poverty in malaysia essay

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Poverty, Malaysia’s Hidden Crisis – Analysis

By Murray Hunter

Successive Malaysian administrations have hidden the real incidence of poverty in the country for decades. The government narrative asserts that it has reduced poverty from 50 percent in 1970 to almost eliminating it – to just 0.4 percent in 2016. International organizations including the like the United Nations Development Program and the World Bank, although they don’t say it publicly, suspect the figure is totally inaccurate. 

When the Malaysian Department of Statistics last year revised national Poverty Line Income (PLI) upward from RM980 to RM2,280 (US$242-564), the official poverty rate in Malaysia jumped from 0.4 to 5.6 percent. Based on this official figure, the incidence of poverty affects more than one in 20, or upwards of 1.7 million people and is on the rise due to the long-standing Movement Control Orders (MCO) implemented as a result of the coronavirus crisis and a deteriorating economy. Urban poverty is on the rise and pockets remain almost unchanged after years at barely the subsistence level in many rural areas of Sabah, Sarawak, Kelantan, Terengganu, Kedah, and Perlis. 

It is not a homogenous problem. Poverty exists across multiple demographics and geographical locations. There are various underlying causes and current economic conditions have exacerbated the incidence. Clusters consist of various groupings negatively affected from a variety of causations, making the issue extremely complex in terms of alleviation strategies. Officially, 1.3 million people domiciled in rural areas are considered to be living in poverty. These include the Orang Asli, or indigenous peoples living on the peninsula, and the Orang Asal and other indigenous groups in Sabah and Sarawak, who live traditionally, or semi-traditionally. Many areas where Malaysia’s indigenous peoples reside are still void of basic infrastructure, electricity, water, basic health amenities, sealed roads and telecommunications. Many live an almost subsistence lifestyle, with some supplemental income from children working in the cities. 

Next are smallholders who may farm uneconomic tracts of land, with limited access to markets. There is a large pocket of poverty outside of Federal Land Authority (FELDA) schemes.  They have also suffered from downturns in commodity prices and lack access to capital and technology. In the rural towns and kampongs, many face chronic unemployment, particularly male youth, with drug addiction a major problem. Petty crime has risen dramatically in many rural areas over the past 15 years given chronic lack of access to economic opportunities. 

The Integrated Agriculture Development Projects (IADPs) that assisted communities with infrastructure and crop technologies of the 1970s and 1980s are long gone, with almost zero agricultural extension programs today. Community infrastructure projects over the past few decades have not provided what communities really need, and funds commonly leak from such projects to contractors and associates. Other subgroups within the rural poor include single mothers, unskilled workers, the elderly and infirm and the handicapped/disabled. This is particularly so in the rural states of Perlis, Kelantan, Terengganu, parts of Kedah, and Sabah and Sarawak. 

According to a UNICEF study , 7 percent —  1.72 million people – of those living in urban areas are in poverty and struggling to maintain minimum incomes to sustain a healthy and reasonable life. Moreover, the Movement Control Order 2 (MCO2) has added large numbers to the above figure, where a recent UNICEF report stated that 15 percent of urban dwellers are now unemployed and are very quickly falling into poverty. In addition, foreign and unskilled workers from rural areas are migrating to urban areas looking for work are causing concern for authorities as people are becoming more pessimistic and exacerbating mental health issues. 

Ghettos of ethnic Chinese in poverty have long existed in outlying areas of Kepong, Klang and Cheras, within the Klang Valley and major cities and towns of Ipoh, Penang and Butterworth. Ethnic Indian ghettos exist in former rubber and palm oil estate areas of Klang, Negeri Sembilan, and Johor, and along the railway line linking north with south. These groups do some of the lowest jobs within the community.

Together with single mothers and the handicapped, many slip through the meager safety net eKasih, the National Poverty Data Bank system, which is reported to be totally unresponsive to many peoples’ needs. 

With an estimated 6 million foreign workers flooding the low end of the labor market, there are few opportunities for the above groups to find any kind of work. Local employers prefer foreign workers for their reliability, higher productivity, and lower wage costs. 

The issue has long been off the government’s policy radar. Poverty eradication policy and implementation has been overshadowed by the government’s development narrative, placing ‘big ticket’ policy initiatives like IT, biotechnology, and smart farming above the mission of getting people out of poverty. Many of these initiatives benefit government agencies and government-owned companies (GLCs), rather than filtering down to the village community level where people benefit. Malaysia has a federal and number of state biotechnology corporations, but very few, if any, projects make any difference to marginal communities. New technologies, for example, systems that allow year-round harvesting of mangoes, are so capital intensive that only wealthy corporations can afford them.   

