23 June 2024

Embracing MPI to address poverty in Malaysia


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By: Datin Sri Prof. Dr. Suhaiza Hanim Dato Mohamad Zailani

Beyond income or consumption levels, poverty is a complex problem. According to the United Nations Development Programme (UNDP), poverty is living on less than US$1.90 a day, or the equivalent of RM 7.95.

In light of this, the World Bank views poverty as a multifaceted shortage. Global initiatives to quantify poverty have embraced the Multidimensional Poverty Index (MPI), a comprehensive instrument that evaluates poverty based on several aspects of deprivation, to address this complexity.

Malaysia understands the need for an accurate and thorough assessment tool to evaluate poverty as it moves closer to becoming a high-income country. Malaysia’s National Multidimensional Poverty Index (NMPI) is intended to be all-inclusive and consider several variables pertinent to the population’s diversity.

The MPI takes into account the relationships between the many aspects of poverty. For instance, a lack of education might cause low income and few work prospects. By considering these interdependencies, the MPI provides a more thorough and nuanced view of the dynamics of poverty.

Furthermore, the Sustainable Development Goals (SDGs), an international framework that Malaysia and other nations have embraced to advance sustainable development, are intimately linked to poverty measures. Evaluating Malaysia’s economic effect on poverty measures is useful in determining how well the country is doing in terms of attaining the SDGs for social well-being, economic growth, and poverty alleviation. Accurately capturing the complex consequences of unemployment on people and households is crucial.

Diversity and dynamics among races can impact poverty-related issues in Malaysia. While economic progress has helped many people escape poverty, other parts of the population still live in extreme hardship, according to Malaysia’s poverty dynamics. The country’s multifaceted poverty results from disparities in the distribution of money and restricted access to high-quality healthcare, education, and social support networks.

Prime Minister Datuk Seri Anwar Ibrahim said he would continue to work on addressing marginalization and inequality.

Thus, examining and assessing the current methodologies, indices, and methods for measuring poverty in Malaysia is necessary.

As with any measuring technique, it is crucial to assess its shortcomings and find any gaps to guarantee the accuracy, robustness, and effectiveness of attempts to measure poverty.

Several indicators and cut-off point-related concerns might be addressed in the context of Malaysia’s NMPI. For instance, the Department of Statistics Malaysia (DOSM) examines “school durations for all households between the ages of 13- 60 years old, less than six years” as part of the education component for the indicator “duration of education.” However, the six years of education are no longer necessary to guarantee that the household pursues higher education or enters the workforce.

The 11-year education system in Malaysia is structured from Year 1 to Form 5, according to the Malaysian Education Blueprint (Malaysian Education Blueprint 2013-2025), as post-secondary and preschool education are omitted.

For the health dimension, DOSM listed two metrics: “access to healthcare facilities” and “access to clean water. “Access to healthcare facilities refers to emergency treatment, specialized medical services, and primary healthcare facilities. Because it doesn’t account for a household’s poverty level, it is recommended that the indicator of “access to healthcare facilities” not be used to gauge poverty levels.

In the meantime, as practically every home in Malaysia has access to well water, hill water, or clean water supplied by a commercial company or the government, the indication “access to clean water” is inappropriate for usage in that country. According to the World Bank, Indicators that show almost zero deprivation do not help differentiate the multidimensional poor from the non-poor.

In addition, the MPI uses various data sources to quantify poverty in various contexts. One of the primary problems is the timeliness and frequency of data collection.

In the event of an unexpected economic or health crisis, such as the COVID-19 pandemic, for example, family income and expenditure surveys may not be able to reflect changes in poverty dynamics in real-time accurately. It may be extremely difficult to effectively measure and alleviate poverty due to the limitations in data sources for multidimensional poverty measurement.

Another gap is the availability and quality of the data used to build the MPI. Current and reliable data must be available to close this gap and accurately measure poverty levels. In Malaysia, this has been addressed through the prompt formulation, publication, and execution of Malaysian Five-Year Plans.

Data collection procedures, especially for specific aspects like labour, healthcare, and education, may be difficult to use in terms of coverage, dependability, and timeliness. Strengthening statistical systems and improving data collection techniques may fill this gap, allowing for more accurate poverty measurements and evidence-based policy decisions.

Thanks to the global MPI, Malaysia now has a thorough framework for comprehending and confronting poverty in all its forms. The framework helps policymakers assess progress and participate in international initiatives to reduce poverty, as well as formulate focused solutions.

By adopting the global MPI, Malaysia creates a national MPI to strengthen its plans to reduce poverty, encourage inclusive growth, and raise population welfare.

The author is the Director of the Ungku Aziz Centre for Development Studies, Universiti Malaya. She may be reached at shmz@um.edu.my