Parliamentary Caucus of Institutional Reform and Good Governance should pioneer new thinking on vital national issues – how to ensure affirmative measures are need-based and not race-based; how Malaysia can be a leading nation of integrity and a showcase to the world of the success of Alliance of Civilisations instead of a failure because of a Clash of Civilisations

I would like to congratulate Datuk Seri Anwar Ibrahim for organizing this seminar in his capacity as the chairman of parliamentary caucus on reform and governance. The formation of this caucus is part and parcel of the rigorous reform of parliamentary process since Pakatan Harapan formed the government after the historic 14th General Elections in 2018. In addition to this parliamentary caucus, six new parliamentary committees have been formed to allow for greater room for backbenchers to keep the front bench accountable to parliament.

The presence of these new accountability structures and processes in a newly invigorated parliament would not have been possible under the previous administration as parliament was seen as a rubber stamp that was used to bulldoze through undemocratic decisions such as the 2018 delimitation bill and the Anti-Fake News Act to whitewash the 1MDB scandal.

Today’s event is a concrete example of how Members of Parliament, through this parliamentary caucus comprising of MPs from all parties represented in parliament, can give inputs on important policy matters for the members of the executive to give serious consideration to.

The issue for discussion today – our understanding of how poverty is defined and addressed via government policy – has been in the news of late arising from the report made by the UN special rapporteur on extreme poverty and human rights, Professor Philip Alston, on the 23rd of August 2019, which states that Malaysia undercounts the number of its poor.

Many have called for the findings of this UN report to be taken seriously including the chairman of this caucus, Dato Seri Anwar Ibrahim, many Members of Parliament, academics and researchers (both Malaysians and non-Malaysians) and members of civil society. Many of the sound reasons to take this report seriously have been raised.

I do not want to repeat these points. But I want to acknowledge that in this day and age of fake news and outright lies, any enhanced measure of poverty, which would inevitably increase the number of people among marginalized groups who are defined as poor, can and most probably will be ‘spun’ by irresponsible parties. If, for example, the percentage of households in poverty is calculated at 19% using more updated measures of multidimensional poverty, I am almost certain that the opposition and their cyber troopers will use this figure to say that the number of poor people has spiked up dramatically under the Pakatan Harapan government. And in all likelihood, the DAP, being the bogeyman for these cybertroopers, will be targeted as the cause of this so called ‘rise’ in poverty.

While these fears are not unfounded, we should not shy away from giving a more accurate picture of Malaysian society just because the facts will be manipulated and misinterpreted by irresponsible parties. I very much believe that the truth will prevail especially if there is proper explanation made to the public, not just by the government, but by experts in this field including some of the researchers and academics who are present today at this seminar.

One good example is the revelation by Prime Minister Tun Dr. Mahathir that our total debt exposure had actually exceeded RM1 trillion under the previous government because of hidden contingent liabilities and commitments. There were some quarters which criticized us from revealing and using this figure. But after explaining to the public and the relevant stakeholders, including the bond rating agencies, Malaysia was able to maintain its overall credit rating.

Almost five decades ago we as a nation adopted the New Economic Policy (NEP). The NEP had two prongs, one of which was the eradication of poverty irrespective of race as a means towards attaining national unity. Successive Five Year Plans have allocated billions of Ringgit for programs and projects designed to meet this important goal. Official estimates put out by the previous government indicated that there are 0.4 percent of households, numbering approximately27,000 households, that remain below the national poverty line.

These estimates have been seriously questioned as a gross understatement and there have been call for a review of the estimates. The estimate of 0.4 percent is delusional and cannot be used as a basis for planning and allocation of resources. The methodology in place needs replacement and needs to be brought into line with international best practice. There is a certain urgency and I would like to propose a number of steps:

A) Establish a Technical Expert Group to recalculate the PLI using international best practice to derive credible estimates of poverty. This is the commonly accepted approach adopted by most advanced countries when calculating important/sensitive statistical measures. It is time for Malaysia to move towards a fully transparent approach by abandoning outdated practices designed to generate “feel good” numbers.

B) Direct the EPU and Dept of Statistics to release disaggregated data (anonymized in keeping with the requirements of the Statistics Act) from the last Household Income-Expenditure Survey to permit researchers to undertake independent analysis. The release would represent the commitment to open and transparent sharing of data consistent with the PH Manifesto.

C) Consider a wide-ranging survey to look into why past policies have not succeeded in achieving the goals set out in the NEP. This should include the identification of leakages. The survey should be given the task of making recommendations for strengthening Safety Net Programs to aid the poor. A further issue that would merit attention would be how best to turn the “minimum wage” into a “Living Wage”.

