Poverty and Economic Inequality: Malaysia

As a plural society, Malaysia cannot afford to have considerable presence of poverty and inequality. They undermine its social fabric and the foundations of long-term political stability. Thus having a strong anti-poverty and pro-distribution economic development policy is a strategic imperative. To be complacent on these two interrelated concerns is to court disaster in the form of heightened ethnic tensions which had once found expression in the infamous 1969 May 13th inter-ethnic clash in the Kuala Lumpur city. The incident led the government to reappraise development policy then which had hitherto relied purely on free market forces and to embark on a development with precise and clear objectives of eradicating poverty irrespective of ethnic origin and to eliminate economic inequality between the major ethnic groups in the country.

The new economic policy (NEP) covering the period 1971 to 1990 aimed to attain national unity through the implementation of two-pronged strategies of poverty eradication and eliminating inequality between the major races in the country so as to eventually eliminate the identification of race along economic functions. The second strategy involves the need to ensure Bumiputra community own and manage at least 30 percent of share ownership within the 1971-90 period. These objectives to be attained within the context of expanding economy and considerable investments in the sectors with high presence of low-income population. The NEP involved significant direct public sector input in agricultural and rural development programmes such as land development schemes, drainage and irrigation, crop replanting with high-yielding varieties and rehabilitation and subsidies, as well as in urban developments.

Social development projects such as rural health and education and low-cost housing programmes were implemented across country to enhance health standards and accelerate the adoption of modern methods of production and improve overall quality of life.

The measures to reduce socioeconomic disparity include efforts to create a Bumiputra commercial and industrial community (BCIC) among the indigenous population often referred to as the Bumiputras. These measures include provision of business premises in urban areas (by Urban Development Authority),  access to government procurement schemes, soft-term loans, training and consultancy services and scholarships for technical and professional education. In addition, share ownership scheme was also established through unit trusts schemes undertaken by institutions such as the Pelaburan National Berhad, or the national equity corporation. Trust agencies such as the state economic development corporations and Majlis Amanah Rakyat (MARA) or the council of trust of indigenous people were created to under-take commercial and industrial projects and to hold in trust ownership on behalf of the Bumiputras.

One important area of focus has been in the area of employment and occupational structure which has substantial disparity in inter-ethnic representation especially during the ‘70s which was largely due to the differential inter-sectoral involvement and participation amongst and between the various ethnic groups. A major measure is to send bright Bumiputra students to local institutions of learning and also to overseas institutions to undertake professional training courses in science and technology, management and commerce and professional areas. A special institute, the Institute Technology MARA was created initially to provide sub-professional training in engineering, technology, business management and related disciplines (journalism and law, for example).

Source: Poverty Alleviation in Pakistan: Present Scenario and Future Strategy, Mohibul Haq Sahibzada. Republished with permission.