Analyzing Strategies for Poverty Alleviation in Malaysia: A Report

This report analyzes various strategies for poverty alleviation in Malaysia. It begins by highlighting the country's economic recovery and the persistent issue of poverty. The report then explores several key strategies, including the importance of free education, providing scholarships, and the involve...Read More

Table of Contents
Introduction................................................................................................................................3
1.0 Free education......................................................................................................................4
1.1 Provide scholarships.........................................................................................................4
1.2 The involvement of private universities...........................................................................5
2.0 Employment.........................................................................................................................5
2.1 Foreign Direct Investment............................................................................................5
2.2 Construction projects...................................................................................................6
3.0 Minimum Monthly Wages...................................................................................................6
4.0 Low-cost Housing................................................................................................................7
5.0 Financial Aid........................................................................................................................7
Conclusion..................................................................................................................................8
Reference....................................................................................................................................9
Appendix 1: Marking Criteria..................................................................................................10
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Introduction
According to statistics, recently Malaysia has entered a period of economic recovery.
So, in the second quarter of 2019, the country's economy grew to 4.9% on an annualized
basis, also affecting Gross Domestic Product growth (Department of Statistics Malaysia,
2019). Nevertheless, the problem of poverty remains one of the most acute problems of
modern Malaysia. According to Lexico Dictionary (n. d.) "poverty is the state of being
extremely poor". Analyzing this definition in more detail, it can be defined as a state of need,
lack of means of subsistence, a state that does not allow satisfying the urgent needs of an
individual or family. The poverty line may be national or international. The national poverty
line is expressed in the subsistence level. This minimum should provide the opportunity to
purchase a set of the most necessary (by the standards of a given country and in a given
period of time) goods and services. The international poverty line is the level of income of $2
per day. Another milestone is $1 per day is already the international level of extreme poverty.
The official poverty rate is calculated by the proportion of people living below the
subsistence level.
Figure 1
Population and incidence of poverty, 1970-2012
Source: Ministry of human resource, 2013
Based on the figure 1, it can be clearly seen that from 1970 to 2012 the percentage of
poor people in Malaysia is rapidly declining, despite regular population growth. According to
Lim (2016), the poverty rate in Malaysia was 0.4% in 2016, that is a huge achievement for
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the country. Nevertheless, the problem of poverty remains relevant to this day and requires
some measures to minimize these indicators.
1.0 Free education
In Malaysia, the lower-class income is the most affected by poverty due to some
economic and political reasons and a low income, which results that few of these families are
entitled to a high education because of means. In order to remedy the question of the poverty
in Malaysia and effectively reduce this scourge, it would refer to support the question of
education in Malaysia. Education is to be considered as the mother science for the
development of a country’s people. To eradicate poverty educated population should be first
regarded as a conscious population that is aware of the current situation and would like to
design changes, according to Anand (1977). It is very important to promote the importance
of education, here is why the largest political institutions in the world are struggling to ensure
a wide access so that everyone, including all social classes, are entitled to an education. Here
some factors that can help to reduce the poverty in Malaysia through a better education.
1.1 Provide scholarships
To control or reform the educational circuit in Malaysia, the government should
provide more scholarship. A funding system provided by either the government, financial
institutions, or Non-Governmental Organizations, in order to give the opportunity to the most
disadvantaged or the most in need, to succeed and to offer something in return. These
scholarships will help to reduce poverty because the fellows later come out with a more
stable economic situation, but also the delinquency that is the consequence of ignorance and
lack of education will be controlled. In addition to that, this does not reduce poverty only but
also improves the quality of life and leads to greater social benefits. The impact of education
on individual’s personal growth helps them realize their potential. Education is the engine of
the economic growth and the promoter of peace and justice (Paterson, 2018).
1.2 The involvement of private universities
The educational quality of Malaysian universities attracts thousands of students each
year, the higher education sector earns about RM 4.5 billion a year (Clark, 2014). The
increase to 200,000 students is expected to generate 10 billion RM by 2020, it’s is fair to
assume that the more international students there are, the higher the revenues generated
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according to the Ministry of Higher Education. Economically saying today Malaysia became
top ten most popular study location in the world. Thanks to those institutions with those
numbers, it plays a role in the poverty eradication. There are many more job offers that are
either directly related to the universities or indirectly as the printing shops, restaurant chains,
the groceries and the residences previously opened around the most popular universities.
These institutions are the result of a better paid wages within better conditions. Therefore, all
of its factors mean that hope of eradicating poverty is possible.
2.0 Employment
According to the Justice Dennan in Patridge v Mallandaine, employment is defined as
types of agreement by which one individual consent to play out an occupation, administration
or assignment for another, with or without compensation despite the fact that, similarly as
with all agreements at precedent-based law, some type of thought must stream. The
Government of Malaysia should increase employment through these various ways: increase
foreign direct investment, create more projects and reduce government intervention in the
private sector.
2.1 Foreign Direct Investment
Foreign direct investment is defined as foreign direct investment (FDI) is an
investment in a business by an investor from another country for which the foreign investor
has control over the company purchased. The government of Malaysia can increase FDI so
that they increase competition among the locals and international firms thereby reducing
poverty because people will get jobs and would now be able to cater for basic needs.