The top-down approach of the Economic Planning Unit (EPU) earmarks projects that bureaucrats, politicians, and GLCs want, not necessarily what small local communities need. Even Village Security and Development Committees, known by their Malay initials JKKK, are stacked with political appointees, rather than true representatives of local communities. Non-affiliated NGOs working with communities are not consulted, and sometimes seen as a threat by bureaucrats. 

Many projects are complete white elephants as the motivation behind them was to reallocate government land to GLCs and other private corporations, and to provide contractors with massive profits. The drive to develop halal and biotechnology industries over the past two decades has resulted in mostly empty, decaying industrial parks that, once built. ‘Consultancies” are formed by those favored by bureaucrats and politicians to undertake projects of little relevance to the really needy. Developing projects are about meeting artificial goals rather than any passion about making a difference for neglected communities. Ministries, state departments, agencies and government corporations’ programs to assist in eradicating poverty exist in their thousands, but primarily waste government funds. 

Past experience indicates that the government has difficulty really understanding the issues. High-rise apartments for the poor remain under-utilized, as kampong people prefer to live in villages to maintain their social environment. Putting villagers in apartments strips them of the value they have from their small plots to become self-sufficient in food. Large paddy estates that rent smallholder land, with the elderly expected to work as laborer, appears as bonded feudalism to villagers. Entrepreneurship programs provided by many agencies are designed around building growth enterprises, rather than sustainable micro-enterprises villagers prefer. 

Education courses provide little in the way of village-suited technologies, micro-finance or marketing channels to sell products. Often purpose-built stalls to sell products are given to the cronies of the governing political party, who re-lease them at excessive rates. 

The fifth Protection Assistance stimulus package developed to assist those in difficulty from the Covid-9 lockdown doesn’t tackle growing urban poverty. Single mothers not only live with economic hardship but cultural stigma which has been allowed to grow and fester. The effects of growing unemployment are filtering back to rural areas, where children can no longer remit funds back to assist their parents.  The education system is lopsided with too many university places available for non-existent jobs, while the vocational educational sector needs much more focus. Scholarships must go to those in most need, rather than the privileged. 

The poor, including the bottom ethnic Malay and Bumiputera classes have no political influence, and have been primarily ignored by the governing elite. However, within Putrajaya, bureaucrats are very quickly becoming aware that poverty is a major problem0. 

We have to wait until the next state general election to see any political effect. This will be the Sarawak state election due before October, where votes coming from longhouse communities may weaken the governing Gabungan Parti Sarawak (GPS) rural stronghold. Federally, malapportionment within urban centers means growing urban poverty will have little electoral effect. However, within the Malay heartlands, poverty may become a much more important political issue as the rural Malay vote has always been about economic wellbeing rather than political issues. 

What is certain is that growing poverty, particularly in the urban areas, is going to retard any economic recovery later in the year. Poverty, policy, and politics is set to be the next major challenge after Covid-19. 

Originally published in Asia Sentinel 

• ← Indigenous Peoples, Beware Of Biopirates – OpEd
• UNHRC Forces Sri Lanka To Lift Ban On Muslims Burying COVID Dead →

Murray Hunter

Murray Hunter has been involved in Asia-Pacific business for the last 30 years as an entrepreneur, consultant, academic, and researcher. As an entrepreneur he was involved in numerous start-ups, developing a lot of patented technology, where one of his enterprises was listed in 1992 as the 5th fastest going company on the BRW/Price Waterhouse Fast100 list in Australia. Murray is now an associate professor at the University Malaysia Perlis, spending a lot of time consulting to Asian governments on community development and village biotechnology, both at the strategic level and “on the ground”. He is also a visiting professor at a number of universities and regular speaker at conferences and workshops in the region. Murray is the author of a number of books, numerous research and conceptual papers in referred journals, and commentator on the issues of entrepreneurship, development, and politics in a number of magazines and online news sites around the world. Murray takes a trans-disciplinary view of issues and events, trying to relate this to the enrichment and empowerment of people in the region.

One thought on “ Poverty, Malaysia’s Hidden Crisis – Analysis ”

Poverty may refer to those people not in the money economy i.e. they use very little money or no money at all. Barter takes place.

Poverty in Malaysia is also due to the transfer of wealth from those who have no power to those who have power, and also internal colonisation of Orang Asli, Indians and stateless in Malaya, and Sabah and Sarawak.

Incomes are too low for savings and investment.

China comes to mind as a “textbook” example where the CCP ostensibly lifted 600 to 800 million out of poverty within two decades or so.

Apparently, Beijing gave millions export-oriented factory jobs to bring them into the money economy and then claimed that they were brought out of poverty.

It also built many ghost towns to create “economic activities”, artificially jack up growth rates and add the bogus figures to the GDP.

Soon, it will tear down the ghost towns to repeat the scam all over again.

