ECONOMY-MALAYSIA: New Deal for Rural Poor

By Baradan Kuppusamy Reprint | | Print |

Baradan Kuppusamy

KUALA LUMPUR, Apr 3 2006 (IPS) - After watching development pass by for nearly three decades, Malaysia’s rural poor – mostly native ethnic Malays – can finally look forward to some goodies thrown their way.

Under former prime minister Mahathir Mohamad, the game was about catching up with success stories like Korea and Japan. In the process, urban centres boomed and a new rich came into being but the rural poor were neglected. Their income levels actually worsened and the gap in wealth within the majority Malay community widened.

Last week, Prime Minister Abdullah Badawi tabled a RM200 million ( 54 million US dollar) ninth Malaysia Plan (9MP), a five-year development blueprint that tries to reverse the trend and put more food on the table of the poor and more cash in their pockets. It aims to boost the economy, stamp out poverty and improve quality of life and governance.

“The government strongly believes in eradicating poverty, generating more balanced growth and ensuring the benefits of growth are enjoyed by the Malaysian people in a fair and just manner,” Abdullah said when presenting the plan in parliament.

The changes in thrust could not have come at a more opportune moment because the growing gulf between rich and poor Malays is perceived to be the result of a costly social engineering exercise set up, ironically, to favour the ‘bumiputra’ (sons-of-the-soil) community.

Malaysia has the worst income disparity in South-east Asia, according to the United Nations’ human development report for 2004. The richest 10 percent in Malaysia earns 22 times more than the poorest 10 percent.

For some of Badawi’s critics it is a step back from reaching for the stars to hitting the dirt and preaching agriculture and fisheries. But, for many economic and social experts, the shift to a more balanced development plan, giving emphasis to the welfare of the small man, is a welcome relief.

“The 9MP makes a clean break from the errors of the past. Gravy trains for the lucky few are to be replaced with structural change and an equality of opportunity based on merit and need,” writes Khairy Jamaluddin, an investment banker and an influential leader in the ruling United Malay National Organisation (UMNO) party.

“If there was any doubt that the Prime Minister would not stamp his imprimatur on the most seminal economic document for the next five years, it was categorically and emphatically erased in parliament on Friday afternoon,” he wrote in a commentary in the News Straits Times daily on Apr. 1.

“Instead of being held captive to the outmoded thoughts and strategies of the economic bureaucracy Mr Abdullah Badawi has used the 9MP to add teeth to his reforms,” he said.

“Instead of relying disproportionately on electronic exports to propel the Malaysian economy, he has made a bold attempt to strengthen several sectors – even those which some dismiss as sunset industries – to ensure that growth is more broad-based and robust,” wrote Khairy. ”His belief in an agricultural revolution is beyond mere talk. The budgetary allocation for agriculture and agro-based industries is 70 percent higher than in the last plan.”

The plan aims to totally eradicate extreme poverty in Malaysia, addressing the plight of some 300,000 citizens or 1.2 percent of the population of 26 million, who survive on less then RM400 (100 dollars) a month.

A key thrust of the package is to eradicate poverty, wipe out income disparity and promote transparency and accountability to make it attractive to foreign investors. The plan seeks to halve the overall poverty rate to 2.8 percent by 2010.

The five-year plans have been important tools for social engineering and restructuring the post-colonial economy aimed at reducing dependency on rubber and tin and diversifying into manufacturing and trading.

The first five-year plan was launched in the aftermath of the 1969 race riots between the politically dominant but economically backward Malays and the economically powerful minority Chinese.

Agriculture will expand by five percent a year as the government wants to promote large-scale commercial activity with a budget allocation of RM11.4 billion (three billion dollars).

About 40 percent of Malaysians live in rural areas. Badawi said the emphasis on agriculture would raise rural income, narrow income disparity and eradicate poverty.

However, continuing to give advantages to Malays is bound to raise unhappiness among the Chinese – and also the Indians who had expected Badawi to offer some remedial measures to alleviate their problems.

“There was none,” said S. Arulchelvam, a prominent Indian and secretary general of the Socialist Party of Malaysia.

A pro-Malay affirmative action policy launched in 1971 envisaged Malays owning 30 percent of corporate wealth but, after 35 years, Malay share remains stagnant at 19 percent whereas the share of Indians has slid from 1.5 to to 1.2 percent. On the other hand the share of ethnic Chinese has increased to about 40 percent.

Worse, the poverty rate among Malays still ranks the highest at 8.3 percent in 2004, followed by the Indians at 2.9 percent and the Chinese at 0.6 percent.

Ethnic Malays comprise 60 percent of the population followed by Chinese constituting around 26 percent. Indians and indigenous tribes make up the rest.

The standard government solution, to hand out more to the Malays, has been condemned by opposition icon Anwar Ibrahim who says the policy is not only obsolete and corrupt, but also benefits a few well-connected Malays at the expense of poor Malays, Chinese and Indians.

“It breeds mediocrity. It will weaken the economic base of our fabric and it is time to abandon these race-based policies and launch a new economic agenda that give assistance to all poor irrespective of race,” Anwar told IPS. “Mr Abdullah promised a clean, efficient and transparent government. So far, it has been all words and little action.”