Accessibility links

Breaking News

Malaysia's Official Poverty Figures Missing Millions of People, Experts Say

Staff and volunteers hand out meals at the Pit Stop Community Café in Kuala Lumpur, Malaysia. (Courtesy - Pit Stop Community Café)
Staff and volunteers hand out meals at the Pit Stop Community Café in Kuala Lumpur, Malaysia. (Courtesy - Pit Stop Community Café)

Officially, the country of 32 million has only 128,000 poor people; some estimates say the real figure could top 6 million

At 5:30 p.m. sharp, six days a week, the Pit Stop Community Café rolls up its metal shop door on a quiet street in central Kuala Lumpur and welcomes in some of the Malaysian capital's most needy for a warm, hearty meal, free of charge.

Some of the café's regulars who count on the soup kitchen to make it through each day, though, earn too much to meet the government's definition of the poor. A growing number of experts, most recently from the U.N., say that the official numbers miss millions of people who would qualify as poor almost anywhere else, leaving them cut off from critical state benefits and with too few of others to make a difference.

Having made only modest adjustments to its official poverty line since the 1970s, the government can claim to have all but routed poverty among its 32 million people, and at 0.4% Malaysia has the lowest self-reported poverty rate of any country for which the World Bank has figures. Neighboring Thailand claims an 8.6% poverty rate.

The latest rebuke of Malaysia's figures came from U.N. Special Rapporteur on Extreme Poverty and Human Rights Philip Alston. After wrapping up an 11-day visit last month, he praised the government for "huge strides" in reducing poverty but called the current poverty line of about $234 a month "ridiculous." That sum would leave each person in a family of four living on less than $2 a day.

"It can't be done, except under really dire circumstances," Alston told a news conference in Kuala Lumpur.

Many Malaysians above the line "are living in conditions that are extremely difficult, extremely tough, conditions that by any international standard would have them classified as living in poverty," he added.

In a report that followed, Alston said the country's "highly unrealistic" poverty line has fostered a misunderstanding of who is poor that has left the country's social safety net underfunded and overstretched. He said the Malaysian government also stood out for its extreme hoarding of household survey data, stifling research that might help solve the problem.

A poverty line is meant to mark the minimum a person or household needs to earn to afford the bare essentials of a healthy life, including food and shelter.

'Not enough'

The Pit Stop is one of dozens of soup kitchens across Malaysia's capital on the front line of the country's problem, where the promise of the country's poverty line meets stark reality.

"It's not enough. It's very simple; it's not enough," Pit Stop cofounder Joycelyn Lee told VOA before closing shop for the night, surrounded by upturned chairs and supplies for the next day's meals.

At the same time, though, she's not sure raising the poverty line would do much good. Like Alston and others, she says the government's reluctance to release detailed data makes it hard to know what the consequences might be.

One worry she says she has is that raising the poverty line might boost inflation, which would hit everyone, especially the poor. She said that in the past the government has linked the poverty line and minimum wage, so that increasing one increases the other.

Pit Stop co-founder Andrea Tan says the issue "is a political hot potato, because we are still a manufacturing country."

Government officials "are very worried that if you increase wages high enough, a lot of factories, a lot of companies will run away to cheaper places like Vietnam," she said.

At the same time, Lee and Tan place the responsibility for the country's low poverty line and wages as much on foreign companies and consumers as the government.

If they rise, Lee said, multinational companies will turn to the government, "and they will threaten to leave."

"So it's a hot seat," she said, "What are you going to do? Are those companies willing to pay more? Are people that buy the products from these companies willing to pay more?"

The 'B40'

Christopher Choong Weng Wai, deputy director of research at Malaysia's Khazanah Research Institute, favors raising the poverty line, as long as the government uses it to target social assistance more effectively.

Because Malaysia's official poverty rate is so low, the government has shifted its social assistance efforts to the bottom 40% of income earners, referred to here as the B40, the vast majority of whom are officially not poor.

"But the problem is that the allocation for subsidies and social assistance for the B40 has not kept up. So it is not so much underinvestment, but rather spreading out subsidies and social assistance to a larger target group. So breadth of coverage improves, but depth of coverage deteriorates," the research director said.

In his report, Alston raised the example of cash transfers to the B40. Because they go to so many, he said, "the payments are so small as to make little difference." A report UNICEF Malaysia prepared for Alston in June also found that the country's tax and social protection systems "have virtually no redistributive or poverty reduction impact."

The question is what Malaysia's real poverty rate is.

Lee, Tan and Choong Weng Wai were all wary of offering ideas without more data and research. Alston also refrained from making his own suggestion.

A recent study by economist and former World Bank research department director Martin Ravallion found that, when compared to other countries with a similar average income to Malaysia's, about 20% of the population — 6.4 million people — should be considered to be in poverty. Research by Khazanah found that setting the poverty line at 60% of the country's median income would put 22.2% of Malaysians below it.

When asked for comment on the barrage of criticism of the poverty line, Malaysia's Economic Affairs Ministry referred VOA to a statement it issued responding to Alston's remarks and report.

In it, the ministry stands by its numbers. It says it derived them using internationally accepted standards and calls Alston's accusation of statistical deception "wholly unacceptable and irresponsible." However, the ministry says it is reviewing the way it sets the poverty line to account for the rising cost of living while also taking into account more than just income.