Poverty Eradication, Malaysia's Experience

Poverty Eradication: Malaysia’s Experience

I.

Incidence of Poverty

1.1

Malaysia has subscribed strongly to the belief that economic envelopment must involve and benefit all citizens. The development thrusts were centered on the philosophy of ‘growth with equity’. With regards to poverty eradication, Malaysia has adopted long-term policies since the early 1970’s. In providing for the vulnerable groups, the thrust of the Government has always been to enhance income-earning opportunities. Pure transfers to the needy are limited to a modest scale for a small group of people such as the elderly and the handicapped. The success of Malaysia’s poverty eradication programs is evident from the sharp decline in the incidence of poverty, which decreased from 52.4 per cent in 1970 to 6.1 percent in 1997. Due to the implementation of the long-term measures, the impact of the 1997 financial crisis was minimal with the incidence of poverty reaching 8.5 per cent in 1998 and decline to 7.5 per cent in 1999. Malaysia constantly monitors incidence of poverty and state of the vulnerable groups through the Household Income Survey (HIS).

II.

Poverty Line Income

2.1

The incidence of poverty is based on the poverty line income (PLI). The PLI is defined as an income sufficient to purchase a minimum basket of food to maintain household members in good nutritional health and other basic needs such as clothing and footwear, rent, fuel and power, transport and communications, health care, education and recreation. The PLI is updated annually on the basis of the Consumer Price Index.

III.

Strategy and Programmes

3.1

The main strategy for poverty eradication was providing employment opportunities in higher-paying jobs, while welfare handouts were reserved for the aged and disabled who could not find employment. Since the poor were largely engaged in agriculture, they were encouraged to be involved in modern farming and non-farm or off-farm activities. The programmes implemented under the NEP, NDP and NVP1 are as follows:

1

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Resettling the landless and those with uneconomic holdings in new land development schemes. The settlers were provided with single unit houses complete with piped water and electricity;

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Undertaking in-situ development of existing agricultural land through rehabilitation and consolidation of the land, replanting of old commercial crops with new higher-yielding clones and better planting techniques;

NEP, New Economic Policy 1971-1990; NDP, National Development Policy 1991-2000; NVP, National VisionPolicy 2001-2010.

3.2

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Integrating agricultural and rural development with downstream processing of farm products and encouraging village industries and rural entrepreneurship to generate additional sources of income;

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Introducing double-cropping or off-season cropping for padi, inter-cropping and mixed farming on the same plots of land to supplement the income derived from main crops;

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Establishing farmers’ markets in urban centres so that farm produce can be sold directly and fetch better prices;

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Providing training and education on topics pertaining to farming as well as work attitudes and values to motivate participants to become more productive farmers;

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Providing industrial and vocational training for the rural manpower, coupled with credit facilities and related support, to enable them to be employed in non-farm occupations or start their own businesses in rural areas and urban centres;

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Improving educational access as well as providing text books and financial assistance to children of poor households; and

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Providing infrastructure and social amenities as part of a broader programme to improve the quality of life of all Malaysians. For the rural population, they include the provision of potable and piped water, electricity, roads, medical and health services and schools, including rural hostels.

During the NDP period, the Development Programme for the Hardcore Poor or Program Pembangunan Rakyat Termiskin (PPRT), was introduced to assist the hardcore poor. The programme established a register on the profile of hardcore poor households and contained a package of projects tailored to meet their specific needs, such as increasing their employability and income, better housing, food supplements for children and educational assistance. Direct assistance was given to the hardcore poor who are disabled and aged. In addition, the hardcore poor were provided with interest-free loans to purchase shares in a unit trust scheme (ASB-PPRT) so that the dividends can supplement their income.

3.2

Non-Governmental Organizations (NGOs) and the private sector complemented government efforts in the poverty alleviation programmes. Working in close cooperation with one another, they provided small business loans, industrial training, job opportunities, and educational support for children as well as better housing. Since 1987, Amanah Ikhtiar Malaysia (AIM), an NGO, provided micro-credit financing to about 69,000 poor families with interest-free loans of RM300 million provided by the Government. The private sector and the various state-based poverty eradication foundations also intensified their efforts in providing skills training as well as in-kind and financial contributions to the poor.

3.3

During the NVP period, to effectively implement anti-poverty measures, all the relevant programmes and projects were consolidated under the Skim Pembangunan Kesejahteraan Rakyat (SPKR). The SPKR included the Program Pembangunan Rakyat Termiskin (PPRT) and other related anti-poverty programmes to address issues of general and hardcore poverty, irrespective of ethnicity in both the rural and urban areas as well as economic sectors. The Program Sepadu Pembangunan Desa Terpencil was strengthened under the SPKR to address pockets of poverty, particularly in remote areas and among the Orang Asli and other Bumiputera minorities in Sabah and Sarawak. To further improve the well-being and quality of life of the poor and low-income households, the SPKR, through its Program Pembangunan Insan, will continue to inculcate the concept of self-esteem and self-reliance among the households and communities involved.

Distribution Section Economic Planning Unit 23 April, 2002