AUGUST 26 — I’m glad that the Special Rapporteur on Extreme Poverty and Human Right’s statement has raised attention on poverty issues in Malaysia. But I think the reactions it has generated, focused on whether we are undercounting poverty, while valid and needed, may be detracting us from a more fundamental problem. And that may be due to the lack of distinction between poverty measurement and targeting in the discourse.
Poverty measured with the poverty line income (PLI) is undoubtedly low at 0.4 per cent, but in terms of targeting i.e. identifying individuals and households for social assistance, the government has already moved to the bottom 40 per cent (B40) income group. By definition, this is 40 per cent of the population, 100 times larger than the 0.4 per cent measured as poor (2.8 million households vs 25,000 households). This means that the income criteria to determine the eligibility for social assistance is not dependent on the poverty line (RM980) but the B40 threshold (RM4,360). Just take Bantuan Sara Hidup for example, households up to RM4,000 are eligible for the cost-of-living allowance. Other examples are easily available.
So, all is good? Not really. The Economic Affairs Minister Datuk Seri Mohamed Azmin Ali, in his statement responding to the Special Rapporteur, cited RM27.5 billion allocated for subsidies and social assistance in 2018. This is crudely about RM820 per B40 household per month or RM205 per B40 individual per month (assuming a household size of four). But we know that a large part of the RM27.5 billion is for fuel subsidy i.e. it is not a targeted allocation and there are numerous programmes that are not income-based e.g. Bantuan Musim Tengkujuh. Hence the per capita amount for the B40 should be substantially lower. In other words, over time, we have expanded the target group without a corresponding increase in fiscal allocation — subsidies and social assistance decreased from RM44.1b in 2012.
Therefore, with limited resources, the debate is whether we should spread out social assistance to all the B40 or focus social assistance on the lower-end segment of the B40 where it is most needed (and how do we determine this segment?). Breadth vs depth of coverage — something has got to give unless social expenditure is increased significantly. If social expenditure is capped, we may, somewhat ironically, be overcounting the “poor” instead, defined here as the B40, at least in terms of targeting.
So, I think we need more than just revising the PLI upwards as an arithmetic exercise. We need to revise it so that it can be used meaningfully as a basis for targeting and the delivery of social assistance, as well as a measure to assess progress. Otherwise, what is the point of measuring something that policies and programmes are not even targeting?
* Christopher Choong is the Deputy Director of Research, KRI. This is the personal opinion of the author and does not necessarily represent the official views of KRI.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
