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Has Malaysia really eradicated poverty?

Unrealistically low poverty line results in rosier statistics

by Jeyakumar Devaraj
Aliran Monthly 2004:2
http://www.alir
In its article titled “The Mahathir
an.com/oldsite/i
Mystique”, Newsweek, (23
mages/squatters
November 2003) terms Malaysia
.jpg
as an Asian success story where
“the percentage of Malaysian
households that fall below the
poverty line has plunged from
nearly 50 per cent to an estimated
6 per cent in 2000.” The figures
quoted by Newsweek are lifted
from Mahathir’s 2004 budget
speech in Parliament on 12
September 2003. From the horses’
mouth as they say — but
unfortunately some horses have
learnt to bluff!

The poverty line

Generally speaking, the poverty rate can

be lowered by two methods. The first is
by raising the income of the poorer
families to above the poverty line. The
second method, and undoubtedly the
easier option, is to lower the poverty line
 Can a family

itself! of five survive

on an income of
RM550 per
Malaysian household income distribution month, given
as quoted in the Eighth Malaysia Plan is the cost of living
pictured in Table 1 — with 75 per cent of in Malaysia
Malaysian households earning below today? Where
RM3,000 per month and 25 per cent of would they live?
And can their
households earning below RM1,000 children go to
monthly. The same document (8MP) also school?
specifies the poverty line for
Semenanjung
Malaysia as RM540 Table 1 -
per month for a family Household
of five individuals. Is Income
this a realistic figure? (RM/month)

A living wage? More

9.8
than
%
RM5,000

Can a family of five RM4,001

5.5
survive on an income -
%
of RM550 per month, RM5,000
given the cost of living
in Malaysia today? RM3,001
9.6
Where would they -
%
live? And can their RM4,000
children go to school?
RM2,001 17.
Yet given the
- 4
government’s
RM3,000 %
definition, they would
not be classified as RM1,001 32.
being poor. - 7
RM2,000 %
At a meeting with 60
factory workers in Sg 20.
Siput recently, we RM501 -
0
asked them to suggest RM1,001
%
a reasonable
household budget, and Less than 5.0
the outcome of that RM500 %
exercise is
summarized in Table Source: Eighth
2. The participants felt Malaysia Plan.
 Table 2 -
Household
that the cost of buying a house and a small Expenditu
allocation for savings must be part of a balanced re (per
family budget. In their opinion, any family with a month)
household budget of below RM1,750 would be
facing economic hardship; House 40
Loan 0
Marke 30
ting 0
A realistic poverty line
Grocer 30
ies 0
In Britain and in several other countries in the
European Union, the poverty line is defined as one School
20
half the average household income. In Malaysia, expens
0
the average household income is RM3,200 per es
month. Half this figure would be RM1,600. In Motor 15
other words if we used the definition used in bike 0
Britain, households earning less than RM1,600 per
month would be considered as poor! If RM1,600 Medic
per month is taken as the realistic poverty line, 10
al/Clot
then around 50 per cent of Malaysians are poor — 0
hes
see the Income Pyramid overleaf — and this is the
level of poverty as quoted by Mahathir for 1970! Festiv
10
als/Tri
0
No one is denying that there has been significant ps
growth in the national economy. Per capita income
(Per capita income = total income of the nation for Light/
10
that year divided by the population) has soared Water/
0
from RM1,132 in 1970 to RM13,683 presently! Phone
(Incidently, this would work out to an average
household income of RM5,534 per month.) Insura
10
However as the income distribution pyramid nce/sa
0
depicts, the distribution of income in Malaysia is vings
skewed towards the rich, and there is still R
significant poverty in Malaysia. M
Total 1,
Perhaps the most incredulous aspect of Malaysia’s 75
poverty statistics is that it hasn’t been challenged 0
by the mainstream media nor by the academicians.
Big Brother’s doublespeak (term used by Orwell
in his book 1984) apparently rules supreme in Malaysia today!

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