We need to talk about poverty

Kampung Numbak in Sabah. — Bassam Khawaja

EARLIER this week, the former United Nations special rapporteur on extreme poverty and human rights Philip Alston raised alarms when he said that Malaysia appeared to backtrack on its previous commitment to revise the national poverty line (NPL), which currently stands at RM980 per household per month.

Although the government has since refuted this claim, and emphasised that a revision of the NPL is still underway, Alston remained skeptical on whether the revised NPL would accurately reflect reality.

“I hope that I shall be proved wrong and that it turns out that a new and serious poverty line will be set. But I can’t say this particular announcement gives me much optimism, ” Alston told Sunday Star after his final report was released on July 6 .

“The government has taken cosmetic steps in the past to tinker with approaches to poverty measurement, but the figures produced have always fallen dramatically short of the scale of poverty estimated by virtually every respected independent economist and all of the key international organisations such as the World Bank and The United Nations International Children's Fund (Unicef). Let’s pray that I am wrong.”

The current national poverty rate of just 0.4% – the lowest in the world – was deemed to be "misleadingly low” and “unrealistic" by Alston.

In response, Minister in the Prime Minister's Department (Economy) Datuk Seri Mustapa Mohamed dismissed Alston’s claim and assured the public that efforts to reassess the NPL from 2018 were ongoing.

Mustapa said that Malaysia will be using a new 2019 methodology to measure the poverty line instead of the current 2005 methodology. This will mean the eventual adoption of a higher NPL and a poverty rate of more than 0.4%. Findings from committees to assess national poverty figures have been submitted to Cabinet a few weeks ago, said Mustapa.

As there will be no doubt that poverty rates are going to increase very significantly as a result of Covid-19, Alston said that the new Malaysian approach will need to factor in the [economic] predictions that the World Bank, the International Monetary Fund (IMF) and all other observers have indicated.

With a global recession underway, Malaysia will also take a hit from the pandemic with its economy declining for the first time since 2009. Last month, the World Bank downgraded its forecast for Malaysia’s economy this year and expects GDP to contract by 3.1% with growth expected to resume in 2021 at 6.9%. The IMF also downgraded its 2020 GDP growth forecast for Malaysia to negative 3.8%.

During his August 2019 visit to Malaysia, Alston had travelled to Kuala Lumpur, Selangor, Sarawak, Sabah, and Kelantan, and met state and Federal government officials, international agencies, civil society, academics, and people affected by poverty in urban and rural areas.

“As long as you pretend there is no poverty, you don’t actually engage in the search for formulae that will resolve the issue,” Alston said during a video interview.

“When I visited Malaysia and I asked what was being done to address the specific situation of people who were living in very overcrowded low cost housing, people who weren’t able to afford enough food for their children, or people who weren’t able to get access to schools, the answer was that there were no policies because there is no [poverty] problem. Everyone has enough, ” he explained.

In his report, Alston said that while Malaysia has done an impressive job of reducing poverty in recent decades, millions of people still scrape by on very low incomes with tenuous access to food, shelter, education and health care, and limited ability to exercise civil and political rights.

He added that denying the existence of poverty has stymied progress, encouraged significant underinvestment in poverty reduction, caused widespread misunderstanding of who is poor and led to bad policymaking.

Based on 2016 data, 20% of households nationwide have a monthly income of less than RM 3,000 and 8.8% survive on less than RM 2,000, said Alston.

A June 2019 report by Khazanah Research Institute (KRI) found that a relative poverty measure of 60% of median income would show 22.2% of households in poverty as of 2016, a far measure from the current 0.4%.

“The difference with Malaysia is the extent of the economic progress that it has made in recent decades, which means that it has the opportunities and resources to be able to address this problem, ” said Alston.

Despite the Malaysian economic “miracle”, Malaysia’s expenditure on social protection in 2017 was lower than all South-East Asian countries for which data was available, said Alston, who explained that better targeted and implemented fiscal policies would allow the Government to develop a comprehensive and integrated social protection policy.

In it’s June Malaysia Economic Monitor (MEM), the World Bank highlighted how Malaysia’s expenditure on social assistance was relatively low compared to most upper middle-income countries.

In 2018, Malaysia spent RM14.6bil on social assistance programs, which amounted to only about 1.0% of the GDP. On average, upper middle-income and high-income countries spend 1.6% and 2.0% of GDP respectively on social assistance programs.

The World Bank report further explained that a high-performing social assistance system can provide a minimum standard of living for all and help protect the vulnerable against income shocks, particularly during the Covid-19 pandemic.

“Every society, including neighbouring countries in Southeast Asia, needs to spend a significant amount on social protection because there are always a lot of people who fall between the cracks. There are people who cannot cope and who need support in order to become productive members of society, ” said Alston.

Protecting the vulnerable

If the Government wants to eradicate poverty, correcting the poverty line is just the first step among a long list of necessary measures.

“If you look at the undocumented workers, if you look at the situation of indegenous people, if you look at issues relating to low income housing and so on. A rich and smart government like the one Malaysia has could be doing a lot more without losing anything, ” said Alston.

Furthermore, Alston explained that official statistics only capture the situation of those with Malaysian citizenship, leaving out millions of migrants, refugees and asylum seekers, and stateless people, all of whom are disproportionately affected by poverty.

He said that progress will require a better understanding of the nature of poverty, especially in urban areas, improved social policies, and a new approach towards long-neglected populations that face higher rates of poverty.

Alston added that indigenous peoples continue to face descrimination and have far higher rates of poverty than the general population and experience widespread violations of their rights, appropriation of their land, and exclusion from social support.

Meanwhile, women in Malaysia shoulder a disproportionate share of housework, have an exceptionally low rate of workforce participation, are disproportionately stuck in lower-level jobs and are paid less than men. And people with disabilities face widespread discrimination and obstacles that prevent them from participating in society on an equal basis with others.

“The Government should institute far-reaching reforms of the fractured and patchy social protection system to ensure that the needs of people living in poverty are comprehensively addressed, with a social protection floor for all, ” Alston said. “Covid-19 has demonstrated that anyone can lose a job through no fault of their own, and reinforced the absolute necessity of strong support programs.”

Data transparency leads to better policies

Poverty reduction is made more difficult by the fact that key poverty-related data is often inaccessible or even non-existent, which is counterproductive and leaves policymakers and researchers essentially working in the dark.

“I think Malaysia stands out as a country that is really not prepared to disclose essential statistics which are really necessary for economic policy making, and ultimately that’s counterproductive because you’re making policy in a blind alley, ” he said, adding that it is very important to adopt a new policy in relation to the availability of basic economic statistical data.

“The Government has a real opportunity to become a true champion of poverty reduction by improving the lives of many facing hardship, providing those in poverty with the support they need and ensuring that the country’s economic growth is truly inclusive and benefits the entire population.”

Alston’s successor, Olivier De Schutter, presented the report to the United Nations Human Rights Council on July 7.