ACCORDING to Bank Negara data, the second quarter of 2023 saw a slight increase in the country’s economy, with growth of 2.9%; a decrease from the 5.6% growth in the first quarter. Even though it has made economic progress, Malaysia nonetheless struggles with the stigma of chronic poverty.

The struggle for survival has become more intense for those less fortunate due to surging cost of living, which is driven by inflation, rising prices of necessities, and higher housing expenses.

In this instance, the rising cost of living stifles social mobility by putting the lower-class population in a straitjacket and limiting their opportunities for socioeconomic advancement. This financial hardship prevents people from accessing good healthcare, education, and work opportunities, which blocks their ability to advance in society.

This continuous battle highlights how urgent it is for our politicians to develop and practise robust, all-encompassing solutions that can successfully negotiate the complex aspects of poverty and promote social mobility. With this, policymakers have proposed looking at minimum wage alternatives to lessen the negative effects of poverty. Thus, Malaysia set RM1,500 as the minimum salary in 2020.

Although this policy intends to ensure that all workers have a minimum standard of living, there is the possibility of job losses due to increased labour expenses. This serves as one of the weaknesses in poverty eradication, as a minimum wage that is set high may result in job losses, particularly for small- and medium-sized enterprises that may find it difficult to pay higher salaries.

Workers with lower skill levels may have fewer job possibilities, which might increase their unemployment rate. Therefore, poverty is made worse by economic inequality, which persists while certain people are unable to get economic opportunities.

Apart from that, a coherent and effective strategy may be needed to improve the fragmented execution of the country’s many poverty-eradication programmes. This is because Malaysia has 17 agencies providing 170 social assistance schemes, over 70 agencies providing skills training, 35 agencies focusing on SME digitalisation, and over 30 agencies providing investment promotion services.

Adopting an excessive number of programmes causes the strategies’ efficacy to decline and the implementation of poverty eradication to become out of control. It is believed that resources can become inefficient when distributed across several programmes, making it more difficult to allocate resources optimally and effectively to achieve poverty eradication.

Meanwhile, the efficiency of attempts to reduce poverty may be hampered by a lack of synergy resulting from inadequate coordination between the different agencies. Although various poverty-eradication programmes have been initiated and significant progress has been made over the years through taxes, transfers, and subsidies, income disparity is still high in Malaysia relative to other nations, as claimed by Economy Minister Rafizi Ramli.

He strongly emphasises making infrastructure investments to develop long-term income-generating projects as part of initiatives to end poverty. To eradicate poverty, the focus has switched from only addressing household income to multidimensional poverty, considering factors including overall quality of life, healthcare, education, and basic requirements.

As announced by Prime Minister Anwar Ibrahim, a total of RM1.5 billion has been allocated to fund initiatives and activities that may provide revenue for the intended recipients, while safeguarding the welfare of the populace. However, the government needs help to move roughly 114,000 hardcore poor households out of poverty (as of August 15, 2023), despite providing RM1.5 billion for income-generating programmes.

In conclusion, Malaysia has addressed economic disparity through several policies and programmes to eradicate poverty. Nevertheless, further work and other measures would be required to reduce inequalities. – January 4, 2024.

* Professor Suhaiza Hanim is director of Ungku Aziz Centre for Development Studies, Universiti Malaya.

* 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.