Poverty

Chapter 4 of the Plan document together with several Tables dealing with Thrust 3 in the Appendices present fairly detailed statistics on poverty and income distribution.

In a somewhat self-congratulatory tone, the Plan proclaims that hardcore poverty was reduced from 1.2% in 2004 to 0.7% in 2009 and that the incidence of overall poverty fell from 5.7% in 2004 to 3.8% in 2009. These claims are questionable because of the underlying methodology employed in deriving these estimates.

In the first place there is no indication as to how the Poverty Lines were estimated. Assuming that the methodology used mirrors that used in the 9th Plan, the bar to define poverty is set at far too low a level.

In the second place, the use of “households” rather than “persons” distorts the measurement.

On the flawed basis, 228,400 households were categorized as poor. It is most significant that of these 99,100 were in Sabah with another 27,100 in Sarawak. Thus, there were a disproportionate number of the poor in these two states highlighting gross neglect by the Federal government of Malaysians in these two states.

Converting the number of households to a “persons” basis, (228,400 households X 6.4 persons per household) the number in poverty is a staggering 1,462,000 persons representing some 5.2 percent of all Malaysians. It is a sobering thought that after almost four decades of the NEP, poverty exists in our midst even when a low bar is used to define it. It is a telling indictment of the failure of the NEP to deliver upon the promise of development. That absolute poverty remains despite the billions expended, points to policy failures, incompetent implementation, and failure of the political will to make adjustments.

A new beginning is needed. To sincerely and fully address the issue of poverty, it is imperative that we apply the internationally accepted concepts and methodology employed to derive the various Poverty Line Income (PLI) measures and the estimates of poverty incidence. The current methods are deeply flawed. To the extent these are flawed, they fundamentally affect the analysis and conclusions. In turn, this leads to the advocacy of policies that are patently wrong.

In both the 9th and presumably in the 10th Plan the concept of HARDCORE poverty defined as “…. Income less than the food PLI which is based on nutritionally based diet” has been used. The very term “Hardcore” is not in international use. The World Bank and UNDP, two global agencies in the forefront on analyzing poverty, use the concepts of “Absolute” and “Relative” poverty. There are no valid reasons why Malaysia deviates from standard international terminology.

The internationally accepted and applied poverty measurement concepts developed by the World Bank are clear and precise. Rural poverty rate is defined as the percentage of the rural population living below the national rural poverty line. Urban poverty rate is the percentage of the urban population living below the national urban poverty line. National poverty rate is the percentage of the population living below the national poverty line. National estimates are based on population-weighted subgroup estimates from household surveys. Population below US$1 a day and population below US$2 a day are the percentages of the population living on less than $1.08 a day and $2.15 a day at 1993 international prices.

It would appear that these methodologies were rejected by the EPU in favor of its own definitions and methods with the sole main of producing low “feel good” estimates of the poor. This is an insult to the poor in that we are unable to generate true and accurate estimates. It cannot over-emphasis the importance of getting the numbers right as these underpin the need policy responses and ultimately the allocation of resources to alleviate the scourge of poverty from Malaysian society.

What of the future?

Beyond the rhetoric, it is clear that fundamental policies will continue. It is no consolation to the poor. The spending proposed on poverty in the Plan is a small fraction of the total size of the Plan. These numbers are more telling than the rhetorical speeches and applause of a compliant media. The reality for the poor is that subsidies are likely to be eliminated and new taxes piled on to finance grandiose projects such as yet another convention center, more roads to nowhere and large transfers to the powerful and well connected corporations and tycoons. If the truth be told the BN are obsessed with creating more infrastructure even though much of what has been created remains underutilized.

The issue of restructuring employment is not questioned. It has been a long pursued policy from the 1970s. However, this is not just a responsibility of the private sector. It must be noted that the public sector continues to be the largest single employer with almost 1.2 million workers. It has however failed dismally to follow the policy of eliminating or reducing ethnicity as a criteria in employment in the public sector. Ministerial statements offer lame explanations that non-Bumiputras are unwilling to enter the public service. This assertion can be challenged given the human resource management policies pursued by the responsible departments and agencies. It is indeed most disappointing that the Plan is silent on the entire issue of balanced employment in the public sector.

It is time for the Government to state in categorical terms that it will take steps to correct the imbalance in the employment pattern in the public sector. It must put its money where its mouth is. It cannot demand of or compel the private sector until it implements an employment policy that is embedded in the national compact under the NEP when it was introduced in the 1970s.

The solutions to the issue of income disparities between groups cannot be resolved through setting targets and postulating restructuring and broad notions of human capital development in the manner proposed. There can be no denying of the fact that reform of the educational system at all levels is a first and fundamental step. The Plan throws out some tentative and meek proposals. These are insufficient. Standards must be improved, merit in selection must be a factor; the curriculum reformed, our institutions of tertiary learning need to be urgently restructured (including the pattern of employment). The focus on quantity must stop and be replaced by quality. It is most telling that our educational institutions are producing graduates to swell the ranks of the unemployed and the unemployables.

A nation’s competitiveness is in part determined by the quality of its human resources. That in turn is determined by the excellence or lack thereof of the knowledge and skill levels of the work force. For a generation or more, Malaysia has had the misfortune to have pursued educational policies that have impacted negatively on the creation of a dynamic, motivated, and skilled labor force. Our institutions of secondary and tertiary education have become sausage factories producing graduates unfit and unemployable in fields that hold a key to our future. The consequent loss of competitiveness is beginning to manifest. Despite the clear and present danger signals, the BN administration continues to ignore actions that are needed. Meritocracy in the selection of those that are taught and those who teach cannot be substituted with less than open and transparent processes. It must be recognized that upgrading the educational system demands more than money; throwing money at the problems will not resolve matters. There is an urgent need to move resolutely towards reforms that will improve the quality of the system, produce graduates that are equipped to meet the challenges of a harshly competitive world.

These issues are hardly addressed in the Plan.