Should we be concerned about the 9th Malaysian plan? In this article, I
evaluate the most basic issue of the formulation of the poverty line.
In the 9th Malaysia Plan (9MP), the Barisan Nasional government will
allocate RM200 billion of taxpayers' money for the following reasons:
- To move the Malaysian economy up the value chain
- To raise the capacity for knowledge, innovation and nurture 'first class mentality
- To address socio-economic inequalities constructively and productively
- To improve the standard and sustainability of quality of life and
- To strengthen the institutional and implementation capacity
Growth with equity poverty and inequality instead
The 9MP states that Malaysians on average earned US$10,318 a year (1).
This amount is a 95% increase from 1990 when it was US$5, 284. This was
due to the fact that the economy grew at an average of 6.2% for the
period 1991 2005. (2)
Ironically, the income share of the bottom 40% of households decreased
from 14.0% in 1999 to 13.5% in 2004 while the income of the top 20% of
households increased from 50.5% to 51.2%.
Some (of the many) anomalies were that the share capital of the
Malaysian Indian community regressed from 1.5% in 2000 to 1.2% in 2004
at the same time Malaysian Indians were on average earning 0.27 cents
more than their fellow Bumiputeras.
The inequality within each race worsened with Malaysians termed
"others" suffered the worst reversals. (3) Next on the list were the
supposedly beneficiaries of government policies the Bumiputeras. Urban
rural poverty disparity also worsened.
What is most astounding is that the states with the highest incidence
of poverty were resource rich Sabah (23%), Sarawak (7.5%) and Terengganu
(15.4%), opposition held Kelantan (10.6%), and Kedah (7%).
Remember that all of this is happening as the size of the economy more than doubled.
We could make several conclusions:
- States with predominantly Malay/Bumiputera/Muslim population are the poorest
- The resource rich states of Terengganu, Sabah and Sarawak are terribly mismanaged
- The calculations are wrong or
- A select elite are siphoning the wealth of the nation;
The New Economic Policy (1070 1990), which has two prongs, namely
"poverty eradication regardless of race" and "restructuring of society
to eliminate the identification with race." The National Development
Policy (1990-2000) and the New Vision Policy (2001-2010) are merely
add-ons to the NEP. More pertinently, one must note that the government
has based its development policies on distribution of wealth for 40
years through affirmative action policies. What is the outcome?
Has the government achieved what it set out, or were the gains merely
the product of a resilient society that utilised favourable historical
conjectures and benefitted from self seeking global capital.
Poor Malaysians
The Poverty Line Income (PLI) was first formulated in 1977. The PLI
(according to the BN government) 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, healthcare,
education and recreation."
The PLI is then updated annually on the basis of the Consumer Price Index.
The PLI was revised again in 2005 with marginal changes. The quantum of
the change does not reflect any philosophical changes towards poverty.
Below is the Barisan Nasional government's computation of what income
level figures constitute poverty for a Malaysian household of five.
What is the income needed, "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, healthcare, education and recreation" for a family of
five?
Can a family of five, anywhere in Malaysia be fed adequately on RM415 a
month? What is your average expenditure, monthly? Can we agree with the
BN government that RM700 a month is sufficient to provide the above to a
family of five anywhere in Malaysia?
Why this approach?
Why is the BN government using this approach to poverty when there are
far more humane and correct ways to define poverty. Central to this is
how the RM700 is earned. If parents are spending 12 hours a day to earn
RM1, 500 can we accept this? They may not be poor in Malaysia but they
are extremely poor as this cannot be construed as dignified standard of
living. If families are cramped into low cost flats which are no larger
than a classroom, are they not poor? If my family members have to wait
in line for critical medical services, am I not poor?
There are other notable approaches to poverty worth mentioning such as the following:
Amartya Sen's Capability Approach asks of the person's freedom to
choose (freedom of choice) between different ways of living (Do 65% of
Malaysian households have this choice?)
The United Nations Human Development Index which looks at income, level
of education, health status and access to sanitation and drinking water
(are these guaranteed to all Malaysians?)
The poverty line used in the OECD and the European Union is based on a
level of income set at 50% of the median household income in the
particular country;
Malaysia is on the verge of becoming a developed country in 15 years
(Vision 2020). Can a country that is on the verge of becoming a
developed nation use RM700 as the PLI. Should we not use RM1, 500 which
is approximately the median income of Malaysian households which would
give a better reflection of Malaysian living standards?
The 8MP provided
data
that 44% (in 1999) of Malaysian households earned less than RM1, 500
while the figure increased to 55% if RM2,000 is used. A staggering 65%
of Malaysian households earned less than RM2,500. Indeed this may
reflect the chasm between Malaysia' superrich, beneficiaries of the NEP,
NDP, NVP and the Malaysia plans and the 65% of "rakyat biasa" that bear
the brunt of low wage regimes, oil price tariff hikes, water tariff
hikes, electricity tariff hikes, increasing cost of medical expenditure,
deteriorating transportation in towns and cities, deteriorating quality
of teaching in schools and universities, etc.
How do we as Malaysians respond to this? A local investment firm in its
review
of the 9MP has indicated which are the corporations that would most
likely benefit from government projects in the 9MP. The usual suspects
are there. Khazanah Holdings, UEM, Gamuda, Puncak Niaga, etc).
Will we as Malaysians use these as stock tips to buy into these
companies, or see them for what they are oppressors of my neighbour and
I.
Endnotes:
1 9MP, pg. 6
2 9MP, Pg. 5
3 9MP, pg. 333
GREG LOPEZ is programme manager with
Monitoring Sustainability of Globalisation
and co-ordinator of
Young People for Development
, Malaysia.
Coalition Against Water Privatisation (CAWP) co-ordinator Charles
Santiago said the European Union has already asked Malaysia to open up
its water sector under the General Agreement on Trade in Service (GATS).
Coalition Against Water Privatisation (CAWP) co-ordinator Charles
Santiago said the European Union has already asked Malaysia to open up
its water sector under the General Agreement on Trade in Service (GATS).