What is the Social Inclusion Agenda and why it is the only way forward – Part 1

Posted on October 1, 2012

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In 1970, based on government statistics, almost 50% of the population were categorised as poor.

The following year, Tun Abdul Razak launched the New Economic Policy, with its two-pronged stated objective of poverty eradication and economic restructuring so as to eliminate the identification of ethnicity with economic function. In terms of  distribution of the national wealth, a target was set to redistribute the wealth to increase the ownership by Bumiputras from the then 2.4% to 30% of the national wealth. In tandem with this, the government was to spur economic growth so that, even as it was sought to increase the Bumiputra share of the national wealth, this, it was touted, would not impinge on the scope for expansion of non-Bumiputra businesses.

In 1974, national oil company, Petronas, was incorporated.

In 1976, Petronas entered into agreement with both Sabah and Sarawak in relation to their vast oil and gas reserves. In the result, both Sabah and Sarawak would receive 5% royalty for all oil and gas extracted.

That same year, Tun Abdul Razak died, and was succeeded by Tun Hussein Onn.

It is estimated that from 1974 to 2009, a period of 35 years, approximately RM2-3 trillion passed into federal coffers from the oil and gas industry.

To give you an idea of just how much is RM1 trillion, this amount would meet, in full, the cost of 25 million low cost houses at a cost of RM40,000 each.

You would think that with this amount of funds at its disposal, the federal governments from the 70s to the present day would have no excuse but to have done an excellent job in meeting the objectives of the NEP.

The Najib administration would have us believe that this is indeed so.

Government figures for 2009 have it that the incidence of poverty in the country has been reduced from 49.3% in 1970 to a mere 3.8% in 2009. See the powerpoint slide below.

THE OFFICIAL POVERTY STORY

Truly amazing, if true.

The truth, though, is that the Najib administration has conjured up these figures by the application of the most unrealistic poverty line income  for Malaya, Sabah and Sarawak. See the powerpoint slide below.

Official Poverty Line Income (2009)

What this means is that, using the official PLI, a household of 4.4 individuals in Malaya that has a monthly income of RM764, a household in Sabah comprising 5 individuals that has a monthly income of RM1049, and a household of 4.7 individuals in Sarawak with a monthly income of RM913, will not be categorised as poor.

And that is how the Najib administration now claims that BN has done an excellent job in eradicating poverty.

The powerpoint slide below presents the real incidence of poverty when the poverty line income is raised to more realistic levels.

POVERTY LINE INCOME [PLI]

You can see from the slide that if you take an average, for Malaya, Sabah and Sarawak, of RM2000 as the PLI, the incidence of poverty goes up from the official government figure of 3.8% to 33.5%

And if you took it up to RM2500, the figure would now hover around 45%.

The powerpoint slide below shows the actual state of poverty in the country.

The Real Poverty In Malaysia

400,000 struggle to try and survive on a monthly household  income of less than RM500.

2,000,000 have to  try and manage every month on a household income of less than RM1,000.

4,400,000 have to somehow make ends meet on a monthly household income between RM1,000-1,500.

Another 3,300,000 Malaysians will barely manage on a monthly household income of between RM1,500-2,000.

Finally, 2,700,000 might just be able to afford all the bare necessities, with a monthly household income of RM2,000-2,500.

Search the internet and you will find report upon report narrating how Malaysia enjoyed tremendous economic growth from the 70s until at least the 90s. The World Bank report of 2010, in PDF, is linked below.

World Bank Malaysian Economic Monitor

So, with all that economic growth and the healthy federal coffers spilling over with the trillions of ringgit from the oil and gas industry, why do we still have near 45% of the people living in poverty?

I have spent some time researching both Razak’s and Hussein’s terms as PMs and I have to  concede that very little is said of the latter, whether good or bad.

Hussein, it would seem, was a somewhat mediocre PM.

Corruption-free, but not dynamic.

Of Razak, though, much has been written.

Here’s just one, from the Amanah website, an excerpt from which I reproduce below.

“Tun Razak had left behind a legacy – the conception of initiatives such as the Razak Education Report and the Red Book; the establishment of educational institutions including University Malaya, Institut Teknologi MARA, Serdang College of Agriculture and Universiti Kebangsaan Malaysia; the creation of the New Economic Policy and setting up of relevant organisations such as FELDA, MARA, FELCRA, RISDA, FAMA, and Bank Pertanian; the development of trade and industry via FIDA/MIDA, PERNAS and State Economic Development Corporations (SEDCs) and the establishment of PETRONAS, to name a few. However, more importantly, he left behind a value system of integrity, honesty, hard work, morality, caring and loyalty to the nation. The evidence can be gleaned from Tun Razak’s behaviour and character”.

“…Tun Razak had a high respect for the rule of law. He did not interfere in the legal institutions or enforcement of the laws.

“…Tun Razak passed away without leaving much worldly wealth behind for his wife and children”.

If all that has been written of Razak is the unvarnished truth, then, whatever view one takes of the policies he put in place, one could conclude that he, too, like Hussein, was relatively corruption-free

Tun Hussein Onn served as Prime Minister from 1976 until 1981, when he made way for Dr Mahathir.

And that is when the nightmare begins.

I’ll save that for Part 2.