Alleviating poverty involves more than just financial assistance; it should also focus on empowering individuals with skills that improve their employment prospects and income opportunities, ultimately promoting human dignity, purpose, and self-sufficiency. — CHAN TAK KONG/The Star
THE problem of poverty will never be eradicated because there will always be people who have a harder start in life, but that doesn’t mean they will always live like that.
Crafting initiatives that can effectively uplift people from poverty is a persistent challenge the world over.
In Malaysia, these initiatives are more critical than ever as the government implements subsidy rationalisation measures and reallocates resources to the poor instead of simply giving cash handouts when politicians are looking for votes.
Malaysia’s poverty reduction programmes have had a measure of success but times are different now. These programmes have to consider that the country is more urbanised and greyer.
Technology has taken away jobs. We need to transition from low or unskilled work to semiskilled. Some initiatives have been rolled out but the poor may still need buffers as they adjust.
Universiti Malaya’s Ungku Aziz Centre for Development Studies director Datin Seri Prof Dr Suhaiza Hanim Mohamad Zailani says governance concerns are still the primary contributing variables at the implementation level and this poses challenges to combating poverty sustainably.
“The government must recognise the efforts of business sectors and NGOs and offer means to facilitate their work to benefit the entire population. It was noted that NGOs providing services to poverty-stricken undocumented people, especially children, were subject to taxes despite receiving funds from outside the government,” she adds.
Centre for Market Education CEO Dr Carmelo Ferlito and Baital Amanah research director Benedict Weerasena believe that fighting poverty does not mean transferring resources, but promoting entrepreneurship so that new resources can be created. As a result, they recommend reforms at the educational and institutional levels so that entrepreneurship can flourish and the poor themselves can become entrepreneurs.
“Finding objective and sensible measurements of poverty is good but not enough. The key shift mindset is moving from the idea of eradicating poverty towards reforms that promote social mobility,” they say.
To begin with, the blanket fuel subsidies have not benefitted the poor extensively. The main beneficiaries are vehicle owners who do not have a hand-to-mouth existence.
Poverty is multidimensional, with the most familiar facet being income as tracked through the poverty line index (PLI). Malaysia’s multidimensional poverty index (MPI), which complements the PLI, also covers education, health and living standards.
Datuk Seri Dr Shafiq Sit says that while subsidy rationalisation is “praiseworthy”, timing is important for the poor to receive the targeted subsidies as blanket subsidies are withdrawn.
“As such, the government should pour money into a New Deal for the poor. Billions saved from the targeted subsidy should go into training, retraining and creating useful jobs for the poor. This does not translate to handouts as the poor can work.”
Shafiq also notes that the subsidy rationalisation should be followed by cutting off wasteful projects that saddle the country with debt.
The MPI was included in the 11th Malaysia Plan (11MP) to assist the bottom 40% of households in the country. Mean household income is used as a measure, and this has risen steadily since the dip during the Asian financial crisis of 1997-98.
However, it has been a mixed bag with the 11MP initiatives to address income inequality and well-being have fallen short, in part due to lower-than-expected economic growth and weak implementation.
The 12MP, which runs till end-2025, is supposed to address poverty and build an inclusive society, with the Madani Economy framework superimposed on the five-year plan during the mid-term review in 2023 to support the political goals of a “Sustainable, Prosperous, High-Income Nation”.
Under this framework, there are three focus areas, of which the “Building prosperous society” focus area seeks zero hardcore poverty by the end of the 12MP. There are other goals in line with the MPI seeking to address the issues that continue to hold back people from opportunities to lift themselves out of poverty.
The latest data shows hardcore poverty at 0.2% in 2022, compared to 0.4% in 2019 while relative poverty stood at 16.6% compared to 16.9% in 2019. Absolute poverty, based on the PLI, rose to 6.2% from 5.6%.
It is to be noted that absolute poverty during the intermittent Covid-19 lockdowns was at 8.4% and 8.2% in 2020 and 2021, respectively. All poverty indicators show that bumiputras are the most impoverished.
Centre for Socio-Economic Research executive director Lee Heng Guie believes that the government, in efforts to fight poverty, will continue to face challenges in an increasingly complex economic environment.
“Alleviating poverty is more than just raising disposable income. It should also equip the poor and vulnerable group with skills to improve employment and income opportunities to gain human dignity, purpose and self-sufficiency,” he points out.
This article first appeared in Star Biz7 weekly edition.
