[Malaysia] Poverty line higher in rural areas

from Sun 2 Surf

Jacqueline Ann Surin

BANGI: The government's revised poverty line in the Ninth Malaysia Plan (9MP) has taken into account some earlier shortcomings, and is a better reflection of poverty in Malaysia, a development economist said.

Institute of Malaysian and International Studies (Ikmas) director Prof Dr Ragayah Mat Zin said the revised approach for the absolute poverty line now provides for a unique poverty line income for each household based on its size and composition.

"Household characteristics determine how much each family needs," she said at an Ikmas seminar at Universiti Kebangsaan Malaysia last Thursday.

"The food basket for East Malaysia also makes allowances for the absence of dhall in their diets, which is substituted for by having more fish," she added.

Ragayah, who was a member of two technical working groups that contributed input to the 9MP, said the revised poverty line income also allowed for differences in urban and rural living costs, unlike before.

The 9MP found that the poverty line in rural areas in Malaysia was higher at RM698 compared with RM687 in urban areas, attributed mostly to the higher cost of living in rural Sabah (see chart).

"Rent and transportation may be more expensive in urban areas but items like food and clothing may be more expensive in rural areas because of distribution costs.

"Urban areas also have hypermarkets that offer much cheaper goods than small shops in rural areas," Ragayah explained.

She said the government also took into account changing consumption patterns as income increased and the economies of scale in consumption patterns; for example, how the use of lights at home would benefit more than one person at the same cost.

Ragayah noted that the current methodology shows the overall poverty line income at RM691, higher than the RM588 calculated using the 1977 methodology.

"More people are defined to be poor because the new methodology has a higher poverty line income.

This does not, however, mean that poverty is on the increase.

"While the 2005 methodology shows the incidence of poverty at 5.7% for 2004, it would be at 4.4% using the 1977 methodology," she explained.

Ragayah said it was good that the revised methodology was moving towards a higher level of accuracy, but argued that what was more important was to reduce the income disparity in Malaysia.

"Income inequalities in Malaysia are at an unsatisfactory level," she said, noting that the 9MP indicated that, for the three major races, the highest intra-community income inequality was among bumiputras.

Yayasan Strategik Sosial executive director Dr Denison Jayasooria said the 9MP was lacking in its focus on urban poverty, noting that the plan of action to address the problem was reduced to only one paragraph.

"With increasing urbanisation and rural-urban migration, and the acute problems of low income families at the bottom 40% in urban areas, there should have been a fuller strategy and more resources allocated to address the issue," he told theSun.

He added that using the income approach to determine the poverty line did not capture the urban poor's experience of deprivation because of the lack of institutional support from government agencies in urban areas compared to rural areas, and the lack of access to services.

He said, for example, that while the ratio of doctors to the urban population may be higher than in rural areas, this did not mean that a city dweller could access medical services, because of the higher cost of privatised medical care.

Denison added that the 9MP was also lacking in information that was available in previous Malaysia plans, such as information on what constituted the top 20%, middle 40% and bottom 40% of the population according to income level, and the racial breakdown of income levels.

"The failure to have this makes it difficult for policy makers to attain a clear picture of the size of the bottom 40%," he noted.