Time to change the way we measure poverty

The country’s current measurement of poverty incidence is ‘outdated, irrelevant and antiquated’, says expert


MALAYSIA’S measurement for poverty should be tweaked to better reflect existing realities on the ground, experts said.

DM-Analytics Sdn Bhd senior researcher Zouhair Mohd Rosli (picture) said Malaysia’s current measurement of poverty incidence — also known as absolute poverty incidence — is “outdated, irrelevant and antiquated”.

“Of course, as stated by the Ministry of Economic Affairs (MEA), Malaysia’s poverty line income (PLI), which is currently at US$5 (RM21) a day, is higher than the targeted PLI in the United Nation’s (UN) Sustainable Development Goal (SDG) at US$1.25 per day.

“However, we must bear in mind that the SDG’s US$1.25 per day threshold was deliberately set up to anchor the poverty lines found in the poorest countries. In fact, I would argue that our PLI should be higher and it should not be compared to this threshold because we are already in an upper middle-income countries group,” Zouhair told The Malaysian Reserve in a text reply yesterday.

Zouhair, who is the co-author of a Unicef report on urban child poverty published last year, said his study found that 7% of low-cost flat households in Kuala Lumpur (KL) lived in poverty, so it is ludicrous that the poverty rate in KL is at 0%.

“We are not saying that poverty rate in KL should be 7%, but our current PLI is too low that a significant segment of our societies has been excluded from the official statistics, especially in big cities.

“We might end up missing out on the urban poor if we failed to measure them. We have been voicing out these concerns for the past couple of years and it is a timely call by the UN for Malaysia to revise our current PLI,” Zouhair added.

The prime minister’s economic advisor, Dr Muhammed Abdul Khalid, in a commentary published in Sinar Harian yesterday repeated his call for greater recognition of the actual state of poverty in the country, describing the current rubric as out of date.

Muhammed, who is also the author of the bestselling book “The Colour of Inequality”, said MEA’s adoption of PLI — defined in absolute terms as a monthly income of RM980 for Peninsular Malaysia; RM1,180 for Sabah; and RM1,020 for Sarawak — was impractical.

In comparison, he said Palestine and Zimbabwe — countries with a GDP size that is one-tenth of Malaysia — had higher PLI levels.

“As Malaysia aspires to be a developed nation, the country should base its policy on indicators used by other developed nations,” Muhammed said.

He added that while the current poverty rate by MEA stood at 0.4%, which is equivalent to 24,000 households, the number of households receiving government assistance was significantly greater.

“In 2018, the amount of financial aid distributed was nearly RM27 billion. Of this figure, 75% were used on three types of assistance: Oil subsidies worth RM7.5 billion; education and welfare RM7 billion; and Bantuan Sara Hidup RM5 billion.

“This means that even though the poverty rate is at 0.4%, there are many others who are receiving aid, including the rich. This is neither optimal nor efficient,” Muhammed highlighted.

He said it is important that the government accepts the fact that the measurement it has long used needed change. “If not, we may well live in extreme poverty — one that involves the soul and morals — and that has no cure,” he concluded.

Meanwhile, Institute for Democracy and Economic Affairs research manager Wan Ya Shin in a statement earlier this week said the government should be more transparent in providing statistics and microdata in response to the recent report made by the UN special rapporteur on poverty.

“There (are) needs (for) distinctions between chronic and transient poverty as different strategies are needed to address these groups,” Wan said.

She agreed that the country’s social protection system should be viewed in a more holistic manner, as it is currently fragmented and needs greater coordination among the many ministries tasked to implement social programmes.

Last week, UN extreme poverty and human rights official Philip Alston claimed that the country’s poverty rate of 0.4% does not reflect the state of poverty in Malaysia.

Alston said the national poverty line of RM980 per household per month would see an urban family of four surviving on RM8 per person per day. A comprehensive report, inclusive of recommendations, will be presented to the Human Rights Council in Geneva in June next year.