Bad loans, NPLs, are at an all time high in China. The banking industry has in fact collapsed but is kept going by not reflecting the extent of NPLs.

China, under the CCP, may be one Big Scam, huge Ponzi Scam, Skim Cepat Kaya (Get Rich Quick Scheme).

Ask the Japanese. They know exactly what will happen to China and CCP.

CCP should learn how to count.

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Home — Essay Samples — Geography & Travel — Malaysia — Poverty Alleviation And Five-year Development Plans Of Malaysia

Poverty Alleviation and Five-year Development Plans of Malaysia

• Categories: Malaysia

About this sample

Words: 2705 |

14 min read

Published: Jul 10, 2019

Words: 2705 | Pages: 6 | 14 min read

Table of contents

Development of malaysia, objectives of the five-year development plans of malaysia, privatisation of government agencies or corporations, multimedia super corridor (msc), poverty line income, concepts of poverty, reasons of poverty, measures to eradicate poverty, best solution, conclusion and recommendations, national economic policy (nep).

• Creation of growth centres
• Rural areas modernisation
• Rapid development of urban areas
• Raise productivity and income of those in occupations which lack productivity

National Development Policy (NDP)

National vision policy (nvp).

• Making the Malaysia society more knowledge-based
• Creating internally-driven growth by boosting local investments
• Improving dynamism of the agriculture, manufacturing and services sector through injection of knowledge
• Addressing the rural poverty and among the Orang Asli and Bumiputera minority groups in Sabah and Sarawak
• Improving the quality of life and income among those in the lowest 30% income categories
• Uphold a knowledge-based society by restructuring the development of human resource

Disadvantages

Msc phase 1 (1996-2003), msc phase 2 (2004-2010), msc phase 3 (2001-2020), rural areas, urban areas.

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Causes of Poverty in Malaysia

Since the Millennium Development Goals were introduced in 1990, the Malaysian government has done a lot to reduce poverty in the nation. The percentage of households living on less than $8.50 per day (the national poverty line) fell from over 50 percent in the 1960s to 1 percent currently. The Asian Development Bank claimed this to be the largest reduction among all Asian countries. Another government goal was to halve the number of people living on $1 a day by 2015, which they also successfully achieved.

The task of solving the root causes of poverty in Malaysia, however, is still far from over. Over 60 percent of the country still lives on less than $1,600 a month , and in rural areas, that number can climb up to 85 percent. Furthermore, although only about 1 percent of people currently live under the extreme poverty line, that still accounts for 300,000 people, a significant number.

The government recognizes that it still has not fully addressed the causes of poverty in Malaysia, and has laid out a road map of its future plan of action. This plan of action revolves around four main focal points.

Addressing the Causes of Poverty in Malaysia

• Increase the level of education among the poor. Through education, children in poor communities will have a better chance to get a high-paying job or start a business.
• Strengthen social safety nets, enhance collaboration with NGOs and corporations and provide empowerment programs.
• Ensure income is redistributed to uplift those in poverty for the bottom 40 percent.
• Institutionalize appropriate policies which promote economic development.

If the Malaysian government continues on the path they have been on so far and successfully addresses these goals in their plan of action, poverty and the ills it brings could be effectively eradicated in the nation once and for all.

– Alan Garcia-Ramos

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Poverty and Sustainable Development Goals in Malaysia

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The World Bank In Malaysia

Over the past 50 years, Malaysia has successfully reduced extreme poverty and promoted shared prosperity. Its goal is to attain high-income and developed nation status while ensuring that shared prosperity is sustainable.

Since gaining independence in 1957, Malaysia has undergone a profound economic transformation, transitioning from a predominantly agricultural and commodity-based economy to a robust manufacturing and service sector. This evolution has positioned Malaysia as a leading exporter of electrical appliances, parts, and components, driving remarkable growth that elevated the nation from low- to upper-middle-income status within a single generation.

Key indicators, such as Gross National Income (GNI) per capita, have demonstrated impressive growth, averaging 6.9% annually between 1960 and 2017. Moreover, Malaysia has achieved notable success in poverty reduction, with less than 1% of its population living below the international extreme poverty line of US$1.90 a day and only 2.7% below the average poverty line among its upper-middle-income peers at US$5.50. Additionally, the country boasts extensive global trade connections, engaging with 90% of countries worldwide, surpassing many of its regional counterparts.

Furthermore, improvements in healthcare have led to a steady increase in life expectancy, rising from 59 years in the 1960s to 75 years in 2019. Malaysia's openness to trade and investment has driven employment creation and income growth, with approximately 40% of jobs linked to export activities. Despite facing challenges such as the Asian financial crisis of 1997-1998, Malaysia has maintained an upward economic trajectory, averaging a growth rate of 5.4% since 2010. 

