South East Asia

Rural Malaysia Mired in Poverty

Mariam looks at the mess inside her house after knee-deep floodwaters had subsided in her kampong, or village, in northern Malaysia. An ethnic Malay widow, Mariam is among a disillusioned underclass of Malaysians who feel marginalized by the economic transformation credited to Prime Minister Mahathir Mohamad, who steps down after 22 years in power at the end of this month [October]. But for all its impressive growth rates and higher per-capita incomes, Malaysia ranks among the most unequal societies in Southeast Asia in terms of income distribution.

In the capital, Kuala Lumpur, skyscrapers pierce the skyline, sleek light-rail transit trains glide on elevated tracks while young urban Malaysians in gleaming cars travel to work along roads lined with trendy shops.

Even around Mariam’s house in Penang, northern Malaysia, the exterior symbols of development are evident. A coat of tar has covered the dirt lane outside her home, motorcyclists race along narrow roads oblivious to the speed humps, while Malaysian-made Proton cars can be seen parked outside neighboring houses. But despite the trappings of progress, there is little welfare support for low-income Malaysians like Mariam who are finding it increasingly tough to make ends meet. 

Reports often point to the fall in absolute poverty levels in Malaysia—from 29 percent in 1980 to about 5-6 percent in 2000. But critical analysts complain that this figure is misleading. They point out that the income threshold used for the poverty line—currently a monthly household income of 510 ringgit (US$134) in western, peninsular Malaysia—is unrealistic given the higher cost of living.

According to the World Bank, Malaysia was one of the few countries in East Asia where inequality fell over the past few decades. But “despite this long-term reduction in poverty rates, the trend has reversed itself since 1990,” it says.

Other reports indicate that Malaysia’s Gini coefficient—a measurement for income inequality where 0 indicates perfect equality and 1.0 indicates perfect inequality—of around 0.49 is among the highest in the region. That is significantly greater inequality than the levels in poorer countries such as Indonesia (0.32), Vietnam (0.36), and Laos (0.37). It is also higher than Thailand’s 0.41 and the Philippines’ 0.46.

According to another research study, intra-ethnic inequality appeared to be worst among the Malays, who make up more than half of the country’s 25 million people. Two decades of affirmative-action policies did increase the stake in the economy of ethnic bumiputras  (ethnic Malay and other indigenous groups) and led to the emergence of a Malay middle class. But a huge chunk of this stake is in the hands of state-backed institutional investment agencies holding shares in trust for bumiputras. There is another disparity: the rural-urban divide. By 1999, rural household incomes stood at just 55 percent of the urban figures. Many of the poor rural households can be found in Kelantan, Terengganu, Kedah, and Perlis states.

Not surprisingly, it is precisely in this Malay “heartland” that support for the conservative opposition Islamic party, Parti Islam Se-Malaysia, is strongest. In north Borneo, indigenous groups in the interior areas of the eastern states of Sabah and Sarawak are among the worst affected. Among indigenous minorities in peninsular Malaysia, the Orang Asli, as they are called, remain desperately poor despite attempts to alleviate poverty.
Even within urban areas, a significant underclass has emerged as well over the decades. A few kilometers from Mariam’s kampong, at a sprawling squatter settlement next to an established industrial estate, conditions are dismal. A sizable number of undernourished children can be found in squatter areas and plantations, according to Nasir, a trained nutritionist. The telltale signs are underweight children, poor academic performance, and health problems. Invariably, many of the children drop out of school.

Situations like this contrast with the image of economic success that Malaysia wants to present.

Visitors to Putrajaya (the multibillion-ringgit administrative capital near Kuala Lumpur) and the Petronas Twin Towers (financed by Malaysia’s abundant petroleum resources) continue to gawk at the ostentatious display of grandeur.