Mainstreaming multidimensional poverty index (MPI) for Malaysia

Malaysia prides itself by being able to reduce poverty from 49% in the 1970 to just 5.6% in 2019. However the perspectives and goals of poverty eradication have changed significantly since the 70s. For an effective poverty eradication, poverty has to be defined accurately, to capture the lived reality of the poor. In 2024, several states were reported to have eradicated hardcore poverty (hardcore poverty refers to the food poverty line of RM 1,198).

Conversely, any activist working with poor households will tell you that, the reality on the ground is very much different especially when taking into consideration urban poverty. The working class poor struggle everyday to provide for their families eventhough they have slogged through one or more fulltime jobs. The most pressing challenges would be food costs, housing , education and healthcare. A UNICEF report entitled “Living on Edge” on Malaysian poor urban households in 2023 reported that 41% were experiencing absolute poverty, with 8 out of 10 families struggling to meet basic needs (UNICEF, 8 May 2024)

Politicians making claims of eradicating poverty are referring to the unidimensional poverty line income based on monetary measurements. Any definition of poverty solely based on material needs has faced criticism among scholars and activists for not capturing the holistic lived realities of the poor. Furthermore, low poverty lines prove meaningless when relative incomes and cost of living have rapidly increased over the years. After much criticism from the UN Special Rapportuer on Extreme Poverty and Human Rights, Philip Aston, Malaysia increased its poverty line income from RM 980 to RM 2,208 in 2019. However, there is still a stark disparity between the reported 5.9% absolute poverty rate based on the new PLI and the realities the UNICEF report revealed.

As poverty is multidimensional, it is no more relevant to make reference to unidimensional PLI to announce poverty eradication achievements. Nobel Prize economist, Amartya Sen conceptualized development as ensuring that people have the capability to do what they value most. Global poverty measurements inspired by Sen’s work took a paradigm shift by incorporating non-monetary dimensions such as health, education and living standards to determine who are the poor. Malaysia adopted the multidimensional poverty index (MPI) in 2016, using the framework developed by Akire and Foster from Oxford University.

The original MPI dimensions and indicators were chosen in order to capture poverty from the most poorest regions of the world, thus it included most basic elements such as clean drinking water, child mortality, types of dwelling floors etc,. Such basic indicators and thresholds to determine poverty are not suitable for a middle-income country like Malaysia. Thus, the Department of Statistics of Malaysia (DOSM) uses a modified version of the MPI with 4 dimensions; health; education; living standards and income.  

Using this methodology, Malaysia’s multidimensional poverty rate is reported to have reduced from 1.52% in 2016 to just 0.8% in 2022 (HIES,2022, DOSM). Here, again, the figures don’t seem to reflect the realities on the ground. Plausible causes for this could be that the deprivation cut-off levels adopted by DOSM are too low. For example, for education dimension, the cut-off is 11 years of education (up to Form 5). The cut-off is unrealistic as many household members with TVET certificates and even diplomas will only receive minimum wage of RM 1,700 which is lower than the current PLI. Similarly, health deprivation is decided by measuring if people have accessed to healthcare facility within 5km from their residence. With increasing urbanisation, most poor households have access to healthcare near them, but the deprivation is affordability of healthcare. Other Malaysian MPI indicators under the living standards dimension include flush toilets and garbage collection. These are readily available in most urban dwellings hence are less accurate indicators to determine poverty. Plausibly, these low thresholds could explain the impressively low  MPI poverty levels reported. Hence, DOSM has to review the dimensions, and their respective deprivation cut-off points in consultation with civil society and poor households.

However, several studies have revealed that, while some thresholds may seem too low for Kuala Lumpur, in East Malaysia it’s a different story.  Khazanah Research Institute, reports that while, at a national level, 97% of the districts in Malaysia had access to clean water, only 4 out of 69 districts in East Malaysia have access clean water. Similarly, only 50% to 80% of households had access to healthcare within 5 km, compared to 97.1% nationally.   Thus, besides a national MPI’s policy, the government department directly in charge of poverty eradication should use disaggregated regional MPI’s for more targeted intervention. The poorest state, Sabah with 1.2% hardcore poverty measured with monetary PLI, invites special attention.

Finally, poverty eradication policies and programs must be increasingly formulated to overcome multidimensional poverty, instead of attempts to reduce the PLI headcount ratios. Unfortunately, information on MPI indicators and poverty rates are rarely mainstreamed as benchmark targets for anti-poverty interventions. Eventhough a national MPI policy has been available since 2016, politicians still rely on the unidimensional PLI to make poverty eradication claims.  Hence, the way forward to effectively address poverty is to upgrade our national MPI dimensions and cut-off thresholds to truly reflect relative deprivations. Subsequently, we need to mainstream multidimensional poverty measurements and strive to overcome the severity of Malaysians struggling in silence.  

Sivarajan Arumugam

Former Secretary-General

Parti Sosialis Malaysia (PSM)

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