urban dwellers in 1970, and that number has grown by 8 times to 24.4 million in 2020.

In Malaysia, these states have the highest urbanization rates:

1. Kuala Lumpur & Putrajaya: 100%
2. Selangor: 95.8%
3. Penang: 92.5%
4. Malacca: 90.9%

Meanwhile, these states are the ones with the lowest urbanization rates:

1. Kelantan: 44.1%
2. Pahang: 52.8%
3. Perlis: 53.8%

Here’s the definitive literature on this. Most economists have agreed that cities are the best places to grow an economy. The logic is this:

1. Cities encourage more people to come together and collaborate. With more people collaborating, newer and more innovative ideas will be developed and commercialized.
2. Most business infrastructures (offices, factories, transportation, logistics, healthcare, education) are primarily located in cities, where businesses can utilize more of these resources.
3. Hence, more businesses congregating together in cities, have more job opportunities.

It can be argued that almost all economies in the world have cities to power their economies and it has proven to be a tried-and-tested economic development model. However, as the world changes, this doesn’t have to be the case anymore. If anything, this developmental model has led to a deep urban and rural divide that could threaten the politics of the country.

The gap between urban and rural incomes has widened considerably

In 2002, an urban household earned about RM3,652 compared to a rural household’s income of RM1,729, translating into an urban-rural gap of RM1,923. Fast forward to 2022, that gap has grown to RM4,281, with urban and rural households earning incomes of RM9,428 and RM5,147 respectively.

While rural income growth has been quicker at an average of 5.6% yearly (urban: 4.9%) in the past 20 years, urban income is still 83.2% higher than rural income. This spells trouble for development in the rural areas. Younger generations in rural areas are more inclined to look for jobs in urban cities, with fewer and fewer people left in rural areas.

By states, Johor, Putrajaya and Selangor recorded the highest increase in migrants from other states in Malaysia, while Pahang, Sabah, and Terengganu sent the most migrants to other states. Kuala Lumpur sent out the most people but most of that was received by Selangor, as more people in Klang Valley are opting to live in properties outside of the city centre of KL.

It is no coincidence that the states of Johor and Selangor have the highest number of industries and jobs in Malaysia. In terms of gross domestic product (GDP), Selangor ranks first (25.5% of Malaysia’s GDP) followed by Johor (9.4%) at third. Meanwhile, the states of Sabah (5.4%), Pahang (4.1%), and Terengganu (2.5) rank quite low on the list. It isn’t a surprise then that Johor (RM8,517) and Selangor (RM12,233) boast the highest household income in Malaysia, while Sabah (RM6,171), Pahang (RM5,777) and Terengganu (RM7,248) are relatively lower.

Conclusion

This is just a high-level overview of the key numbers that describe the rural and urban migration patterns in Malaysia. We have seen that the urbanization rate has significantly increased in Malaysia over the years, and is expected to continue doing so. Many people from rural and even urban areas in less wealthy states are leaving for more urbanized states to capture the job opportunities there.