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POVERTY STATISTICS in MALAYSIA Abdul Rahman Hasan and Sa'idah

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POVERTY STATISTICS in MALAYSIA Abdul Rahman Hasan and Sa'idah POVERTY STATISTICS IN MALAYSIA Abdul Rahman Hasan and Sa’idah Hashim March 2001 The views contained in this article are those of the authors and do not necessarily represent the official views of the Department of Statistics, Malaysia. Introduction 1. Malaysia consists of two geographical entities: Peninsular Malaysia occupies the southern part of the Malay Peninsular in Southeast Asia while East Malaysia (comprising Sabah and Sarawak ) occupies the northern quarter of the isla nd of Borneo. The two areas are separated by about 600 km. of the South China Sea at the closest point. Covering an area of 329,827 square kilometers, Peninsular Malaysia takes up 40 percent of the area with 11 states and a Federal Territory while Sabah and Sarawak forms 22 and 38 percent of the area respectively. 2. Based on the recent Population Census 2000, Malaysia’s ethnically heterogeneous population stand at 22.2 million of which 79.9 percent live in Peninsular Malaysia, 11.0 percent in Sabah and 9.1 percent in Sarawak. Of these, the ethnic composition of the population is about 58% Bumiputera, 24% Chinese, 7% Indian and 11% are Others which also includes non citizens. 3. Historically, the economic and social features of the population has been moulded since the colonial times and that has either directly or indirectly shaped the pattern of income and poverty distribution among its multiracial population. Hence, the Malaysian Government’s Development Policies was formulated, with the overriding obje ctive of attaining national unity and fostering nation-building through the two-pronged strategy of eradicating poverty and restructuring society. The first prong to eradicate poverty, irrespective of race whilst the second sought to restructure society by eliminating the identification of race with economic function. 4. The Malaysian economic growth has accelerated since achieving Independence in 1957. During the 1990’s, its real GDP growth exceeded 8 percent until the onset of the economic crisis in 1998 (-7.4%). As a result of the measures taken to combat the ill-effects of the crisis, its economy subsequently shows signs of recovery commencing the third quarter of 1999 and by 2000, achieving a real GDP growth of 8.5%. Current Development Policies 5. In the last decade, the country adopted the Vision 2020 concept to set the country’s strategic direction for the next 30 years. The successful implementation of the National Development Policy during the 1990s which marks the first phase of Vision 2020, has enabled the country 2 to achieve rapid growth with wide-ranging transformation of its economic, social, physical and institutional landscape. 6. The launching of the Third Outline Perspective Plan (OPP3) also saw the nation moving into the second phase of Vision 2020. During the next 10 years, the National Vision Policy (NVP) will form the basis of the strategies and programmes under the OPP3. The National Vision Policy is aimed at establishing a progressive and prosperous Bangsa Malaysia (Malaysian Race) that lives in harmony and engages in full and fair partnership. Economic growth will be promoted alongside aimed at poverty eradication and restructuring of society, as well as reducing social, economic, and regional imbalances. 7. A remarkable progress has been achieved in poverty eradication. In the early 1970’s almost half of the households being classified as poor, and in 1997, the incidence of poverty has significantly declined to 6.1 percent. However, the crisis brought a slight upward swing in the trend at 8.1 percent in 1998. Efforts to counter the effects of the crisis has borne positive results when the incidence of poverty among Malaysians was reduced to 7.5 percent in 1999. By 2005, the incidence of poverty was targeted to reduce further to 0.5 per cent. To realise this target, the anti-poverty programs will be more target-specific and address pockets of poverty in different regions, particularly in remote areas as well as among disadvantaged groups such as the Indigenous groups of Peninsular Malaysia and other minorities in Sabah and Sarawak. To increase programme effectiveness, existing anti-poverty programmes will be consolidated and revitalised under Scheme for the Development of the People’s Well- Being. A key approach to eradicate poverty and improve the quality of the life of the population is education. In addition, the provision of health services and other social amenities will also contribute towards reducing poverty and enhancing the quality of life. 8. The objective of this paper are: ² to briefly describe the national statistical system in Malaysia; ² to describe data sources pertaining to poverty statistics and ² to explain income data collection and derivation of poverty statistics. National Statistical System 9. The Department of Statistics (DOS) is the main Government agency entrusted with the responsibility to collect, compile and disseminate statistics . The Department operates 3 under the authority of the Statistics Act 1965 (Revised 1989) which defines its functions and provides the le gal backing to undertake these functions. Statistics are collected and compiled from surveys undertaken by DOS and also from secondary sources and supplied to users both in the public and private sectors as well as international organizations. However, this Act do not curb other Government agencies from conducting their own data collection, mainly for their specific needs, e.g. the compilation of paddy data by the Ministry of Agriculture. 