Introduction
The eradication of poverty has been a core tenet of our country's economic development goal. Indeed, Malaysia has made great progress in eradicating poverty since its independence. By 2022, the proportion of households living in hardcore poverty—defined as those unable to afford sufficient food to meet basic caloric needs—stood at 0.2% or 18,445 households. At the same time, absolute poverty, which includes those unable to meet basic needs beyond food, was recorded at 6.2%, a slight increase from 5.6% in 2019.
However, poverty is multidimensional and is far more complex than the lack of monetary income. The theme of the 2024-2025 International Day for the Eradication of Poverty: "Ending Social and Institutional Maltreatment Acting Together for Just, Peaceful and Inclusive Societies" highlights one of the hidden dimensions of poverty: the social and institutional mistreatment faced by those living in poverty. Thus, this paper explores the understanding of poverty in Malaysia, focusing on multidimensional measures and spatial disparities of poverty. It aims to provide insights into how these factors can enhance poverty eradication efforts.
Currently, Malaysia measures poverty through both income-based (monetary) and multidimensional indicators (non-monetary). While Malaysia's recognition of poverty as being multidimensional and the revised poverty line income are milestones in our country's method of capturing poverty, there are still gaps in how we can effectively measure poverty. Additionally, spatial understanding of poverty is important for better targeting in poverty eradication policies – particularly to those who are most vulnerable and face barriers in accessing resources needed to thrive.
The evolving understanding of poverty
Historically, poverty was understood primarily through income. A widely used approach in measuring poverty is by setting a specific income threshold, known as the poverty line income (PLI), and anyone living below this line is considered poor. However, this method only provides a partial view of poverty, as it fails to capture other essential aspects of well-being, such as access to basic services, quality of life, and social exclusion.
Over time, the understanding of poverty has evolved significantly, shifting from a narrow focus on income to a broader, multidimensional perspective that captures various deprivations affecting people's lives. This evolution reflects a growing recognition that poverty is more complex than simply lacking money—it involves many other factors that influence a person's well-being and quality of life.
The hidden dimensions of poverty
There have also been other international efforts to expand the poverty definition. One of which is developed through the 2019 joint study by ATD Fourth World and Oxford University, which introduced the hidden dimensions of poverty. The study identified nine key poverty dimensions across three categories namely, (i) core experience, (ii) relational dynamics, and (iii) privations.
Among the nine dimensions, familiar aspects under privations such as the lack of decent work, insufficient and insecure income, and material and social deprivation are frequently discussed in policy dialogues. In contrast, the dimensions related to core experiences and relational dynamics are less commonly addressed. In addition to the nine interdependent dimensions, factors such as (i) location, (ii) timing and duration, (iii) identity, (iv) cultural beliefs, as well as (v) environmental policy can all impact the form or degree of poverty experienced.
Capturing spatial understanding of poverty in Malaysia
Incidence of absolute poverty in Malaysia
Among the income-based measure used to assess poverty in Malaysia is absolute poverty, set by a poverty line income (PLI), which determines a minimum threshold for household earnings necessary to meet basic needs like food, clothing, and shelter. Under this definition, any household that earns below the PLI is considered to be in absolute poverty. Meanwhile, households who are in hardcore poverty, are those that earn below the food PLI – the income threshold to afford sufficient food that meets caloric needs.
In 2020, the government announced the new poverty line income to better reflect current social welfare needs and actual costs of living. This new PLI refined the items in the food basket and increased the number of items in the non-food basket from 106 to 146. This included essential food items as well as other non-food needs such as transportation, housing, and utilities. The changes made to the PLI methodology are also in line with the expenditure patterns of households in the bottom 20% of the income distribution.
In addition to examining absolute poverty rate at the national level, examining the incidence of households in absolute poverty at the district level can provide a more detailed picture of Malaysia's socio-economic landscape. This analysis is now made possible through Malaysia's Department of Statistics (DOS) efforts in recent years to produce more disaggregated measures and thus enhance our spatial understanding of poverty.
Though the national rate of poor households is at 6.2% in 2022, 107 districts had an incidence that was higher than the national average of poor household. Among them, 62 districts had a prevalence of poor households that was twice the national average (highly above) while 17 districts were significantly above the national average of poor households.
Malaysia's Multidimensional Poverty Index
Aside from monetary poverty indicators, Malaysia also uses the Multidimensional Poverty Index (MPI). The MPI looks beyond income. It also considers households access to education, health, and basic living conditions. In 2022, 1.9% of households are multidimensionally poor – an improvement to the 2.6% in 2019. However, the incidence (0.5% urban, 6.7% rural) and deprivation intensity (37.0% urban, 42.0% rural) of households in multidimensional poverty is consistently higher in rural areas, again showing the disproportionate distribution of poverty in Malaysia. This also calls for the need to assess multidimensional poverty at the district level to better identify highly deprived areas.
Overlaps in monetary and non-monetary poverty
Assessing various poverty indicators at the district level offers a more nuanced and comprehensive understanding of the poverty experienced by different households. Districts with higher incidences of households in absolute poverty are also districts that have relatively lower access to basic amenities. This points to a strong overlap between households that are experiencing both monetary and non-monetary poverty. This is even more concerning in districts where it faces both a high proportion of households in absolute poverty and low access to basic amenities.
Multidimensional poverty recognises that poverty can involve a range of deprivations including poor access to healthcare, education, housing, clean water, sanitation, and living standards. However, current MPI indicators still have limitations in measuring non-income aspects of poverty, as they fail to capture qualitative factors such as food security, nutrition, education quality, advanced healthcare, and digital connectivity. While these fundamental services, such as access to clean water and healthcare, remain crucial, the MPI should also incorporate indicators that reflect higher living standards and can provide greater insight into household poverty, especially in targeting and addressing overlapping deprivations.
Deepening Malaysia's understanding of poverty
Our country's recognition of multidimensional poverty and the revised poverty line income reflects Malaysia’s evolving understanding of poverty. However, gaps remain. Furthermore, the inclusion of communities in poverty in policy research and decision-making is important to gain greater insights into the obstacles faced when trying to overcome poverty.
Poverty is not just a matter of material deprivation; it also affects human dignity. People who lack basic services and opportunities can often be excluded from fully participating in society. The evolving perspective not only enhances our ability to measure poverty, but it can also guide in effective policies that aim to reduce both material and non-material forms of deprivation, promoting equity, dignity, and sustainable development.
