Alleviating Poverty Remains a Priority

There has been some renewed interest in the subject of poverty in Malaysia recently, specifically on the issue of poverty rates and the household income survey.

Allow me to provide some clarification on how poverty rates are determined in Malaysia, and also to share some of the initiatives that have been undertaken to uplift the livelihoods of Malaysians living below the poverty line.

The household income for Malaysian households is calculated based on the Household Income and Expenditure Survey (HIES) conducted by the Department of Statistics Malaysia (DOSM). This survey has been conducted twice every five years since 1974, and forms the basis for the measurement of Malaysia’s average household income. The 2012 HIES Report revealed that 1.7 percent of households were living below the Poverty Line Income (PLI).

The following survey was conducted in 2014 on a random sample size of 81,634 households by on-the-ground DOSM officers in all states. Based on the latest preliminary data from the DOSM, it was illustrated that only one percent of households is living under the PLI in 2014 (see Table 1). In essence, this statistic has already been made public in the Ministry of Finance (MoF) 2014/2015 Economic Report, accessible on the MoF’s website.

Table 1 Incidence of Poverty and Average Household Income (RM) from 1970 - 2014
Year Incidence of Poverty (% of household) Average Household Income (RM)
1970 49.3 264
1976 37.7 505
1979 37.4 678
1984 20.7 1098
1987 19.4 1083
1989 16.5 1169
1992 12.4 1563
1995 8.7 2020
1997 6.1 2606
1999 7.5 2472
2002 5.1 3011
2004 5.7 3249
2007 3.6 3686
2009 3.8 4025
2012 1.7 5000
2014 1.01 5919
Note: 1) Preliminary Data

Prior to the Government Transformation Programme (GTP) in 2010, one of the challenges faced in the implementation of the Raising the Living Standards of Low Income Households National Key Results Area (LIH NKRA) was the lack of a common definition and threshold for the PLI across ministries and agencies. The difficulty was in clearly identifying target groups, hence making it difficult to provide the necessary assistance. To overcome this challenge, there was a need for a clearer definition, and one that was also recognised globally. Hence, the PLI definition for extreme poverty, and poor, was clearly defined and published in the GTP 1.0 Roadmap as the target group most in need of aid by the LIH NKRA. To ensure adherence to international and global standards, the PLI definition was revised in 2012. This too was documented in the GTP Roadmap 2.0 and it serves as the current measure of LIH NKRA achievements to date.

Today in Malaysia, extreme poverty is defined as households with average monthly incomes of less than RM460 in Peninsular Malaysia, less than RM630 in Sabah and less than RM590 in Sarawak, while poor is defined as households with average monthly incomes of less than RM760 in Peninsular Malaysia, less than RM1,050 in Sabah and less than RM910 in Sarawak (see Table 2).

Table 2 Poverty Line Income Definitions
Peninsular Malaysia Sabah Sarawak
Extreme Poverty Less than RM 460 Less than RM 630 Less than RM 590
Poor Less than RM 760 Less than RM 1,050 Less than RM 910

The PLI mechanism has been adopted by many countries including all OECD members such as the US, UK, Canada, Australia, Korea, France, Spain, Germany, Greece, Japan etc. The incidence of poverty in Malaysia is based on the measurement of income in comparison to the Cost of Basic Needs (CBN) , and the CBN is a mechanism standardized by the United Nations Development Programme (UNDP) .

Hence, compared to World Bank’s definition of absolute poverty at US$1.25/day, Malaysia’s extreme poverty threshold of RM460 a month which is equivalent to approximately US$4.30/day, is comparatively higher than the global norm.

Ministries and implementing agencies have been working hard to identify and focus on groups most in need of aid through the e-Kasih database. Adjacent to continuous searching and identification of this defined group, the 1AZAM Programme was established to aid them and to provide a sustainable income. This consisted of the AZAM Kerja, AZAM Niaga, AZAM Khidmat and AZAM Tani in 2010, as well as the AZAM Bandar in 2012, in order to:
  • Generate business opportunities through training and micro-credit facilities;
  • Create jobs in agriculture by coordinating action plan with Ministry of Agriculture;
  • Ensure job placements by coordinating action plan with Ministry of Human Resources;
  • Train and equip individuals to become actively self-employed.
1AZAM is a collaborative effort which involves multiple ministries/agencies to provide services related to their core functions such as job placement, small business start-ups and micro-credit, and self- employment opportunities to help target groups move out of the poverty trap.

To date, a total of 164,483 individuals have participated in the 1AZAM Programme, and a total of 64,689 individuals have participated in financial literacy programmes since 2013.

One of the Key Performance Indicators (KPIs) under the LIH NKRA is to monitor the number of existing 1AZAM participants who increased their income by RM300 for any three months. In 2013 and 2014, this number recorded 18,249 and 24,646 respectively. With continued focus in implementing these programmes, together with frequent monitoring and constant evaluation, the LIH NKRA efforts will empower and uplift more families above the PLI.

Azemi Majid, a AZAM Tani beneficiary who received RM9,000 worth of equipment to enhance his satay-selling business, now earns no less than RM3,500 (from RM700) monthly, also as a result of successfully applying the skills learnt during the business skills training provided to him under the programme.

Under the AZAM Kerja programme, Clarisa Balicao from Sabah is now able to own her own salon after receiving training in areas related to business activities, and currently earns between RM6,000 and RM8,000 a month. Azemi and Clarisa are just two of the many Malaysians whose stories are shared in the several publications, such as the GTP Annual Reports under the Prime Minister’s Deparment, and 1AZAM Publications under the Ministry of Agriculture and Ministry of Women, Family and Community Development.

These stories show that much can be done to improve the lives and livelihoods of Malaysians living below or close to the PLI, with certain initiatives reaching those living in inaccessible rural parts of the country. The successes over the last five years are also attributed to a growing collaboration between the ministries and agencies, NGOs and Corporate Partners in 1AZAM Community-based programmes to create bigger impact.

Finally, there is still much to do as “one percent” translates close to 300,000 people. The commitment to uplift the livelihoods of these Malaysians remains a national priority. The toil and effort of those involved in identifying and providing assistance, be they the officers from DOSM, Ministry of Women, Family and Community Development, Economic Planning Unit, State Governments and Agencies, as well as those from the Non-Governmental Organisations, should therefore be recognised and saluted.
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