Who are the “poor” in Malaysia

We live in an age which excels in broadcasting slogans and catchy phrases. Often we, the hearers, unconsciously ‘choose’ the meaning. A good example is “People first.” What does it mean? Who are “the people”?

We most easily think of “the people” as ourselves, our “class” of people. We forget that “the people” includes politicians, civil servants, police, soldiers, bankers, businessmen, garbage collectors, drivers, investors, farmers, etc., all with their dreams and goals.

Who’s poor?

All of us fear being poor. That’s why we worry about increases in the price of electricity, fuel, assessments and hikes in tolls. We recognize there will always be rich and poor. We hope the poor won’t suffer too much. We hope they will grasp opportunities and lift themselves up. We “do charity” now and then, and shed tears of joy whenever we hear of someone doing good for the poor.

Yet, the question “who are the poor?” is not easy to answer. One economist famously said “Poverty, like beauty, lies in the eyes of the beholder.”

When, in our conversations, we try to define poverty, the first thought that arises is lack of income or resources.

Eventually we end up with a list of poverty indicators which are not much different from what we find in academic discussions of poverty: “vulnerability to risks, powerlessness, lack of personal freedom, social exclusion, etc.”

Such conversations often end with someone asking whether there is an official definition of poverty. And, as soon as we hear it, we critique it.

Yet those who work for government, e.g. in the Social Welfare Department, in the Housing Department and in the Economic Planning Unit (EPU), have to work with definitions.

They need clear definitions in order to make decisions.

The statistically poor.

So, according to officialdom, who are the poor?

I’ll start with official data from the statistics department, published by the EPU.

Poverty Line Income (PLI).

Malaysia began measuring the incidence of poverty in 1970. In 1977, we introduced the PLI approach: any household which earns equal to or less than the PLI =96 and the PLI varies according to where the household is located =96 is classified as poor.

Household.

The PLI is based on "household” income.

In 2005, when the current definition was finalized, the “reference household” was made up of 1 male and 1 female aged 18-29, 2 boys aged 3 and 9 and a girl aged 5.

For the reference household, statisticians and dieticians estimated the expenditure for a healthy and balanced diet. This is called “Food PLI.”

To this was added “Non-food PLI,” comprised of the expenditure for clothing, housing, durables, transport and =91others.’ The Non-food PLI is based upon many inputs, including Household Expenditure Surveys, mathematical models, tests, checks and reviews.

This is a summary of the PLI’s for 2005 (source, Table 2.8 on page 47):

PLI

Urban (2005), RM

PLI

Rural (2005), RM

Food

Non-Food

Total

Food

Non-Food

Total

Maximum (WP Kuala Lumpur)

404

476

880

Maximum (Sabah)

420

382

802

Minimum (Kelantan)

373

245

618

Minimum (Kelantan)

352

220

572

The PLI is adjusted annually for changes in the Cost of Living Index. The latest year for which I was able to locate figures is 2010, only with this level of granularity (source):

Peninsula

Sabah & Labuan

Sarawak

Malaysia

Incidence of poverty

2.0 %

19.2 %

5.3 %

3.8 %

No. of poor households

102,200

99,100

27,100

228,400

Mean PLI

RM 763

RM 1,048

RM 912

RM 800

Mean Per Capita PLI

RM 194

RM 225

RM 208

RM 198

According to officialdom in Malaysia, the incidence of poverty in 2012 is 1.7 %, an improvement on the 3.8 % reported for 2010 (the figure reported for 1970 was 49.3 %).

Although Household PLI is the “official” way of reporting poverty, it does not appear to be used by civil servants to make decisions.

Welfare department.

I’ve not been able to determine what welfare payments are “for the poor,” and how “the poor” are defined and assessed. I’ve been told Welfare departments around the country do not use the PLI.

Low-cost housing.

According to some REHDA materials on an EPU website, those who earn less than RM 1,500 per month ("low income households") qualify for low cost housing.

BR1M.

A ceiling of RM 3,000 per month is used for deciding which households qualify for BR1M cash hand-outs “to alleviate the burden of low income earners.”

In his 2014 Budget speech, Prime Minister Datuk Seri Najib Tun Razak announced another round of BR1M hand-outs.

According to a report in the Star Newspaper, people can now register online to receive the hand-outs, which are expected to flow to “5.9 million households” and “2 million unmarried individuals” in the country.

The hand-outs are for 3 groups of people:

First, households with a total monthly income of RM 3,000 and less. It's claimed that 5.9 million households are eligible. The head of each household will receive RM 600 (up from RM 500 previously).

Second, unmarried individuals. It's claimed that 2 million persons are eligible. Each will receive RM 300 (up from RM 250 previously).

Third, people living alone who are aged 60 years and above. Each will receive RM 600 (up from RM 500 previously).

Leaving aside the question of sensibility of hand-outs as a means to alleviate hardships caused by increases in the cost of electricity, tolls, fuel, etc., I wonder how the figures 5.9 million, 2 million, etc. were computed.

Although a Barisan Nasional website says “80 % of the (sic) total Malaysian households” will benefit,38.8 % seems a better estimate, since according to the EPU, that’s the percentage of households which earn RM 2,999 or less per month.

So, how do we recognize “the poor”? What’s the PLI? What do you think it should be? How many people are poor? Where are they? How do civil servants decide who’s poor for purposes of welfare, housing and BR1M? What does “People first” really mean?

Rama Ramanathan blogs at http://write2rest.blogspot.com/

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