12th Plan: Cross Examining its Poverty Measurements, Policies and Programmes

How to make the 12th Malaysia Plan work

Lim Teck Ghee, Ramesh Chander and Murray Hunter

Poverty Situation Outlook

Poverty is the key issue facing Malaysia today, and deserves to be

looked at much more closely than the 12th Malaysia Plan has

given the problem. There is little point in fixating on

transformation of the economy if there is a growing incidence of

poverty left out of focus.

Prime Minister, Ismail Sabri, in a recent press interview noted:

Because of the pandemic, the landscape has changed. There are

people in the B40 (low income) category who are now hardcore

poor. Some previously in the M40 (middle) income bracket are

now in the B40 group. Under 12MP, the target is to eradicate

hardcore poverty by the end of 2025.

Despite the proliferation of programs - a total of 167 programmes

across ministries and departments, involving 13.7 million aid

recipients with a value of RM28.6 billion - the 12 th Plan fails to

address the changed poverty landscape that the Prime Minister

described and is doomed to failure if it does not correct the

anomalies and shortcomings listed below.

Contesting the Poverty Numbers 

Malaysia’s Five Year Plans have always incorporated discussions

of poverty. When the concepts and methodology employed to

derive the various Poverty Line Income (PLI) measures and the

estimates of poverty incidence are flawed they fundamentally

affect the resulting policies.

The current Malaysian PLI approach grossly under-estimates

poverty incidence and continues to be designed to project “feel

good” numbers about poverty reduction. Many experts have

raised serious questions about the objectivity and integrity of the

estimates in the past.

In 2019 the UN Special Rapporteur Philip Alston reported that

Malaysia’s method of measuring poverty produces a national

poverty rate of just 0.4 per cent, the lowest in the world. He

noted that the claim reflected a statistical sleight of hand that has

had harmful consequences.

The Government initially defended the existing poverty line but

relented in the face of wide support for the UN report’s

recommendations. It led to a revised set of poverty lines based on

data drawn from household income/expenditure surveys. This is a

welcome change from the earlier poverty line that contributed to

the official narrative that poverty was largely a rural phenomenon

whilst ignoring poverty in the urban areas.

The Alston report called for reforms of the social protection

system to improve the well-being of the least well-off members of

all racial and ethnic groups. The 12 th Plan document offers no

indication that such reforms will be introduced. The Plan makes

no reference to how the Government intends to include citizens

of all ethnicities who are systematically excluded from official

poverty figures, neglected by policymakers and often effectively

barred from access to basic services.

Lessons from Past

Poverty eradication programs in Malaysia have always been

devised top-down, imposing Putra Jaya’s view of what is best

upon the ground. These projects are plagued with mis-

management, wastage, “pork barreling”, leakage of funds and

outright corruption. There has been an emphasis on building

bureaucratic agencies and infrastructure rather than investment

in community development projects. Much poverty eradication

spending is thus ineffective, with relics of misspent funds visibly

abandoned across the country.

To improve effectiveness in tackling poverty in its different forms

and manifestations, agencies must spend time empowering the

various communities to communicate their needs, wants, and

aspirations. Programs must spring up from grass-root

communities according to specific and situational requirements,

and espoused needs and aspirations.

Until the top-down bureaucratic approach of previous Plans is

rejected, there will continue to be upteen examples of failed

poverty alleviation projects and hundreds of billion ringgit wasted

or leaked to outside parties.

The bottoms-up approach can provide the material and financial

foundations for more effective poverty alleviation. This can be the

game changer in ensuring real progress is made with the national

poverty alleviation programme.

It will also provide the catalyst to changing mindsets and to

releasing the productive forces which have been marginalized by

political and other intermediary proxies who stand to gain most

from the latest round of 12th plan projects.

We emphasise: continue with the same approach and there will

continue to be a wastage of funds, leakages, and communities

remaining in poverty.

Recommendations for 12 Plan Policy Resetting and

Programming

● Policy planning and implementation needs to take into

account the multi-dimensionality of poverty. The

problem needs to be addressed through a geographical

basis with grassroots approaches

● Consolidation of poverty programs. This would lead to

strengthening the safety net to protect the poor, reduce

costly overheads and improve the delivery of services. It

would also result in a reduction of leakages

● Strengthening the governance aspects relating to

projects. Projects should be awarded following

competitive bidding rather than on a negotiated basis.

This would reduce opportunities for corruption

● Open availability of data to permit independent

assessments concerning poverty and income

distributions

● Establishment of a Parliamentary Select Committee on

Rural and Urban Poverty to examine the true extent of

poverty, its various causes and to recommend changes to

the 12th Plan poverty alleviation program with definite

goals, targets, measures and deadlines

● Pending the establishment of the Select Committee the

ruling and opposition coalitions should set up a joint

poverty alleviation committee that can immediately

begin work to ensure that the poverty issue is not lost

sight of in the fog of the political battles conducted in

Parliament

● Establishment of a poverty alleviation monitoring council

comprising of non-official NGO representatives and

respected experts to work with the Parliamentary Select

Committee and poverty alleviation agencies to ensure

that goals and targets are met

Appeal to Our Legislators

The Prime Minister and other legislators coming from poverty or

deprived backgrounds should know the hardship and challenges

that poor people face. They should also be aware of how and why

the enormous sums expanded in the country’s poverty

programme since independence have failed to bring about the

positive results and success promised by successive past

governments. The 12th Plan can provide the opportunity to break

the vicious cycle of poverty in the nation but only if there is

political will and determination and the pursuance of the new

policy setting and programming outlined here.

Originally published in FMT and Malaysiakini 19th October 2021

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● Ramesh Chander is a former chief statistician of

Malaysia and a senior statistical adviser at the

World Bank in Washington, DC. Murray Hunter is

an independent researcher and former professor

with the Prince of Songkla University and Universiti

Malaysia Perlis. Lim Teck Ghee is a former senior

official with the United Nations and World Bank.