Academic questions reliability of poverty line maths

Academic Fatimah Kari says data transparency is crucial for effective implementation of poverty policies.

PETALING JAYA: An academic has warned of the likelihood that the methodology used in setting the new poverty line income (PLI) may result in the exclusion of some poor groups from government assistance and poverty eradication programmes.

Speaking to FMT, Fatimah Kari of Universiti Malaya’s Centre for Dialogue and Civilization said there was no indication that the government had considered differences between rural and urban areas and between East and West Malaysia.

She said data transparency was crucial for effective implementation of poverty policies.

The statistics department announced last Friday that the government had revised the national PLI from RM980 to RM2,208 a month.

Fatimah Kari

The previous PLI was based on a method of calculation devised in 2005 and the new one on a 2019 methodology.

Fatimah noted that under the 2005 methodology, the non-food PLI was based on the consumption patterns of the bottom 20% of the population.

“If the 2019 methodology did not improve on this, it may lead to underestimation as the bottom 20% does not represent a homogeneous group,” she said.

She said having a blanket poverty line of RM2,208 for the whole country would therefore see certain people incorrectly placed below or above the line.

Different regions might have different consumption patterns and costs of living, she added.

She also argued against basing the 2019 PLI on the consumer price index (CPI) for food and non-food items.

“CPI is an aggregated index,” she said. “A cost-of-living index would better reflect the actual expenditure of households.”

As a result, she said, the PLI could prove unreliable in the face of economic shocks, such as the current one which was brought about by the Covid-19 pandemic.

She also asked if there was any effort to consider meals taken outside of the home as an item of consumer expenditure.

“Malaysians tend to dine out a lot more and it’s becoming part of our habit,” she said. “Food away from home also explains the consumption inequality between different households.

“All these technical matters need to be addressed to come up with a reliable, consistent and specific poverty line.”

In announcing the new PLI, chief statistician Mohd Uzir Mahidin said optimal food intake and quality non-food basic requirements were among the factors taken into account.

Last year, the United Nations special rapporteur on extreme poverty and human rights, Philip Alston, said the official poverty line did not reflect the cost of living in the country and excluded vulnerable populations. This prompted the Pakatan Harapan government to propose a review of the country’s poverty rate.

Last week, Alston accused the Perikatan Nasional government of backtracking on the commitment of the previous administration to take poverty seriously. - FMT