When it comes to wealth and financial health, Singapore and Malaysia tell two very different stories.
While one country climbs the global ranks, the other struggles to keep up.
The Allianz Global Wealth Report 2024 shines a spotlight on this divide, highlighting just how far apart the neighbouring countries are when it comes to net financial assets.
Here’s how their financial paths diverge:
Singapore’s winning formula
Singapore ranks 4th globally with net financial assets per person at €171,930 (about RM800,000). What’s driving this success? Let’s break it down:
- Impressive growth: In 2023, Singapore saw a 5.8% increase in gross financial assets—almost double the growth rate from the previous year.
- Key drivers:
- Rising investments in securities
- Increased bank deposits
- Smart debt management: Over the last decade, Singaporeans have reduced their debt-to-financial assets ratio to 54.1% as of the end of 2023, reported The Straits Times.
Malaysia’s financial struggles
Malaysia is ranked 40th, with net financial assets per person at only €9,430 (around RM44,000). What’s holding Malaysia back? Here are some key factors:
- Lower wages
- Smaller savings rates
- High reliance on debt
- Rising cost of living and inflation
The middle-income group is particularly affected, relying heavily on personal and housing loans. Despite rising global interest rates encouraging cautious borrowing, household debt remains a significant hurdle.
Lessons from Singapore
Singapore’s strategy could serve as a guide for Malaysia (and other countries) looking to boost their financial health. Here’s what sets Singapore apart:
- Focus on investments: Investing in securities and growing bank deposits has proven effective.
- Debt reduction: Managing debt ratios effectively to maintain financial stability.
- Long-term planning: Prioritising sustainable financial growth over quick gains.
As the Allianz report shows, the wealth gap between Singapore and Malaysia isn’t just a statistic; it’s a story of different choices, strategies, and outcomes. To close this gap, Malaysia might need to rethink its financial playbook and focus on long-term growth and stability.
