Najib: Growing gap between rich and poor a pressing issue

He noted that this was not just the battle cry of the "Occupy Wall Street" protesters, as many research institutions had pointed to the corrosive effect of structural inequality.

"A little inequality encourages individuals to work hard and innovate. But an unequal system creates hollow economies, where wealth and opportunity are kept for the few, at the expense of the many," he said in his keynote address at the prestigious Nikkei 20th International Conference on the Future of Asia "Rising Asia: Messages for the Next 20 Years" here.

"In my country, for example, where income inequality remains a concern, we are working to find the right balance between affirmative action and individual opportunity," he told the almost 700 delegates comprising political leaders, economists and captains of industries attending.

Najib, who is also Finance Minister, stressed that excessive inequality has serious and avoidable effects on health, education and life outcomes.

"When soaring Gross Domestic Product outstrips living standards, people feel they do not have a stake in their nation's economic success. That in turn undermines social progress and threatens stability," he said.

He said with rapid growth at a time of globalisation and technological change, emerging Asia is particularly exposed to widening inequality.

"Over the past two decades, eight out of 10 Asians found themselves living in areas where income inequality is rising, not falling. Whilst inequality has narrowed in emerging regions such as Latin America, it has widened in Asia," he added.

The Asian Development Bank has pointed out that, had inequality stayed static, an extra 240 million people would have been lifted out of poverty.

"So, behind the headline growth figures, it is clear that Asia's future success depends on broader and more diverse economic development.

"For Asia to truly prosper, we must give our citizens greater equity, as well as greater equality. Again, this will not be easy. Even the most successful economies have struggled to tackle inequality.

"There is no straightforward solution. But there are a number of things we can do," said Najib.

Among others, he said, economies must invest more in public goods such as education and health, increase access to quality education, and narrow the divide between urban and rural health outcomes.

"It means strengthening social safety nets, and deploying targeted subsidies that support the poor at the point of need. This is alongside encouraging the private sector to do its part, with corporations providing labour with flexibility, training and support," he added.

According to Najib, there is also a need to build more balanced economies, with higher quality jobs, and more even growth spread across sectors, with a lasting commitment to fight corruption.

"Tackling corruption is not the work of a year, or even a decade, but it can and must be done. Government procurement should be reformed to introduce open bidding, bringing transparency to a process often blighted by graft.