Poverty Eradication: Malaysia

The approach used by Malaysia in planning for the eradication of poverty involved the targeting of incomes, the construction of the poverty profile and the targeting of specific target groups. In terms of incomes poor households are identified based on a specified poverty line income (PLI) adequate to meet the basic family needs such as food, clothing and shelter and other basic necessities. There are three separate PLIs to reflect regional differences in prices; hence a PLI each for peninsular Malaysia, Sabah and Sarawak. The PLI is adjusted regularly to reflect changes in consumer prices. In 1970 the poverty line income for a household was RM180 per month whilst the figure for 1993 was RM405 per month.

The PLI is used to construct the country's poverty profile based on statistics from income and labour force surveys regularly undertaken by the department of statistics. Based on earlier analysis, the poverty profile consisted of households in poverty by ethnic origin, occupation, educational attainment and their regional or state distribution. Based on this profile, the target poverty groups were identified and these include rubber tappers, padi growers, coconut smallholders, fishermen and plantation and landless agricultural workers. The urban poor were largely low-income workers and squatters.

The understanding of the profile of the target poverty groups enabled the government to formulate income improving programmes such as land development, double cropping for padi growers and replanting for the rubber smallholders and low-cost housing programmes and to ensure the impact of those programmes.

Now the stage has reached by which the concentration of efforts have to be on the eradication of poverty amongst the absolute poor who cannot be lifted out of poverty through income improving efforts alone. Two measures have been undertaken. The first is through direct assistance such as through building of simple houses for them and giving direct grants in the form of unit trust shares (about RM5000) in the national equity corporation (PNB) and let them enjoy the annual dividends.

The second approach is through encouraging small businesses among them and a financial facility called Amanah Ikhtiar has been set up to give small loans (RM500 to RM10,000) for small businesses such as tailoring, retail business and petty trading as well as hawking. This approach has been effective and repayment rates of the loans exceeded 99 percent (Alhabshi, 1995).

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