Income Inequalities – While poverty incidence has been the subject of public discourse, the related issue of income inequalities has received far less attention. The calculations of Gini coefficients have broadly pointed to skewed distributions. While some studies have indicated a widening of the disparities in incomes between the rich and the poor, other studies have pointed in the opposite direction.

A recent study by Muhammed Abdul Khalid (National University of Malaysia) Li Yang (Paris School of Economics) entitled INCOME INEQUALITY AND ETHNIC CLEAVAGES IN MALAYSIA EVIDENCE FROM DISTRIBUTIONAL NATIONAL ACCOUNTS (1984-2014) fills an important gap in our knowledge. The study exposes a number of myths about income distribution patterns.

The authors have combined available information obtained from national accounts, household surveys, fiscal data, and demographic statistics. This appears to be the first attempt to produce inequality measurements which are fully consistent with the national accounts. The two authors present their key findings as follows:

For the period of 2002 – 2014, the real income growth for the bottom 50% is the highest (5.2%), followed by the middle 40% (4.1%), the top 10% (2.7%) and then the top 1% (1.6%). However, while average growth rates are positive across all ethnic groups (Bumiputera 4.9%, Indians 4.8%, and Chinese 2.7%), the highest growth of real income per adult accrued to the Bumiputera in the top 1% (at 8.3%), which sharply contrasts the much lower growth rate of the Indians (at 3.4%) and negative income growth rates of the Chinese (at -0.6%). Despite the negative growth rate, the Chinese still account for the lion’s share in the top 1%. In 2014, 60% of the adults in the top 1% income group are Chinese, while 33% Bumiputera, and 6% Indians (compared to 2002, in which the top 1% consists of 72% Chinese, 24% Bumiputera, and 3% Indians). We conclude that in this period, Malaysia’s growth features an inclusive redistribution between income classes, but with a twist between racial groups.

The Caucus can probably organnise a Seminar to invite the two authors to make a presentation of the full findings.

The authors of the study caution readers to take account of the fact that the estimates are fragile because of the lack of transparency about income and wealth data in Malaysia. This is yet again another plea for official agencies to be more open and transparent in the release of data. The Pakatan Harapan manifesto had promised reforms in that regard.

It is time for EPU and Dept of Statistics to be directed to release disaggregated data (anonymized in keeping with the requirements of the Statistics Act) from the last Household Income-Expenditure Survey to permit researchers to undertake independent analysis. The release would represent the commitment to open and transparent sharing of data consistent with the PH Manifesto. This is a promised reform and needs to be met. It is noteworthy that release of such data are a basic and common practice and in keeping with the UN Principles of Statistics. No statistically mature country hoards survey data in the way Malaysia does.

We should not feel the need to be defensive or to defend the policies of the past administration especially in areas where there is a great consensus for change. The need for a more updated definition and understanding of poverty is one such area and we should not shy away from such a challenge. This includes making some of the technical terms and definitions accessible and simple to understand for the public at large, enhancing existing and coming up with new government policies to tackle and reduce the expanded number of people who will be categorized as poor under a revised definition of poverty. I am confident that many of the academics and researchers here would be able to help us in this regard.

In addition, we should not be afraid to examine the record of the National Economic Policy (NEP) in reducing poverty in Malaysia across the various ethnic groups in the country. While it should be acknowledge that the NEP has had some success in lifting many Malaysians out of poverty and into the middle class, especially among the Bumiputera community, there remain many pockets of marginalized groups among our midst, especially the Orang Asli and the natives of Sabah and Sarawak who are living in the rural areas. We need a wider definition of multidimensional poverty in order to properly capture the plight of these marginalized communities. With this recognition, we can then put in place and implement better targeted policies to help improve the livelihoods of these communities especially in terms of alleviating inter-generational poverty.

The engagement on this issue should continue beyond today’s seminar. This conversation, which has already started, should include more NGOs, academics, researchers, and other stakeholders who work on the frontlines of the battle against poverty.

In fact, I would go further. The Parliamentary Caucus should be in the forefront advocating institutional reforms and good governance. The Prime Minister in his keynote address on the occasion of the first anniversary of the Pakatan Harapan Government on May 9, 2019 spoke of the Shared Prosperity Vision where Malaysia could be continuously developed sustainably in line with equitable growth at all levels of the supply chain, class, race and geography and to create a sense of harmony and stability among the people by 2030. The Parliamentary Caucus should not initiate new thinking not only on the issue of poverty but also other important issues, viz:

(a) how to ensure that affirmative actions in Malaysia are needs-based and not race-based;

(b) how to promote national unity and in particular combat the surge of fake news and hate speech to incite inter-racial and inter-religious polarisastion;

(c) how to implement institutional reforms and good governance;

(d) how Malaysia can become a leading nation of integrity in the world and;

(e) how Malaysia can be a show-case to the world of the success of the Alliance of Civilisations instead of being a failure as a result of Clash of Civilisations.