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Poverty in Malaysia: Understanding the Root Causes

Is Malaysia Poor

Malaysia is located on the Malay Peninsula in Southeast Asia and is home to more than 30 million people. It has a Gross domestic product (GDP) of $407 million (2022 estimate). Furthermore, improvements in health care have led to a significant increase in life expectancy, from less than 60 years in the ’60s to more than 76 years in 2024.

Renowned for its strides in poverty alleviation, Malaysia’s citizens have reaped the benefits of its economic expansion. According to the Commission on Growth and Development, Malaysia is one of the first 13 countries to experience more than 7% growth yearly for more than 25 years.

Poverty in Malaysia

According to the United Nations Children’s Fund (UNICEF), before the COVID-19 pandemic, approximately 6% or 405,000 Malaysian households experienced acute poverty. However, this number rose significantly to more than 630,000, while the number of families living in extreme poverty tripled to 78,000. Further, migration from rural areas to urban areas has increased urban poverty, which has been exacerbated by crony capitalism and a rising cost of living.

Factors Causing Malaysia’s Poverty

  1. Rural to Urban Migration

In recent decades, poverty has been much higher in rural areas than in urban areas in Malaysia. As a result, the government’s poverty-reduction programs and policies were focused on rural poverty, neglecting urban poverty. Many people, including many foreign workers, moved to cities from rural areas during that same period.

This rural-to-urban migration put pressure on urban infrastructure and essential services. Currently, more than 70% of Malaysians live in urban areas. This led to increased unemployment and consequently, large families earning low wages now suffer from a lack of basic resources.

  1. High Cost of Living

The cost of living in urban areas is significantly higher than in rural areas. On average, about three out of 10 Malaysians feel they do not have enough money to purchase basic needs such as food. This is more significant among urban residents, where 28.7% feel this way.

This skews the perception of poverty in rural areas relative to urban areas. However, a Malaysian man says, “In rural areas, the cost of living is cheaper and there is no housing shortage. Food supplies can be supplemented by farming, growing your own vegetables and rearing chickens. But you can’t do that in flats in urban areas.”

Food prices have skyrocketed in Malaysia and several people, especially those from lower- and middle-income households, have to skip meals daily. Despite many years of economic growth, the increase in food prices means Malaysians can experience poverty in urban areas even if they are technically earning an income above the poverty line.

  1. Ethnic Disparities

Malaysia broadly defines ethnic minorities as “Other Bumiputera,” which encompasses communities such as the Orang Asli and all indigenous peoples living in the Sabah and Sarawak states. Poverty rates among “Other Bumiputera” are consistently much higher than ethnic-majority groups. For example, the poverty rate in the Sabah state is six times higher than the national poverty average.

The Good News

Like any country, some of Malaysia’s citizens are experiencing poverty, which must be addressed. However, Malaysia has made major strides in reducing poverty since the ’80s. Today, the government provides free primary and secondary education for all Malaysians and health care is free in rural areas and very low cost in urban areas. In short, there is always room for improvement and Malaysia is on the path to eliminating poverty.

– Olivia Bradley

Photo: Flickr
Updated: May 27, 2024

Causes of Poverty in Sweden Mitigated by Strong Policy

Causes of Poverty in SwedenSweden is a nation in northern Europe that is home to about 10 million people. One of Sweden’s defining characteristics is its neutrality. Formerly a military power, it has been more than 200 years since Sweden has gone to war. This is not the nation’s only impressive accomplishment. Sweden’s other notable claim to fame is its robust economy. Overall, the economy is very strong, and measures have been enacted to reduce and alleviate the causes of poverty in Sweden.

Some statistics about Sweden’s economy:
• In 2016, the nation’s GDP was $511 billion
• The nation’s unemployment rate is about 6 percent

One strength that enables Sweden’s economy to achieve as much as it does is how easy the nation makes doing business. In fact, Forbes rated Sweden as the best country in the world for business in 2017. By comparison, the U.S., an undeniable economic power, is ranked 23rd. Some of the factors that Forbes took into consideration were innovation, taxes, technology, levels of bureaucracy and stock market performance.

Another factor that allows for Sweden’s economic success is its interest in defending and promoting gender equality. In 2016, the World Economic Forum created its Global Gender Gap Index and showed the progress that Sweden has made in this area. According to the index, Sweden trails just three nations, Iceland, Finland and Norway, in terms of gender equality. While economic gain may not be the first thing you think of when you improved gender equality, it really is the case. The European Institute for Gender Equality (EIGE) believes in a very simple cause and effect relationship: “If the EU stepped up its efforts to improve gender equality, more jobs would be created, GDP per capita would increase and society would be able to adjust better to the challenges related to the ageing population.”

