The Eighth Malaysia Plan (8MP) aims to reduce poverty to 0.5 percent in 2005 from the present 7.5 percent, but the development towards a knowledge-based economy and measures taken under the plan do not suggest a positive change towards faster eradication of poverty.

Director of the Institute For Malaysia and International Studies (Ikmas) at Universiti Kebangsaan Malaysia (UKM), Dr Ishak Saari pointed out that in the last three years, the incidence of poverty has increased in the peninsular Malaysia which has a poverty line of RM510.

"In 1999, there was a rapid recovery from the currency crisis of 1997 and the economy grew by 7 percent on average from 1998 to 2000. And yet the incidence of poverty rose between 1997 to 1999," he said.

According to the 8MP, the incidence of poverty among Malaysians has decreased from 8.7 percent in 1995 to 6.1 percent in 1997, but the economic crisis pushed the figure up to 8.5 percent in 1998, and it only declined to 7.5 percent with the recovery in 1999.

The number of poor households has also reduced from 366,000 in 1995 to 274,000 in 1997, but increased again to 351,000 in 1999, said Ishak who was speaking at a public forum organised by DAP on Wednesday entitled the 'Malaysian Economic Crisis, OPP3 and The Eighth Malaysia Plan'.

Ishak noted that this meant the number of poor people decreased from 1.8 million to 1.4 million between 1995 to 1997, but increased to 1.7 million in 1999.

"It is important for us to realise that the numbers of the poor may be higher than that stated in the document," he said, referring to the 8MP announced by Mahathir on April 23 as the first phase of the Third Outline Perspective Plan (OPP3) 2001-2010, dubbed the National Vision Policy.

Besides, added Ishak, many people were also concerned the poverty line currently used may no longer be suitable.

Under the 8MP, the poverty line income in peninsular Malaysia is RM510 per month, whereas for Sarawak it is RM584 and Sabah, RM685.

"Given the new needs of society, these levels of income are definitely not enough," he explained.

However, he said he welcomed the 8MP, in recognition of its efforts to improve the livelihood of the poor and the newly poor.

Poor households

According to 8MP, measures will continue to be undertaken to increase income and improve the quality of life of the bottom 30 percent of the population, and that the government will streamline the eligibility criteria for assistance based on the household incomes, which will be reviewed periodically.

"For the first half of the plan period, the income eligibility for assistance is set at RM1,200 and below, per month per household," stated the 8MP.

Ishak stated that between 1997 and 1999, the incidence of urban poor also increased, from 2.1 percent to 3.4 percent.

"No one wants to see what happened in Petaling Jaya Selatan recurring again or spreading to other parts of the country. And, in terms of urban poor, the Petaling Jaya Selatan incident is an important manifestation," he said.

The number of new poor households, meanwhile increased to 34,400 households or 1.5 million people. And between 1997 and 1999, the number of poor households in urban areas increased by about 65 percent.

"What we are seeing today is the rapid increase of the number of urban poor, not only in Malaysia, but also globally," said Ishak.

With greater globalisation and liberalisation, as well as privatisation, there is growing instability and growing economic insecurity especially among the low-income group, the uneducated and the unemployed, he added.

"What we might see today is growth, but fewer jobs are being created and a steady income is not easy to come by," he stressed.

Income disparity

Although the 8MP and OPP3 have been rather optimistic in growth prospects for the next 10 years, one has to adapt with the process of transition, from production to knowledge economy, and more and more people are finding themselves dislocated in the economic system, he said

"Unfortunately, it is the poor who are going to face more of these problems," he said.

After the implementation of liberalisation, deregulation and privatisation policies, income inequality in 1990s increased. Income disparity between the urban and rural population is wide, while disparities between ethnic groups and within each ethnic group have also widened up to 1997, said Ishak.

But in1999, there was a decline in income disparity. The 8MP did not highlight this drop, only mentioning that the inequality increased marginally between 1995 to 1999, he added.

He pointed out the decline of income inequality was actually accompanied by a drop in household income. For instance in 1997, the average household income was RM2,607 per month. In 1999, it dropped to RM2,472 per month.

Despite the economic recovery, people's income declined. The groups that were most hit were the top 20 percent, having their income reduced from almost RM7,000 to RM6,200 per household during the same period.

"It means that while growth figures may be impressive, they do not translate into higher income particularly among the lower income group," he said.

Based on the figures provided under the 8MP, the household income for the bottom 40 percent actually improved marginally, from RM834 to RM865 between 1997 and 1999.

"But we must remember during that time, the electronic export sector was still booming, and at the same time, the prices of palm oil were reasonably good," he said.

He pointed out that in 1999, palm oil prices had dropped from RM1,500 per tonne to the current level of less than RM1,000 per tonne.

"That means the number of poor people in rural areas was bound to have increased as a result of this drastic drop," he said.

Housing shortage

He elaborated the urban poor were not only having low incomes, but also faced other dilemmas such as housing problems, unemployment and social concerns of women and youth.

Ishak noted that the target of low-cost houses to be built has not been fully met.

"The low-cost housing target under the Seventh Malaysia Plan was 35,000 units; by the end of the plan we only achieved 17,229 units, about 50 percent.

"What is sad about the 8MP is that the target for low-cost housing has been reduced to 17,000 units. And yet we talk about the need to relocate the poor from the squatter areas," he said.

Ishak also said that for the poor, education is a tool for social mobility, and one of the problems faced by them is that they normally start very late in the education process.

"Many poor children do not have access to pre-school education. They are already disadvantaged when they enter schools," he said.

The 8MP stated that until 2000, 63.7 percent of children in the five to six age group had access to pre-school education,.

"The target of the 8MP is 75 percent but what will happen to the remaining 25 percent? It means they are losers right from the beginning of the education process," he said.

Employment concerns

The 8MP reported that the highest growth in employment opportunities was in the administrative and managerial groups as well as in the professional and technical categories.

"So while we are transforming into a knowledge-based economy requiring high skills and a highly-educated work force, large numbers of unskilled workers are still working in various industries," he said.

He stressed that in the next five years, the challenges in terms of eradicating poverty, particularly urban poverty, will be influenced by the development of a knowledge-based economy.

"Assuming that the economy can recover, the benefit from the recovery might not be shared by the poor or low-income group," he said.

He also noted that the Malaysian Trades Union Congress' (MTUC) proposal for a retrenchment fund has not elicited any response from the government, although the fund was supposed to be funded by both workers and employers in view of the economic slowdown.

He said the dimensions of the projected slowdown in the near future are not as bad as in 1997, but with the drop of commodity prices and retrenchments nationwide, which has reached something like 7,000 jobs in Malaysia this year alone, it is doubtful the 7.5 percent average annual growth until 2005 is achievable.

Expensive health care

Ishak also highlighted the trend of privatisation in health care services. Under the 8MP, the private sector increased the number of hospitals from 197 in 1995 to 225 in 1999.

In 1999, the number of public hospitals was only 127, he said, adding it was interesting to note that many medical specialists and facilities were in private hospitals. For instance in 1999, out of 27 MRI (magnetic resonance imaging) machines, 23 were in the private sector and out of the 86 CT (computer thermograph) scanners, 67 were in the private sector.

He reported that 67 percent of physicians, 66 percent of surgeons and 80 percent of ONG (obstetrics and gynaecology) specialists were practising in the private sector.

Keeping this in mind, he said, even before the privatisation of health services, there are already imbalances in terms of health accessibility to those in rural as well as urban areas.

"The challenges outlined above are the ones the nation will have to think about carefully if we do not want to see more Petaling Jaya Selatan incidents in our society," he said.