These achievements can be attributed to strategic development policies focusing on outward-oriented, labor-intensive growth, investments in human capital, and credible economic governance to ensure macroeconomic stability. However, as Malaysia prepares for its high-income transition, it confronts new challenges.

The current economic landscape is marked by slower growth, heightened inequality, and a lower proportion of high-skilled employment compared to its peers. Indicators such as labor compensation, tax collection, social spending, environmental management, and corruption control are areas that require attention, as they fall short of benchmarks set by high-income OECD countries. Domestically, there is a growing sense that the middle class's aspirations are not being adequately met, with concerns over job quality and equitable wealth distribution. These challenges are crucial to understand as Malaysia prepares for its high-income transition.

To address these challenges and compete effectively on the global stage, Malaysia must shift its focus toward broader economic development, emphasizing the quality over quantity of growth. Income inequality remains a significant issue, albeit gradually declining, and targeted measures, such as cash transfers to low-income households, are being implemented to alleviate poverty and support vulnerable populations.

Last updated: April 2024

The World Bank has had a long-standing relationship with Malaysia since its independence. Our partnership has evolved from development financing from the 1950s to the 1990s to leveraging the Bank's knowledge and research in its current form of collaboration. In 2015, the government invited the World Bank to open an office in Kuala Lumpur with a 5-year partnership under the Office Support Agreement (OSA) focused on disseminating Malaysia’s development experiences and policy innovations for the benefit of other countries, conducting original economic research, and sharing global experience and expertise in support of Malaysia’s development priorities. Today, the World Bank brands itself as an Inclusive Growth and Sustainable Finance Hub, reflecting the development ambitions of Malaysia to achieve inclusive growth, greater shared prosperity, and developed nation status, as well as to retain its global leadership role around sustainable finance.

Our work with Malaysia consists of three core pillars: 

• Supporting Inclusive Growth: As Malaysia is projected to transition into a high-income economy in the next few years, ensuring sustainable and inclusive growth will be a policy focus. In supporting the country’s shared prosperity agenda, our knowledge and research work encompasses areas of growth and inclusion, private sector competitiveness, and human capital development.
• Promoting Sustainable and Islamic Finance: Sustainable finance has become an increasingly valuable tool to support Malaysia’s vision of shared prosperity while achieving sustainable development. Working with stakeholders, the World Bank continues its knowledge, technical assistance, and research to develop a sustainable, inclusive, and resilient financial sector.
• Strengthening Governance: Countries with strong institutions are more resilient, facilitate private sector growth, reduce poverty, deliver high-quality services, and earn the confidence of their citizens. To enhance these outcomes for Malaysia, we have continued developing new measures to improve public sector productivity, planning and fiscal management, and transparency in government institutions and operations.

The World Bank Group, through its Inclusive Growth and Sustainable Finance Hub in Malaysia, is committed to supporting the government of Malaysia and its people in implementing reforms and achieving their aspirations toward an inclusive, developed nation.

Annual Report Financial Year 2023: The Hub reached a significant milestone with the halfway point of 'OSA 2.0' (Office Support Agreement 2.0). Following a successful Annual Review for FY22, the Hub realigned its work program with the government's priorities, providing relevant analytical work and technical assistance for informed policymaking.

Annual Report Financial Year 2022: Amid the challenges posed by the COVID-19 pandemic, global impacts, and policy changes in Malaysia, the World Bank Group Inclusive Growth and Sustainable Finance Hub adapted its work program to address immediate economic needs while pursuing long-term priorities. The Hub engaged in various activities, such as webinars, advisory services, policy notes, and in-depth reports, to foster inclusive growth and sustainable finance.

Annual Report Financial Year 2021: The 2021 financial year marked the beginning of our second phase of operations, from 2021 to 2025, as the World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia. Our Annual Report looks at the key highlights and activities the Hub undertook during the year. Please refer to the Annual Report to learn more about the Malaysia work program.

Annual Report Financial Year 2020: 2020 was a transition year for the World Bank Group in Kuala Lumpur as it marked the end of its first five-year term. The Hub prepared for its second phase as the World Bank Group Inclusive Growth and Sustainable Finance Hub, responding rapidly to support Malaysia during the COVID-19 pandemic. The Annual Report reflects on the first phase's work and prepares for the second phase of operations.

• Annual Report Financial Year 2019: The Hub partners with stakeholders, conducts research, and provides policy recommendations to policymakers, industry, and academia. This Annual Review Report highlights the progress made during a critical period of change and continuity. The Hub's diverse reports, publications, conferences, and discussions have benefited various sectors in Malaysia and lower- and middle-income countries, strengthening policymaking and institutional capacity in Malaysia.

Last updated: April 2024 

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