ONE of the ways poverty is defined and measured in Malaysia is through the poverty line income (PLI), which is an absolute income threshold.

It is defined as “the minimum income needed by a household to meet the basic food and non-food needs for each member to enable him or her to have a healthy and comfortable life.”

PLI is determined using the “cost of basic needs”, which involves calculating the minimum income required by a household to meet each member’s basic nutritional needs, as well as other basic needs, such as clothing, housing, transport and other non-food items.

These calculations are then adjusted for variations in prices across states and between urban and rural areas, as well as for differences in household size and demographical composition.

Under the PLI, households that fall below a certain income cut-off are officially defined as poor. According to the 2016 household income and basic amenities survey, these were households with monthly gross incomes of less than RM960 in the peninsula, less than RM1,180 in Sabah and less than RM1,020 in Sarawak.

The second income-based approach to poverty used in Malaysia is the “bottom 40%” or the B40 group, a term referring to households at the 40% of the income distribution. There are approximately 2.7 million such households in Malaysia.

Unlike PLI, B40 does not provide a specific definition of the poor. Nevertheless, it is similar in that it provides a broad income category for economically vulnerable households.

In 2014, the B40 were defined as households earning RM3,855 and below and a calculated mean income of RM2,537 and a median income of RM2,629.

Within this, the vulnerable poor are identified as families with incomes between the PLI and 2.5 x PLI, and the aspirational poor with income between 2.5 x PLI and the national mean income.

One-dimensional view

Both the PLI and B40 are income-based poverty measures help policymakers identify who the poor are, and design policies to address their needs.

However, an income-based approach also has its drawbacks. It portrays poverty through only one dimension, related to material and income-based issues, while leaving out poverty’s other contributing factors, such as poor education, unemployment and social exclusion.

When it comes to tackling poverty, an income-based approach can lead to policy measures that heavily prioritise material and income-based assistance to the poor, over and above other forms of social support and assistance.

For example, in the 10th Malaysia Plan (10MP), many programmes to elevate the B40 communities were income-based, targeted at improving their levels of income, production, assets and consumption.

This included, among others, interventions to support urban and rural micro-enterprises, creating business ownership opportunities for capable entrepreneurs, and raising household income through ICT programmes, such as e-Rezeki micro-sourcing to generate income.

According to 10MP, these were deemed to have succeeded in increasing the socio-economic participation of the poor, as well as in “raising their quality of life and living standards”.

Yet, while income-based interventions (provided these are effective) may well result in raising the poor’s income-generation potential, the actual impact on improving their quality of life and living standards is less straightforward.

This is because, in reality, poverty is driven by a wide spectrum of issues. These are not tied exclusively to income and wealth but also related to various political and social challenges: restricted access to resources and services, heightened risk of crime, violence and dysfunctional families, and weak social cohesion, to name a few.

Need for multidimensional approach

To get to the heart of why and how poverty occurs and how best to help people get out of it, policymakers should adopt a multidimensional approach.

Instead of focusing solely on material issues, they should also pay attention to various other social and political challenges faced by the poor and how policies may be tailored to meet their specific needs. Further, interventions must strike a good balance between economic uplift and delivery of social support and assistance to the needy.  

In this sense, the 11th Malaysia Plan (11MP) has laid some good groundwork. While the focus is still on uplifting B40 households towards a middle income society, the blueprint moves beyond income-based measures, to look at broader multidimensional strategies, such as improving health standards and education levels and skills. 

Significantly, the 11MP uses a multi-dimensional poverty index (MPI) which, unlike the income-based PLI, redefines poverty in relative rather than absolute terms. It does this by measuring household levels of “deprivation” in terms of education, health and living standards (giving equal weight to each dimension), and using the results to gauge the degree of poverty.

By attaching specific indicators to each dimension (e.g. number of years of education, access to health facilities, clean water supply), the MPI also provides detailed insights into the different layers of deprivation faced by the poor, over and above purely income-based challenges.  

Tackling poverty on a micro-level

The application of the MPI in policy planning is encouraging and much needed, as it allows biases to be overcome and facilitates a better, more realistic assessment of poverty that recognises and addresses multiple dimensions.

Moving forward, policymakers should collaborate with universities and local authorities to compile case studies of poor communities across states, and between the urban and rural areas. These case studies should aim to create micro-level “poverty profiles”, by gathering detailed information on demographics, while also identifying specific challenges and issues related to poverty that are encountered in different localities.

Building on these profiles, policymakers will be able to assemble a fuller and more accurate picture of poverty as it exists on the ground.

Beyond the income dimension, these studies may also capture insights into the social and political underpinnings driving poverty, which may or may not be tied to local concerns. These insights can provide a platform for policymakers to work with local authorities and social service agencies to plan and set poverty interventions tailored to community needs.

The first step towards effectively addressing poverty is to recognise that it is multifaceted and driven by a broad range of material and structural inequalities.

Beyond targeting income levels and wealth creation, policies should prioritise issues, such as affordable housing and access to education and basic healthcare, such that the poor are empowered to lead their lives with dignity and self-respect.

Only then can we truly claim to have an inclusive development approach that prioritises improving the quality of life and wellbeing of all. – September 25, 2018.

* Lim Su Lin is a Policy Analyst with Penang Institute in Kuala Lumpur. She graduated in 2013 with a degree in History from Cambridge University. Her research interests lie primarily in psychosocial health and wellbeing. She explores these in the context of making recommendations to improve social and development policies. The long-term goals of her work are to advocate for more equitable outcomes and reduced inequalities in society.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.