Tackling income inequality in Malaysia


A trader packs vegetables for a customer in Johor Baru. Household income for the poor is estimated to hit RM2,007 last year, with a target of RM2,3 00 by 2015.

CHANDRASEKARAN Ramaiah fell into hardship when he suffered a stroke some years ago. Now partially recovered, he runs a food kiosk in Melaka after having secured help under the Azam Tani programme.

When we met last month, he told me his income has doubled to RM100 per day. Chandra is one of 145,630 households that have benefitted from the Low Income Household (LIH) National Key Results Area (NKRA) between 2011 and 2013.

I also got to know of food stall operator, Norian Mohd Ludin from Selayang. She was able to expand her roadside nasi lemak business into a proper food stall after having received financial assistance under Amanah Ikhtiar Malaysia (AIM).

With the expansion, this single mother significantly raised her income levels. Norian is one of 24,200 people who got a head start from the AIM initiative between 2011 and 2013.

When the Government built roads for remote villages in Negri Sembilan between Kampung Esok and Kampung Chenah – linking six villages – over 1,750 villagers now have better access to Jelebu town to sell their products like rubber, durian and petai. Ecotourism has picked up in these areas such as rafting and leisure activities.

Communities in Sabah and Sarawak likewise have also reaped similar advantages with roads and other civil infrastructure built in the provinces. Between 2010 and 2013, 4.5 million people have been lifted by the Government’s rural development programmes.

These are just a drop in the ocean of families who have managed to come out of poverty with the right kind of support.

When we embarked on the national transformation agenda, we were very clear Malaysia cannot achieve its high income ambitions if a significant portion of Malaysians continue to live below the poverty belt.

As articulated under the New Economic Model, we must stubbornly pursue the ideals of inclusiveness and sustainability. This cannot be compromised.

Governments around the world struggle with achieving the balance between economic growths and providing job opportunities so their citizens can enjoy the prosperity created.

It is not surprising that many developed countries tend to have the first envelope – economic growth – down pat, but they still struggle with dealing with the bottom 40% of society.

Karl Marx thought he had the answer. He argued that a fairer wealth distribution can be established by changing the system towards socialism and communism. The poor should see a rise in income, and in time, inequalities staining much of early European civilisation will be resolved. We now know better.

I believe the path that Malaysia has taken and continues to take is balanced and sustainable, looking at both economic growth and inclusivity.

We have managed to successfully eradicate absolute poverty in the country. Incidence of hardcore poverty reduced from 6.4% of the population in 1984 to 0.2% in 2012.

Mean monthly income for households is on the rise for the nation’s poor. In 1970, mean monthly income was at RM76 per household, rising to RM693 by 1995. Household income for the poor is estimated to hit RM2,007 last year, with a target of RM2,300 by 2015.

Gini Coefficient – which is a number between zero and one to measure income inequality – shows a downward trend which is favourable. In 1970 it was at 0.513, in 1992 at 0.459 and in 2012 at 0.431.

While the signs are encouraging, much, much more needs to be done. Surely RM2,300 will not suffice for a family of four in this day. This is why the Government Transformation Programme’s LIH NKRA is focused on programmes such as 1Azam and 1Tani in teaching them “how to fish”.

Some people can be easily helped under these programmes. Others present a challenge because they are unskilled and need to be trained.

The Government invests heavily into Technical and Vocational Education and Training to shore up supply for the 46% high income jobs out of 3.3 million jobs to be created under the Economic Transformation Programme. Last year alone, the Government spent RM3.61bil.

I grew up in a remote village tucked away in the highlands of northeast Borneo. There is no romance or nostalgia in being poor. Education and my father’s deep respect for discipline lifted my siblings and me out of the yoke of poverty to a global world of opportunities.

An incredible number of good people are hard at work addressing the kinks in our current education system. The ongoing subsidy rationalisation will also provide for a more efficient social safety net tackling poor households.

Solutions to resolve poverty are not easy, challenging even the most advanced nations. The path ahead in building a better, richer life for all Malaysians can be daunting. I have faith we are on the right track, but we must have the gumption to keep going even as the going gets tough.

Datuk Seri Idris Jala is CEO of Pemandu, the Performance Management and Delivery Unit, and Minister in the Prime Minister’s Department. Fair and reasonable comments are most welcome at idrisjala@pemandu.gov.my

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