Has Malaysia Zerorized Poverty?

Prof. Martin Ravallion of Georgetown University examined this issue recently. The Department of Statistics Malaysia has suggested the country has made huge progress on this rate. Officially, the poverty rate has fallen from near 50% in 1970 to just 0.4% in 2016.

Currently, that suggests the line is RM920 per household per month or about RM7 per person per day. This is compared with World Bank’s International poverty line of USD1.90 a day at 2011 purchasing power parity.

According to Prof. Martin, if one looks at countries with similar average incomes as Malaysia, the poverty line should be USD12 a day or at least 3 times the current line in Malaysia. That suggests an average income per month of above RM1,500 -  more like a minimum wage. If that is true then the poverty rate in not 0.4% but 20%! Up to 27% of households in Kuala Lumpur are earning below the living wage (RM2,700).

The United Nations’ new thinking on poverty and its eradication has suggested, amongst others:

·       Sustained growth of output and jobs;

·       Social provisioning;

·       Basic social protection floor; and

·       Progressive structural changes.

That demands improvements in education, employment and health – the key to a better life!

References:

1.         The Edge Financial Daily, 29 January 2019

2.         Anis Chowdhury and Jomo K Sundaram (NST, 2 Nov 2017)