Poverty in Malaysia

Poverty in Malaysia is a controversial economic issue. The definition of poverty and the poverty line for Malaysians has been disputed, and government policies to address poverty such as the Malaysian New Economic Policy have been met with political protest.

History

Independence

After Malaysian independence, significant chunks of the Malaysian economy were controlled by British colonial firms. Second economically to these monopolies were small-scale retail enterprises run by the Malaysian Chinese and small-scale moneylending businessess run by a few Malaysian Indians. [cite book |last=Musa |first=M. Bakri |title=Towards A Competitive Malaysia |year=2007 |publisher=Strategic Information and Research Development Centre |location=Petaling Jaya |isbn=978-983-3782-20-8|pages=122 ]

New Economic Policy

After the May 13 Incident in 1969, where racial rioting broke out in the federal capital of Kuala Lumpur, the Malaysian New Economic Policy (NEP) was initiated. Its purpose was to narrow the disparities in wealth between the Malay and non-Malay communities in the country through aggressive affirmative action and state intervention in the economy. [Musa, pp. 122–123.]

It has been suggested that although the NEP was initially successful in achieving its goal of reducing the economic gap between different communities in the country, its politicisation in the 1990s and 2000s hampered its implementation; during this period, intraethnic economic inequity amongst the Malays reportedly increased. Anecdotal evidence has been used to suggest that rural Malay communities have not been significantly uplifted economically by the NEP. [Musa, p. 123.]

Industrialisation and urbanisation

As the country modernised, new forms of poverty appeared; one such problem was that of urban poverty. Economic development has been named as the cause of poverty amongst "single female headed households, the rural elderly, unskilled workers and migrant workers" by a local economist. [cite web|url=http://www.mier.org.my/mierscan/archives/pdf/musalmah3_10_2005.pdf |title=Eradicating Rural and Urban Poverty|accessdate=2007-06-01 |last=Johan |first=Musalmah |year=2005 |month=October |format=PDF |publisher=Malaysian Institute of Economic Research]

The United Nations Development Programme has praised Malaysia for its reportedly successful poverty reduction programmes. Officially:

An unacademic survey, however, found that the official poverty line at the time the UNDP figures were published, set at about RM500, was unrealistically low; a group of factory workers surveyed suggested that to survive, their households would require a monthly income of about RM1,750. [cite journal |url=http://aliran.com/oldsite/monthly/2004a/2j.html |title=Has Malaysia really eradicated poverty? |accessdate=2007-06-01 |last=Devaraj |first=Jeyakumar |year=2004 |journal=Aliran Monthly |issue=2] A 3 room apartment in Malaysia near the town has a rent of between RM200-RM1000.

Urban and rural poverty

Although the apparent focus of government policy has been on addressing poverty in rural communities, commentators have argued that due to urbanisation — the proportion of Malaysians living in urban areas increasing from 27% in 1970 to 62% in 2000 — the urban communities have been unfairly neglected.Musa, p. 124.]

The official figure for urban poverty is given as 2%; critics have argued that this significantly underestimates urban poverty, as the poverty line is set at RM500 per month for a family of four — a monthly income which has been argued as unrealistically low for a family of four to meet its needs. A survey of Kuala Lumpur has suggested that about a quarter of the population lives in squatter settlements, which commentators like Bakri Musa have argued is a more reasonable estimate of the poverty rate.However,as of December 2007,the squatter settlement has been totally eradicated in the state of Selangor.

Prior to urbanisation, urban poverty was largely a problem confined to the non-Malay communities, as they were significantly urbanised at the time of independence. However, as Malay villagers migrated to the cities, the proportion of Malay poor has likewise increased.

Notes and references