More efficient, equitable distribution of income needed

PETALING JAYA: Diverging trends in the distribution of incomes, a practice embedded in societies throughout time, have exacerbated in recent decades, opines Malayan Banking Bhd (Maybank) group president and chief executive officer Datuk Abdul Farid Alias.

“I don’t have the answer, but we need to explore how this allocation can be done better. Case in point, we produce enough food for the world’s population, but how can we distribute it more efficiently and equitably?

“And furthermore, in our efforts to maximise production and profit, how do we ensure we do not produce too much that will only go to waste?” he said in his closing remarks at Invest Malaysia 2020 yesterday.

Acknowledging that the free market played an important role in allocating factors of production as it allowed efficient distribution of resources, he said while the choices one needs to take were human decisions, technology could be a great enabler. “But waste, whether it is resources or people-hours, is a bottom-line issue. We do talk a lot about sustainability, and some as if it were a new idea. We’ve taken to it so completely that we have set up structures and strategies for applying the principles of sustainability to our businesses,” he said.

According to him, a more equitable society and the reduction of waste would bring immediate benefits to profitability. Corporates, he said, should not only be measured for their returns on financial capital, but also human, social and natural capital. “I am not ashamed of our corporate leaders’ ambitions to maximise profits. It is consistent with the human psyche, that human needs and desires are unlimited. But our estimation of companies needs to be properly filtered by the ultimate desire that we should value those businesses and leaders who do it responsibly.

“For instance, should corporates be measured only on profits? Or should they also be measured on their ability to generate sustainable and responsible profits?”

Added Abdul Farid, if sustainability strategies were something that the corporate must do to meet the demands of investors who measure corporate behaviour, that is to “tick a box”, then the results will be mediocre at best.

“However, if it is something we want to do, to fulfil our purpose as community-builders and good citizens, in a world where inequalities are rising and societies are dividing, then we can hope for greater success,” he said.

He said Malaysia and Asean have made tremendous progress towards a sustainable future. This, he added, has benefitted the societies at large. However, the notion of the rising tide lifting all boats is only partially true.

“The old mantra of stockholders-first is evolving to the new desire to put stakeholders-first. That simple, two-letter spelling change makes us think more broadly about wealth-creation. However, words are not actions, and more equitable allocation of our nation’s wealth is still a massive challenge,” he posited.

Themed “Economic Recovery: Policies and Opportunities”, the event was co-organised by Bursa Malaysia and Maybank.

“Should corporates be measured only on profits? Or should they also be measured on their ability to generate sustainable profits?” Datuk Abdul Farid Alias