PETALING JAYA: There is a need for Malaysia to change the current method to measure poverty rates, as it is outdated, says the Prime Minister's economic adviser, Dr Muhammed Abdul Khalid.

He said that people should not be ashamed if the new indicators showed high poverty rates.

"That is a fact and to solve problems, it is better that we accept reality. Only then can we find quick solutions," he said in a column in Sinar Harian on Tuesday (Aug 27).

The former Khazanah Research Institute director said that the poverty line income (PLI) rate used by the Economic Affairs Ministry - a monthly income of RM980 for Peninsular Malaysia, RM1,180 for Sabah and RM1,020 for Sarawak - was very low.

Dr Muhammad also said that data from the Ministry showed that five states - Johor, Melaka, Selangor, Kuala Lumpur and Putrajaya - had 0% poverty, while other states had less than 1% of poverty with Sabah's rate at 2.8%.

He added that states considered to be poor such as Kedah, which had a poverty rate of 0.2%, while Kelantan and Terengganu had rates of 0.4%.

He said that by ethnicity, the data showed that there was a 0.5% poverty rate among Bumiputeras, while among the Chinese and Indians it was 0.1% respectively.

In rural areas, poverty was at 1%, while in urban poverty stood at 0.2%.

"In other words, does it mean there are no poor people in Malaysia? Obviously not," he said, adding that it, however, could not be denied that overall poverty rates had dropped since Merdeka.

Dr Muhammed then said that Palestine and Zimbabwe have higher PLI rates, even though their Gross Domestic Product (GDP) is less than one-tenth of Malaysia's.

He then added that the data recorded was based on absolute levels and suggested that relative poverty definitions used by developed countries be used instead, saying that a household is considered poor if its income is less than 50% of the median income.

"If we used this measure, the poverty rate in Malaysia would go up to 16% in 2016, a slight increase compared with 15.6% recorded in 2014, although the economy grew during that period," he said.

He added that research by Unicef and DM Analytics last year that used relative poverty definitions showed that almost all children in low-cost flats in Kuala Lumpur lived below the poverty rate.

"This is a far cry from the concept of absolute poverty, which shows that poverty in Kuala Lumpur is 0%," he said.

He said the main focus should not only be on poverty, but lowering inequality and social mobility, with policies based on this objective.

"What's important is the need to face reality that the yardstick we have been using needs to be changed. If not, we will face the worst kind of poverty - of the soul and of morality. That has no cure," he said.

Meanwhile, United Nations Special Rapporteur on Extreme Poverty and Human Rights Professor Philip Alston, said that Malaysia's stance that less than 25,000 households in the entire country live in poverty (or 0.4%) is unrealistic.

He added that our official methodologies undercount poverty.

Professor Alston further alleged that Malaysia’s official poverty line of RM980 is also unrealistic, and that our actual poverty rate could be between 16 and 20%.

Economic Affairs Minister Datuk Seri Azmin Ali, however, said Malaysia stands by its official poverty figure of 0.4%, as it was derived from internationally-accepted standards based on the second edition (2011) of the Canberra Group Handbook on household income statistics published by the United Nations.

Read more at https://www.thestar.com.my/news/nation/2019/08/27/pm039s-adviser-malaysia-needs-to-change-how-it-measures-poverty-rates