10. DOS, which is under the Prime Minister’s Department, is staffed with about 2,000 personnel and operates with an annual budget of RM60 million. In order to carry out its functions, DOS is organised into 17 Divisions under 3 Sectors, namely the Trade and Industries Sector, the Coordination and Support Sector and the Prices and Human Resources Sector. It has offices in each of the 14 States and some of the larger states are assisted by Operations Centres. Functionally, the State Offices are responsible for data collection and generating validated state data whilst the Central Office is responsible for the production of aggregated National statistics as well as analysing and disseminating the output. 11. With respect to poverty statistics and indicators, the data is obtained from various primary and secondary sources. Two household surveys form the main source of primary data, namely the Household Income Survey (HIS) and the Household Expenditure Survey (HES). The HES carried out on a five year interval, aims primarily at collecting the latest information on the levels and patterns of consumption expenditure by private households on a comprehensive range of goods and services. This in turn provides the basis for determining the weights of items of household expenditure, thus forming the basis for updating the current price in establishing the Consumers’ Price Index and subsequently the expenditure pattern of private households. The Collection of Income and Poverty Data 12. The Household Income Survey (HIS) has been conducted periodically since 1974 with the latest being in 1999. The main objective of the HIS is to provide data on income distribution, the extent and magnitude of poverty and accessibility to basic amenities for use in policy formulation. Since the main trusts of the Malaysian Government Development Policy is for balanced development, the focus on the eradication of poverty, especially hard- core poverty and the reduction of relative poverty, raising the income share of the lowest 30 4 percent of the households and increasing the size of the middle income group, continued to be emphasised. Continuos monitoring of the changing pattern of income distribution and the incidence of poverty is essential to assess and evaluate the success (or failure) of Government’s programmes and policies. The data collected from the HIS have been used in part for the preparation of the various Malaysia Development Plans, the Mid-Term Reviews of these Plans and formulation of income policies. Sample Design 13. A two-stage stratified sample design has been adopted for the survey. The first stage sampling unit is the Enumeration Block (EB), which is a geographical area artificially created to have about 80-120 living quarters with about 600 population. The EBs are selected using a probability proportionate to size (PPS) linear systematic selection scheme which give higher probabilities for larger EBs. This systematic selection also ensures a good spread of the sample, thereby enhancing its representativeness. In the second stage, living quarters are selected from each of the sampled EBs, also on a linear systematic basis. The rate of the selection used is aimed at maintaining the self-weighting feature of the sample design. Since the living quarters are ultimate sampling units, all households (i.e. the reporting units) within the selected living quarters are canvassed. Geographically, the HIS covers both the urban and rural areas in Malaysia. During the 1999 survey, about 40,000 households were selected. 14. The survey covers a representative sample of all private households. Institutional households, whose population constitute about one percent of the total population are excluded. The concept of a household is based on arrangements made by persons, individually or in groups, for food and other essentials for living within the same living quarter. Thus, a household may consist of related and/or unrelated members. Data Collection and Data Processing 15. The HIS is conducted jointly with the Labour Force/ Migration Survey (LF/MS) using a common questionnaire. The questionnaires on income and basic amenities are tagged on to the LF/M questionnaire. The socio-economic characteristics of the household, for example ethnicity, citizenship status, age, educational attainment, etc., are canvassed under the labour force section. 16. Data collection is carried out by the 13 State offices throughout Malaysia. Staff members are thoroughly trained prior to the enumeration and closely monitored by experienced supervisory staff. During training, the staffs are exposed to concepts, operational procedures, coding and checking procedures.
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