Without aid, 1.2m households risk falling into poverty

UP TO 1.2 million households in the country are at risk of absolute poverty if no financial assistance is given during the reimplementation of the Movement Control Order (MCO).

As the current MCO is likely to last beyond two weeks, Khazanah Research Institute (KRI) senior research associate Hawati Abdul Hamid said a new stimulus package needs to be drafted immediately.

“From the experience of the first MCO in 2020, it showed that the assistance must ensure the aspects of coverage (breadth) and adequacy (depth), so that everything is protected fairly.

“The targeted Wage Subsidy Programme extended until the first quarter of 2021 does not protect most employees, especially those who are self-employed and in the informal sector,” she told The Malaysian Reserve (TMR).

According to data from the Department of Statistics Malaysia, 5.6% of Malaysian households (about 400,000 households) are living in absolute poverty since 2019, with their income not enough to meet basic necessities such as food, clothing and shelter.

However, there are still many households who cannot afford to live comfortably and are very much exposed to absolute poverty, when their income is only slightly higher from the absolute poverty line (average RM2,208 per month), said KRI research associate Adam Manaf Mohamed Firouz.

“Statistics for 2019 show that almost 17% of households (1.2 million) are in relative poverty due to them having income less than half the overall intermediate income of Malaysian households of RM5,873, which is less than RM3,000 per month.

“Therefore, more than 800,000 households are very vulnerable to absolute poverty in the event of economic shock due to poor income level,” he told TMR.

Adam said under the 2021 budget, the government has allocated RM2.2 billion for monthly aid for poor families and individuals.

“Through this programme, a family can earn as much as RM1,000 a month. However, the number of recipients of only 400,000 is expected.

“This provision may not be sufficient if more people lose their income and fall into the poor category,” he added.

He said Bantuan Prihatin Rakyat with RM6.5 billion allocation is still lower than the RM21 billion allocated for Bantuan Sara Hidup and Bantuan Prihatin Nasional in 2020.

“Total cash transfers which are channelled to each recipient is also quite small when viewed from a monthly point of view.

“For example, households earning RM2,500 and below with two children will receive RM1,800. From a monthly point of view, the amount is only RM150 per month,” he explained.

Hawati also believed that the number of people living in poverty is still underestimated in the country.

Possibly, this could be due to underestimation of basic non-food needs (clothing, housing, transport) as the proportion of non-food goods and services is less than half. But expenditure survey data shows that B40 (bottom 40%) households spent more than 60% of their total expenditure on non-food items.

“Additionally, Malaysian consumption patterns across all income groups have also changed over time, with greater spending on items traditionally described as discretionary, such as in communications and recreational/cultural activities,” she added.

While such spending has long been seen as discretionary, she said some of this may have become necessary, for example Internet and devices or handphones.

“Also, food away from home for example has become a necessity for many (not only the rich). If such items are not adequately taken into account, the poverty line income will also be underestimated.

TMR previously reported Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz as saying that the ministry is looking into enhancing Budget 2021, following the implementation of various forms of MCO nationwide.

“The Ministry of Finance (MoF) always listens and is ready to improve the initiatives when required. As such, with the implementation of the various MCOs, the MoF is studying and discussing appropriate improvement on Budget 2021 measures to ensure the welfare of the people and business continuity,” he said after giving the latest report on Laksana, or Unit Pelaksanaan dan Koordinasi Stimulus Ekonomi Antara Agensi Nasional.

Source: The Malaysian Reserve


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