The Malaysian Insight

PUTRAJAYA’S focus on the B40 group has obscured critical differences between low-income households and the degrees of poverty felt by this group, which include having access to clean water, jobs and public services.

The term B40, as it was fashioned by the previous Barisan Nasional regime, includes those living in “relative poverty” and families living in hardcore or “absolute poverty”.

But the differences between the two and the scope of their problems are papered over because Malaysia had set an artificially low poverty threshold, says sociologist Prof Denison Jayasooria.  

By ignoring the differences between the relative poor and the absolute poor, the government is unable to craft effective policies tailored for each group, said Denison of Universiti Kebangsaan Malaysia (UKM).

Denison had accompanied a UN official on a recent poverty fact-finding mission, which uncovered substantial numbers of households – Malaysians and foreigners – living in conditions considered poor by most world standards.

When the UN team queried government officials on such cases, most of them replied that “there are almost no poor people in Malaysia”.

This is because most of the poor had been lumped together under the catch-all category of B40, which refers to people who are making low-incomes, said Denison.

For example, there are people living in the interiors of Sabah and Sarawak and they may make marginally more than the poverty-line income, said Denison of UKM’s Inter-ethnic Studies Institute (KITA).  

“But their houses lack clean water, they are far from schools and healthcare facilities, they lack access to jobs,” Denison told The Malaysian Insight.

“But they are grouped together with others in the B40, which also include people who have homes, jobs, have access to schools and clinics but who struggle to get by.”

Another example was stateless people, Malaysians who lacked proper identification documents but are nevertheless employed in the informal sector, he said.

Because they lack MyKad, they did not have access to proper healthcare and their children can’t go to government schools. 

“When we asked government officers how many of stateless people are there, the officers didn’t know because ‘these people don’t come and register themselves’. When in reality it should be the government’s job to go out there and find these people.”

This is why Denison and many experts who have studied poverty in Malaysia want a thorough reform of how the country tackles deprivation and the most urgent need is to review the poverty-line income (PLI) to match the country’s state of development.       

Different groups, different needs

Under the current national PLI measure of RM980 per month, only about 0.4% of Malaysians are categorised as poor, the equivalent of about 25,000 households.

UN rapporteur for extreme poverty and human rights Prof Philip Alston characterised this as a “statistical sleight-of-hand” and that it “obscures the troubling reality that millions scrape by on very low incomes and there is significant hardship in urban and rural areas”.   

Economist and author Prof Martin Ravallion who is based in Universiti Malaya, had also argued that the current PLI is not relevant for Malaysia’s status as an upper middle-income nation.

According to a paper Ravallion wrote in January, Malaysia’s current PLI is equivalent to RM8 or US$2 per day, which was relevant in the 1970s.

“If one looks instead at countries with a roughly similar average income as Malaysia, one would expect the poverty line to be about US$12 a day – three times the current line in Malaysia.

“That would indicate a national poverty rate of about 20%, not 0.4%!” said Ravallion, who is UM’s Royal Ungku Aziz Professor.

In a May paper, the Khazanah Research Institute (KRI) also urged Putrajaya to review the PLI and how poverty is calculated so that policies can better help the “relative poor” and “absolute poor”.   

“Absolute poverty forms the basis for welfare and social assistance to deliver basic needs,” wrote KRI researchers Christopher Choong Weng Wai and Tan Zhai Gen.

“While relative poverty provides the ground for the promotion of socio-economic participation for those left behind from the processes and outcomes of economic growth.”

The KRI authors said reviewing the PLI and differentiating between the absolute and relative poor was necessary to craft policies that target their different needs.

“If the fiscal space is broad enough, we should be addressing both absolute and relative poverty with equal vigour and urgency.

“However, with social spending on a declining trend, we need to deliberate and debate on how to prioritise and allocate limited fiscal resources between absolute and relative poverty.” – August 25, 2019.