February 20, 2005

Basic poverty patterns remain unchanged

Poverty in the country has taken on new dimensions. While overall poverty has been reduced, the Government is identifying pockets of poverty in urban areas. YEANG SOO CHING listens to the views of an expert.

WHEN the New Economic Policy (NEP) was formulated after the troubles of 1969, it had two goals: to eradicate poverty irrespective of race, and to restructure society. Thirty five years on, to what extent have these objectives been met?
While the NEP jump-started Malay economic capabilities, critics say it has not achieved its targeted 30 per cent Bumiputera equity.
In fact, only 20 per cent has been achieved.
And comparison studies of the ethnic profile of poverty, compiled between 1969 and 1999, show the Malays continue to remain in the main poverty group.
While poverty across board has been reduced, the original characteristics of poverty remain unchanged, said Associate Professor Dr Sulochana Nair, Head of Department of Development Studies, University of Malaya.
"Poverty has become more complex, and income-distribution is worsening."
"We need new approaches because past ones have not had significant impact on poverty reduction.
"The way out of poverty has been due to other factors, such as growth rate and movement out of poverty sector, rather than poverty policies per se."
Her studies show that the poverty line income in 2002 was RM529 for Peninsular Malaysia, RM690 for Sabah, and RM600 for Sarawak.
For the hardcore poor, poverty is estimated at half the poverty line income.
Sulochana questions the relevance of the income poverty lines.
She thinks they are way too low and is hopeful the Government will come out with different poverty lines.
Sulochana presented her paper Walking a Tightrope: Poverty Eradication in Multi-Ethnic Malaysia which looked at the impact of development policies on ethnic relations.
Looking at pre-NEP development policies, Sulochana pointed out that the focus then was on rural development, as the rural sector was neglected under colonial rule.
Significant milestones were established in the First Malaysia Plan, which was a comprehensive plan pre-NEP.
"There was rural development and emphasis was on the productive and income-earning capacity of the rural producers.
"In the Second Malaysia Plan, there was even greater emphasis on the rural sector.
"The National Rural Development Plan was formulated, the National Rural Executive Committee was set up and so was the Ministry of National and Rural Development."
Then came the NEP, with its strategies for target groups.
The nature and dimensions of poverty were taken into account.
These comprise concepts and definitions, incidence and patterns, ethnic and sectoral profiles, poverty and income distribution, as well as challenges.
Policy instruments used were institutions, fiscal policy and land development schemes such as Felda.
In the context of institutions, problems surfaced when agencies proliferated.
To these agencies, poverty eradication was just one of many objectives and not their top agenda.
"The NEP was basically a Bumiputera policy of development, but politicisation of it resulted in competition between, and within, the different political factions," Sulochana said.
While the programmes were good, their efficacy was questionable. They did not address the structural constraints in the rural sector.
In the rice sector, for instance, there was poverty reproduction. Increasing landlessness, new tenurial systems and adverse impact of subsidy programmes resulted in poverty reproduction.
In the fisheries sector, subsidy programmes had minimal impact, while big trawlers affected the livelihood of traditional fishermen.
"Felda was a good land development scheme where the Government went into land-rich States and resettled the poor in these schemes.
"However, it was of high cost to the Government and the number of beneficiaries was small. The scheme also created rural inequities."
Post-NEP ethnic relations have not improved significantly and inter-ethnic relations are fragile, Sulochana observed.
There is also increasing polarisation in academic institutes.
When the National Development Policy (NDP) replaced the NEP, two strategies were in place: PPRT (Hardcore Poverty Development Programme) and AIM (Amanah Ikhtiar Malaysia).
"The PPRT was fairly good, a multi-pronged approach for the hardcore poor. However, performance was poor.
"There were inefficiencies in project identification, planning and implementation.
"There was also politicisation at the grassroots level."
Sulochana cited the PPRT scandal implicating key officials in critical Ministries.
In a year in Kelantan, she said, there were losses of RM36.5 million meant for the hardcore poor.
AIM on the other hand, was highly successful, initially. Modelled after Bangladesh's Grameen Bank, AIM empowered women through the provision of credit.
Women were organised into groups to receive small loans. These had to be repaid on a weekly basis.
When one finished paying off the loan, another in the group would get it.
If an individual member defaulted in payment, the whole group was responsible. The group dynamics ensured the money was not mismanaged.
Still, problems surfaced. The uptake of the second loan was not encouraging. Though AIM was a non-govermental organisation approach, the money came from the government and there was a lack of funds.
A dependence on the government meant the lack of political neutrality in loan disbursement. There was also the problem of sustainability.
Despite the various aid given, there was persistent poverty among the Orang Asli, estate workers and Bumiputera households in the rural sector.
In Sulochana's view, poverty in the country has been reduced across the board, but basic patterns of poverty remain unchanged.
"Until the Eighth Malaysia Plan, the relative poverty line was the bottom 40 per cent of the population.
"It has now been revised to 30 per cent.
"Does this mean the 10 per cent has been moved out of the poverty line?" Sulochana said.
The statistics are interesting, she added, for those for Terengganu, Kelantan and Sabah, which point to higher incidences of poverty.
Two issues pop up: when Opposition parties are in control, are federal funds easily available? Secondly, do Opposition parties really want the funds?
"In my studies in three villages, it was obvious that federal funds were easily available for projects which had strict technical criteria.
"But when it came to State funding, political affiliations came into play."
What is of concern to the Government, she says, is that the Bumiputera income has not caught up with that of the Chinese.
Comparing the mean monthly gross household income between 1999 and 2002, she found that the income for Bumiputera in 1999 was RM1,984 and RM2,376 in 2002. For the Chinese, it was RM3,456 in 1999 and RM4,279 in 2002.
Though the Indian population in the country is small, it is highly represented in prime data such as social and poverty statistics.
Sulochana said poverty in the estate sector is not classified as rural or urban. Rather, the estate sector is an entity by itself.
"Though the Indians were classified among the poor, poverty reduction projects for rural and urban areas were not given to the estates.
"So once an estate closed, the Indians relocated to urban areas.
"They had low level of education, no skills and had to compete with the foreigners for work in the urban areas.
"This gave rise to social problems among them."
Urban poverty has brought a new dimension to the poverty problem and Sulochana concluded that it is worsening with increasing inter and intra ethnic income distributions post 1990.
She stressed the need for a multi-dimensional approach to eradicating poverty.

THE week-long Third World Country Training Programe, for public officials from Afghanistan, Bosnia-Hesergovina, Sri Lanka and Timor Leste ends this Thursday at the Inpuma premises at the University of Malaysia city campus in Kuala Lumpur.
The programme, themed “Consolidation of Peace for Post-Conflict Countries”, draws on the national development programmes in Malaysia, and also Japan’s post-war development and policies.
The programme is jointly organised by Inpuma (International Institute of Public Policy and Management), The Economic Planning Unit of the Prime Minister’s Department, Japan International Co-operation Agency and The Malaysian Technical Co-operation Programme.

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