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The Complex Reality of Eradicating Poverty in Malaysia

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15 Oct 2024

6 Min Read

Afrina Arfa (Alumni Columnist)

IN THIS ARTICLE

Explore the complexities of poverty that entrap Malaysian households in cycles of deprivation and discover how to contribute to a more equitable future for all.

'End poverty in all its forms everywhere.' Among the many social issues unfolding across the globe, eradicating poverty remains one of the most urgent and critical challenges to be addressed. In 2015, all member countries of the United Nations (UN) adopted the 2030 Agenda for Sustainable Development, with the first goal being 'No Poverty'. Yet, nearly half of the world's population still lives in poverty, lacking food and clean water, resulting in the deaths of thousands each day. 

 

While Malaysia was branded as a 'success story' for tackling absolute poverty, having met Sustainable Development Goal 1 (SDG1) (formerly Millenium Development Goal 1, MDG1) of halving poverty before 2015, the COVID-19 pandemic brought a wave of income loss, health crises, and other setbacks that quickly turned the tide. Absolute poverty, determined by whether a household's gross monthly income falls below the Poverty Line Income (PLI), is set at RM2,208 in Malaysia. By this standard, 5.6% of households (equivalent to over 400,000 households) were considered poor in 2019, with the percentage rising to 8.4% in 2020 due to the pandemic's impact. Beyond these statistics, hundreds of thousands of families not only struggle with insufficient income but also face limited access to essential services like education, healthcare, shelter, clean water, and sanitation—redefining poverty as not a singular issue but a complex, multidimensional challenge.

Why Eradicate Poverty?

A subset of absolute poverty, households are considered to be in hardcore poverty if their gross monthly household income is below the Food Poverty Line Income (Food PLI), indicating that they do not earn enough to meet basic caloric requirements. Despite Malaysia's hardcore poverty rate standing at a low 0.2% (or 18,445 households) in 2023, these numbers often do not portray the ground reality experienced by thousands of people. 

 

Access to basic needs, such as shelter, food, and clothing, is considered a fundamental human right in every part of the world. Yet, many still lack access to these necessities. A UNICEF study reported that families in Malaysia are struggling more now than during the pandemic, with 8 out of 10 families struggling to meet basic needs. While families are working harder and spending less in response to the higher cost of living, it is still not enough for 90% of low-income households, forcing them to make extreme choices, such as reducing their food intake. As of May 2024, one in two children is reportedly eating fewer than three meals a day. From a humanitarian perspective, every individual has the right to a decent standard of living, yet those in poverty are stripped of their dignity and denied opportunities for a fulfilling life from the moment they are born—often purely due to chance.

 

For policymakers, eradicating poverty is not only morally right but also a sound strategy for fostering a healthier economy. Individuals living in poverty are often unable to fully participate in the economy due to a lack of education, skills, and resources. By lifting individuals out of poverty, Malaysia can boost workforce participation and innovation, leading to overall economic growth.

What It Means to Eradicate Poverty?

As a multidimensional issue, increasing income through minimum wage or other compensation initiatives will only alleviate some forms of poverty, neglecting the social and economic gaps that keep people entrenched in deprivation. By recognising every individual's right to a decent standard of living, addressing poverty in a country involves providing affordable healthcare, ensuring access to quality education, and improving housing conditions for the underserved. 

 

Due to the entrapment caused by poverty, which perpetuates a seemingly endless cycle, increasing income is often not enough to pull individuals out of their circumstances. The economic dimension of poverty eradication revolves around creating sustainable livelihoods, ensuring that resources are directed towards lifting individuals out of poverty and preventing them from falling back into it. Numerous initiatives for job creation and skills development that focus on building future-proof careers can uplift individuals, benefiting not only them but the economy as a whole. 

 

Statistically, global frameworks such as SDG 1 offer countries a roadmap for measurable progress. The UN targets to eradicate extreme poverty for all people everywhere by 2030, or at least reduce the proportion of men, women, and children of all ages living in poverty in all its dimensions by half. However, because poverty exists in national and international contexts, no uniform solution can be created for global application. Without such a curated framework, every country, including Malaysia, will need to tackle poverty individually with country-specific programmes that may be difficult and time-consuming to implement.

Why Is It Difficult to Eradicate Poverty?

In 2023, a total of RM1.5 billion was approved to mobilise programmes and projects that can generate income for target groups to end extreme poverty in Malaysia. Through the MADANI framework, numerous programmes such as Program Pemerkasaan Ekonomi Komuniti Bandar, Skim Pembangunan Kesejahteraan Rakyat, Program Pembangunan Ekonomi Orang Asli, and many more have been introduced to aid struggling families. 

 

Despite vast efforts by the government, eradicating poverty is fraught with challenges. Over the past few decades, Malaysia has faced multiple economic slowdowns and crises, such as the financial turmoil in 2007/2008 and the COVID-19 pandemic in 2020. During these times, income-generating opportunities in both the formal and informal sectors become more limited due to a decline in the need for labour. The presence of systemic inequality in both our economy and the global economy disproportionately affects the poor, who often lack the financial buffers to weather economic downturns. These fluctuations trap people in a cycle where poverty begets more poverty. 

 

The poverty measurement employed using PLI and Food PLI has also been critiqued for its constrained approach. As the change in PLI is unidimensional and based solely on income, it automatically alters the poverty rate whenever the PLI changes. Following the comment made by UN human rights expert Philip Alston, stating that Malaysia claims the world's lowest national poverty rate by using an unduly low poverty line that does not reflect the cost of living, the country increased its PLI from RM980 to RM2,208 for the first time in 15 years. This means that for 15 years, families earning slightly above the PLI were not recognised as living in poverty, thus excluding them from benefits intended for those in poverty. 

 

However, the government has since injected various financial aid and cash disbursements to families in need. Yet, according to a report in 2020, only 54% of households earning below RM4,000 and 51% of those earning above RM4,000 were recipients of Bantuan Sara Hidup (BSH), given that not many knew about the aid available to them. While policies aimed at wealth redistribution or social safety nets exist, they often do not reach the right hands, reflecting the imbalances in the economic system that allow wealth to concentrate at the top, leaving little room for upward mobility among those at the bottom. 

Conclusion

An issue as deep-rooted in society and as nuanced as poverty requires time and extensive research to be fully eradicated. Simply increasing income is inadequate for the long term; the complexity of poverty demands a holistic approach that tackles both the social and economic barriers these individuals face. Although Malaysia has made strides in reducing poverty, structural challenges remain, necessitating comprehensive reforms that directly address the root causes of inequality. 

 

While the burden falls heavily on policymakers, numerous local initiatives are providing aid on the ground. For those interested in making a difference, organisations like the Malaysian Relief Agency and Yayasan Kebajikan Negara work tirelessly to support impoverished communities. Donating to these groups, volunteering, or simply raising awareness about poverty can all contribute to the broader goal of eradicating poverty in an inclusive and sustainable manner.

Discover how Taylor's University is working to eradicate poverty in Malaysia through our Eradicating Poverty Impact Lab, where we explore innovative solutions and community initiatives!

Afrina Arfa is a Bachelor of Finance and Economics (Honours) alumna of Taylor's University. She spends her time indulging in economic news, hoping to inspire others to think beyond the constraints of society.

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