On March 20, I attended a public lecture by Tun Dr Mahathir Mohamad in University of Malaya organised by its Faculty of Economics and Administration.
Speaking about poverty in Malaysia, the 89-year-old former prime minister was eager to emphasise that Malaysia's hardcore poverty rate is below 1% and the overall poverty rate stands at 1.7%. That's a huge "success" from the New Economic Policy and other policies pursued by the country.
But, is it really true?
After independence, Malaysia’s journey in economic growth and development has been mesmerising.From an agrarian economy to an economy which is now thriving on services (almost 58%), Malaysian policymakers have delivered much in uplifting the economic standards of the rest of “Anak Malaysia”. But,to what extent?
Now back to the core issue.
In Malaysia, our poverty line income (PLI) is set around RM860. This is the national average although it tends to vary according to regions, that is, the peninsula, Sabah & Sarawak.At RM860, it means anyone earning less than that is considered to be under the poverty cluster. That's what the government's data says. But is the RM860 threshold appropriate?
No. Why?
The United Nations defines poverty as income below 50% of the national mean monthly income.The OECD, on the other hand, says that it should be below 60% of the median monthly income.
Let us just take the benchmark by the UN.
In 2012, Malaysia's mean monthly income was RM5,000. This inevitably means that those earning below RM2,500 should be categorised under the poverty group and not under RM860.
To our horror, if the benchmark is RM2,500, this brings the poverty percentage in comparison to the Malaysian households to around a whopping 40%.
This shows that a huge proportion of Malaysian households fall under the poverty group and no doubt, with the rising cost of living in recent times, more Malaysians are bound to struggle financially.This compels the government to alter its methodology of drawing a benchmark to identify the poor so that appropriate government aid can be channelled to them.
While some might deny that Malaysians are better off since the number of billionaire and millionaire Malaysians is growing (for example, Datuk Mokhzani Mahathir has just entered the top 10 billionaires' club and Tun Mahathir insists that his son is not a crony), the top 20% of wealthy Malaysians control 65% of the mean monthly household income.
Alas, the rest of us (80%) have to be contended with the 35% of mean monthly household income. – March 25, 2014.
