Economic Aspects and Applied Policies of Poverty Reductionin Malaysia

Abstract

Poverty is multidimensional, involving not only income deprivation, but also ill-health, illiteracy, lack of access to basic social services, and little opportunity to participate in the processes that influence people's lives. Malaysia, a multiracial country, managed to drastically reduce the incidence of poverty and lessen income inequality while achieving rapid economic growth and maintaining racial harmony. What transpired in Malaysia during the 1970.2000 period was complex and challenging, requiring masterful management by the government of the varied demands of a heterogeneous population [1]. The incidence of poverty and hardcore poor in Malaysia has dramatically declined from 1970 to 2002. Poverty incidence in the rural areas has also been on the down trend from 60 per cent in 1970 to 11.4 per cent in 2002. Urban poverty is relatively lower, falling from 22.3 per cent in 1970 to 2 per cent in 2002. The study assesses the policies, strtegies, programes and the tools that used to reduce incidence of poverty in Malaysia. The research also looks to represents some lessons from the Malaysian development experience specially in poverty reduction. The Poverty Line Index (PLI) for Malaysia was introduced in June 1977 using the 1973 Household Expenditure Survey (HES). It was based on the minimum requirements of a household for food, clothing and footwear, and other non-food items such as rent, fuel and power. Beside PLI the research used secondarry data from it’s relevant sources to achieve the aims of study. The paper concluded that the Malaysian growth regarded as challenges, policy development and progress were in many dimension unique. Nevertheless, there are successful lessons that can provided and adopted from the Malaysian model.