2.2 Construction projects
The government of Malaysia can eradicate poverty through creating more
construction projects which require a lot of people to complete; hence, the lives of people will
become better and better with the advent of new jobs, as well as with the development of
infrastructure. For example, the MRT, the construction of this project resulted in people being
employed to build the railway, upon completion they will be looking for people to work the
various stations. Another example of the construction projects can be the condominiums. This
type of project requires manpower to build the site and furthermore create job opportunities
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and the Condo would require people to work and serve, as reward for their services they get
salaries and wages which will be used to feed families and reduce poverty.
The government can build more industries so that a lot of people can have job
employment be it the educated and also the people who are not educated. Creating more
industries can also bring people together; hence, people giving each other advice on doing
things that can build them and make a difference in the country of Malaysia.
3.0 Minimum Monthly Wages
In Malaysia, the lowest pay permitted by the law commonly known as the minimum
wage alludes to the most minimal salary every month and it doesn’t includes people
understudies or the household workers. The announcement of the minimum wage in Malaysia
was introduced in October 2010, and then presented and put in practice in January 2013,
supported by the government who implemented this new policy, by the link of the New
Economic Model (NEM) to guarantee comprehensiveness by changing the economy from an
average salary level to the upper level salary by 2020. According to 2019, the minimum pay
allowed in Malaysia start from RM 1,110, a great change in contrast with the recent years.
Increasing minimum wages might be a great solution to decrease poverty, but it has
both pros and cons. Recently it was announced in Budget 2020, that the minimum wage will
be increased by RM100 and reach RM1,200 in the next year (Tan, 2019). Employees and
workers both are unhappy about that. First ones said they were stunned by the proposed
increase, and questioned the wisdom of raising the rate only a year after the previous one.
The second ones are saying that increase by RM100 just isn’t enough.
4.0 Low-cost housing
A low-cost house is not altogether different from a customary house. A minimal effort
house is planned and developed simply like some other house with respect to the quality,
establishment, and structure. The main contrast is that minimal effort houses are moderate
and much less expensive to execute contrasted with customary houses. This decrease in cost
is normally accomplished through legitimate and powerful utilization of locally accessible
assets, building materials, and strategies that are effectively open and do not require
expensive upkeep.
Besides lessening the expense of development, minimal effort houses likewise assume
a significant job in providing people with better lodging techniques while securing the land.
Essentially, with regards to ease lodging, the structure materials can either be pre-gathered or
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collected away from the building site. On the off chance that most people were to respect
minimal effort lodging, lodging development rates ought to lessen radically. As more
advantages and patterns encompassing the execution of minimal effort lodging innovations
keeps on coming to fruition, it is normal that an ever increasing number of individuals will go
to these advances with regards to development and homeownership. Low-cost housing is
popular in many areas of the world. This is because it serves as a lasting solution to the
housing shortage that the world currently is facing.
5.0 Financial Aid
Financial aid could be defined as all those means or strategies government introduce
in order to improve social and economic development in the society/country as well as
eradicate/alleviate poverty. Government should provide financial aid as follows:
5.1 Central Bank of Malaysia (Bank Negara Malaysia)
This is a financial institution established by Malaysian government and some of
the specific objective mandate objectives is to provide financial aid, development and
promote all the key sectors that are considered of strategic useful to the overall socio-
economic developmental aims and objectives of the country. These sectors are namely,
agricultural sector, small and medium enterprises (SMES) infrastructure, maritime,
export-oriented sector, including high technology industries.
5.2 Low Interest Rate
Government should give financial aid through central Bank by granting low cost
of borrowing, slashing interest to the minimum cost for the key sectors and this low
interest will promote domestic economy, increasing employment level and low wages to
the higher level.
5.3 Implications
One of the implications of financial aid is that, it increases excess supply of
commodities in the labour/competitive market as well as fall in price of goods and
services at a given period of time.
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5.4 Local Farmers Support
Government should provide financial aid to the local farmers and cooperative
societies. Such aid includes provision of basic loan, fertilizer and other farm implements
which help them to improve high productivity from time to time. This aid encourages
specialization at the rural areas.
Conclusion
To conclude, the following areas of poverty alleviation in Malaysia can be
distinguished: education, employment, the creation of low-cost houses, financial aid and
wage increases. Thus, reforms in education are able to provide a greater number of people
wishing to learn a certain profession and contribute to the country's economy. As a result,
talking about jobs, the increase in employment is able to introduce more innovations, because
when employment is high, it increases the country's Gross Domestic Product (GDP) and,
therefore, solves problems such as poverty and also improves living standards for all.
Creating affordable low-cost houses with all the necessary conditions will help people spend
more money on food, rather than on rent. Speaking of financial aid, it is very important for
key sectors because it helps to expand annual economic growth. An increase in the minimum
wage will serve as a huge help to the population as well. Together, these measures can
significantly reduce the level of poverty in the country to minimum levels or even completely
eliminate it.
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