Low threshold masking true scale of poverty in Malaysia, says Nurul Izzah

BY SYED JAYMAL ZAHIIDAPRIL 15, 2014

UPDATED: APRIL 15, 2014 07:09 PM

Lembah Pantai MP Nurul Izzah Anwar says Malaysians earning just
above RM700 a month are at risk of missing out on government aid
as they fall outside the strict official definition of poverty. ― File pic

PETALING JAYA, April 15 ― Putrajaya is artificially keeping the poverty index low by only classifying households earning below RM700 a month as poor, PKR vice-president Nurul Izzah Anwar said today.

The Lembah Pantai MP said this put Malaysians earning just above RM700 a month at risk of missing out on government aid as they fall outside the strict official definition of poverty.

“The method used to define the poverty line is no longer sufficient to explain poverty here, in fact it gives a false picture, especially when the government refuses to redefine that line,” Nurul told a press conference at the party's headquarters here.

With the subsidy roll backs and the introduction of the goods and services tax (GST) next year, disposable wage for middle income earners would drop from 28 per cent to 21 per cent by 2020, which is staggering low compared to South Korea's 45.8 per cent and Singapore's 42 per cent, Nurul Izzah argued.

Citing a report by University Malaya's poverty research unit, she pointed out that Malaysia's poverty rate would return to the pre-New Economic Model period where the income gap was wider.

The report, published last month, cautioned that subsidy cuts would impact Malay households the most. It would also increase poverty rates among Chinese and Indians in rural areas.

The report suggested that fuel subsidy cuts would increase poverty rate among urban Bumiputera to 37.5 per cent and 23 per cent for rural Bumiputera.

“In recognising this high risk group, Keadilan proposes a new poverty index system, the multidimensional poverty index (MPI),” she said, adding that the MPI would measure individual limitation based on the person's health, education and standard of living.

She argued that the MPI could give a better picture about the poverty rate in Malaysia.

Despite criticism on the present poverty index system, Putrajaya insisted that it has succeeded in tackling abject poverty which stood at 1.7 per cent presently.

Prior to the introduction of the controversial positive racial discrimination plan known as the New Economic Policy in the 1970s, those categorised as critically poor made up 40 per cent of the population.

Since the end of the third quarter last year, Putrajaya has embarked on a round of subsidy cuts including a 10 per cent hike in petrol pump prices, and since January 1, electricity prices has gone up by 15 per cent.

And starting April next year, the sales and services tax will be replaced by the controversial goods and services tax (GST) at a flat rate of 6 per cent.

Prime Minister Datuk Seri Najib Razak insisted that the move was necessary to rein in the government’s ballooning debt that is hovering just below the 55 per cent ceiling mark.

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