Why economic growth doesn't guarantee happiness in Malaysia

By Dalilawati Zainal

The 2024 Malaysia Happiness Index reveals a striking paradox. Terengganu tops the charts, Johor balances growth with wellbeing, while Kuala Lumpur, Selangor and Penang lag behind.

The findings challenge the belief that prosperity alone guarantees happiness and highlight why sustainability must be at the heart of Malaysia’s future development.

When the Department of Statistics released the 2024 Malaysia Happiness Index, the results startled many.

Terengganu, often viewed as traditional and less developed, emerged as the happiest state with a score of 8.64. Johor, Malaysia’s southern economic hub, followed closely at 8.08.

Meanwhile, the economic and cultural giants of Kuala Lumpur (7.22), Selangor (7.21) and Penang (7.19) languished at the bottom.

These findings expose a paradox – that material growth and urbanisation do not automatically deliver wellbeing.

For decades, Malaysia’s progress has been defined by gross domestic product (GDP) growth, industrialisation and infrastructure. While these remain essential, they fail to capture the lived reality of citizens.

The Happiness Index provides a broader lens, considering dimensions such as social bonds, leisure, culture, security and the environment.

The results suggest that wellbeing and ultimately sustainability depends on more than financial wealth. It is about whether development nurtures communities, protects the environment and ensures a balanced way of life.

When growth falls short on sustainability

Selangor and Kuala Lumpur highlight the risks of growth falling short on sustainability. Though they drive Malaysia’s GDP with advanced infrastructure and global links, residents face congestion, soaring housing costs, pollution and weakened community ties.

Urbanisation has outpaced liveability, with shrinking green spaces, fraying social bonds and eroding work-life balance. Rising burnout and anxiety reflect an economy that values output over resilience. These urban models, focused on relentless expansion with limited balance, ultimately diminish happiness.

Johor’s counter-narrative

Johor offers a counter-narrative. Despite rapid industrialisation through Iskandar Malaysia, ports and investment, it remains among the happiest states, showing that sustainable growth is possible.

Johor balances modernisation with community cohesion, cultural identity and liveability. Its proximity to Singapore fuels the economy while shaping planning in greenery, environmental management and neighbourhoods.

Johor proves sustainability is not abstract but can be integrated into development to deliver both prosperity and happiness.

Terengganu’s cultural and environmental wealth

Terengganu, meanwhile, reveals how sustainability extends beyond economics into cultural and environmental realms.

Residents benefit from strong family ties, traditions and community practices that provide social stability, while its beaches, rivers and forests are part of a lifestyle connected to nature.

Lower living costs and lighter environmental strain reflect social and cultural sustainability that is often overlooked in policy debates. Although challenges remain in job creation and youth migration, Terengganu demonstrates that safeguarding culture and environment is just as essential to wellbeing as boosting GDP.

Penang’s cautionary tale

Penang provides a cautionary tale. Despite its reputation as the ‘Pearl of the Orient’, a Unesco heritage city and a global tech hub, it ranks lowest on the Happiness Index. The contrast between prestige and residents’ lived experience is stark.

Housing affordability has become a crisis in George Town, where gentrification displaces locals. Congestion, limited land and overtourism strain infrastructure and inflate costs.

For visitors, Penang appears charming, but for residents, life is increasingly difficult. Prestige means little when social cohesion and environmental stability are undermined.

Critical lessons

The experiences of these five states provide critical lessons for Malaysia’s future.

First, GDP alone cannot define success. Development must be measured alongside sustainability indicators, from environmental health to social trust.

Second, urban centres must be redesigned with liveability at their core, integrating affordable housing, accessible green spaces and safe communities.

Third, cultural and community capital must be preserved as a form of social sustainability. These are not ‘soft’ issues; they are central to national resilience.

Finally, work-life balance and mental health must be recognised as sustainability concerns, because human capital is a nation’s most valuable resource.

These findings align with broader sustainability challenges. Economic strength alone does not guarantee wellbeing or environmental sustainability. The happiness data suggests that quality of life depends on a balance of factors beyond financial wealth.

The cost of ignoring wellbeing

The implications of these findings are profound. If policymakers continue to chase growth without embedding sustainability, the rural-urban happiness gap will widen. This will create discontent in the very regions meant to showcase progress.

Businesses that ignore wellbeing will struggle with unproductive, burnt-out employees.

Cities that overlook environmental quality will face higher healthcare costs, reduced investor confidence and declining social trust.

Conversely, states that embrace sustainability – by investing in green infrastructure, protecting cultural heritage and prioritising social equity – will be better positioned to attract talent, tourism and long-term economic stability.

A choice for Malaysia’s future

Johor demonstrates that growth anchored in sustainability can deliver prosperity and happiness simultaneously.

Terengganu shows the enduring value of cultural and ecological sustainability.

Kuala Lumpur, Selangor and Penang reveal the risks of urban models that prioritise economic expansion at the expense of wellbeing.

With Malaysia’s 13th Malaysia Plan set to begin in 2026, these lessons are urgent. If the nation continues to chase GDP figures without embedding sustainability into its policies, it risks widening the gap between economic strength and lived happiness.

But if Malaysia takes the Happiness Index seriously, integrating sustainability into its development compass, it has a chance to build a society that is not only richer but also more resilient, inclusive and genuinely content.

The paradox is clear: economic growth without sustainability is a hollow victory.

The real challenge now is whether Malaysia wants to be measured by skyscrapers and statistics, or by the happiness and wellbeing of its people.

The choice is not just about development priorities but about what kind of Malaysia we want to build – one that is prosperous in numbers or one that is sustainable in spirit.

Dr Dalilawati Zainal is a senior lecturer at the Department of Accounting, Faculty of Business and Economics, University of Malaya.

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