MALAYSIA’S poverty rates could spike from the Covid-19 pandemic because the country lacks comprehensive social safety nets and is understating true poverty levels, said Philip Alston, the former United Nations Special Rapporteur on extreme poverty and human rights.

He said his prediction coincides with projections by the World Bank and the International Monetary Fund (IMF) that the pandemic would catalyse a poverty rate increase.

Alston’s findings from a visit here last year, while he was with the UN, were released yesterday.

He said Malaysia will not be an exception when it comes to experiencing a rise in poverty rate because it lacked social protection safety nets.

“Certainly Malaysia, with no real social protection safety nets, is clearly going to see a significant spike in poverty rates,” he told The Malaysian insight in a Skype interview in conjunction with the release of the report.

Alston last year said Putrajaya is understating poverty levels because it used outdated yardsticks. 

He yesterday said the situation could get worse if the government does not measure the poverty rate accurately, disclose statistics and acknowledge the actual number of people in poverty.

Malaysia’s poverty line is set at RM980 per month for a family of four. This would translate to RM8 (around US$2) per person per day.

“That is just not sufficient, certainly not in urban areas. And so, the basic amounts that are provided in addition to the basic amount of protection provided need to be significantly strengthened.”

While Putrajaya’s RM260 billion stimulus package to cushion the impact of Covid-19 includes cash handouts to the needy, Alston said such measures for those in poverty is insufficient.

“The level of cash aid available in Malaysia can be very minimal and while it can be important, it is not a substitute for structural policies such as housing, which is not resolved by getting a small handout from the government.

“Decent education, adequate food for people who don’t have enough, are not resolved by handing out small handouts,” said Alston, adding that there should be “minimum guarantees” in social welfare for all needy people.

In his report for the UN, Alston disagreed with Malaysia’s 0.4% poverty rate.

In remarks released together with the report, he said Putrajaya should review the national poverty rate to show a more inclusive picture of marginalised groups. These include indigenous people, migrants, refugees and stateless persons, as well as the disabled.

Protect poor, not big businesses

Alston, who is also a law professor at New York University, said the government should ensure that the lower income group prospers, as spending by the community is significant in stimulating the economy.

“The biggest challenge is to understand that the best investment in a time of recession is to ensure that people at the bottom of the income ladder are able to survive.

“If they don’t, there is a huge drag on the society,” he told The Malaysian Insight.

“It is a mistake to assume that because of Covid-19, government support needs to go to the wealthy to protect businesses.

“The wealthy are not going to invest money unless there is a good economic climate, but the poor are always going to be spending whatever money they have and stimulating the economy.”

The World Bank recently said that the coronavirus could drive between 70 and 100 million people into extreme poverty this year as the global economy undergoes the worst recession in 80 years.

The IMF also warned of sluggish global economic growth and worsening inequality, with low-income countries to be especially hard hit.

The fund also revised its projection on the global economy, which is expected to shrink by 4.9% compared to the 3% predicted in April. – July 7, 2020