These and other actions have limited the causes of poverty in Sweden and ensure a good quality of life for its citizens.

– Adam Braunstein

Photo: Pixabay

Is it Possible to Reduce the Sint Maarten Poverty Rate?

Sint Maarten is a country located in the Caribbean that shares a portion of the island it is located on with the French part of the island, known as Saint Martin. Although the island is a beautiful and popular destination spot for tourists, poverty is a problem for the citizens of Sint Maarten.

Poverty has created very dangerous problems for the small country, including issues such as crime, illiteracy and teenage pregnancy. Poverty is defined as “the total absence of opportunities, accompanied by lack of education, physical and mental ailments, social instability and unhappiness”. The Sint Maarten poverty rate has not quite reached a state of crisis, but there have been definite warning signs for the country.

The Sint Maarten poverty rate is an issue that has been present for the past few years. The Board of United Sint Maarten Party has said that “The increased crime rate wherein people are scared to carry out their daily routine, and are in constant fear of becoming victims of crime even in their very home, is evidence enough that the poverty exists on St. Maarten. Another example is when you visit certain communities and you find up to 6 persons living in a one-bedroom apartment with just the bare essentials to get by, that is poverty.”

According to Trinidad & Tobago MCO, the unemployment rate in Sint Maarten is 11 percent, the illiteracy rate is 4.1 percent, residents without a secondary school education is at 42.9 percent and 22 percent of households have no income.

Fortunately, the Sint Maarten poverty rate can be reduced. The country has been recovering from the recession of 2008-2009, and a positive economic growth is envisaged in the coming years. The economy is very open in Sint Maarten, meaning that developments in the external environment—mainly the U.S. economy— will directly affect the small island country’s economy in return. According to the Economic Outlook of Sint Maarten, the economy has a relatively good starting position for further expansion, and is also said to be able to absorb financial as well as economic setbacks better than other Caribbean countries. These factors will contribute to improving the Sint Maarten poverty rate.

– Sara Venusti

Causes of Poverty in Israel

Causes of Poverty in IsraelOf the 34 member countries of the Organization for Economic Co-operation and Development (OECD), Israel ranks twenty-sixth poorest when discussing gross income, or before government intervention. However, when poverty is discussed in net terms or income after government intervention, it is ranked second-poorest. According to a report by the Taub Center for Social Policy Studies in Israel, 31 percent of the country is living below the poverty line. Why is there such a discrepancy and what are the causes of poverty in Israel? There are a number of reasons.

  1. System of allowances
    The first of the causes of poverty in Israel is its system of allowances. While Israel, compared to other countries, collects a significant amount of income from the wealthy in the form of taxes, it lacks in its system of allowances. The government’s influence in curtailing poverty is at around 30 percent. Other countries’ participation is at around 60. Of the allowance payments made by the government, most are handled efficiently. Part of the solution lies in more system of allowances by the government.
  2. Low participation in labor market
    Another one of the causes of poverty in Israel comes from low participation in the labor market, specifically with two minority groups: ultra-Orthodox Jews and Arab Israelis. As of 2011, only 48 percent of ultra-Orthodox Jewish men and 28 percent of Arab-Israeli women were employed.According to a report by the Bank of Israel in 2015, “the dilemma [of poverty] becomes greater because about half of the poor in Israel belong to the ultra-Orthodox (Haredi) community – a population sector that attributes great value to devoting time to studying the Holy Scriptures – and the traditional Muslim community, in which there are cultural restrictions on the employment of women.”For these cultural reasons, some of the ultra-religious in Israel choose not to search for jobs and therefore fall into poverty. This is also one of the reasons why the government’s influence on curtailing poverty is so low; it believes it will encourage living on allowances instead of looking for other means of income.

These main contributors work in conjunction to create a difficult environment for the government to control poverty. Between the low participation in the labor market and therefore lower system of allowances by the Israeli government, the population has suffered from impoverished conditions.

To combat these issues, the OECD has offered some recommendations that will hopefully decrease the poverty rate, the first of which includes increasing competition and efficiency in the domestic economy. An OECD survey noted that the banking industry is inefficient and concentrated.  Therefore, should allow the entry of new competitors into the market, particularly in non-banking credit entities.

Another way to improve the apparent disparity in the labor market is to boost “investment in infrastructure and promoting skills, particularly among disadvantaged groups [which] can both enhance social cohesion and raise long-term growth.” One of the last recommendations given was improving education for those disadvantaged groups like Arab women and the Haredi population so that they may increase their income levels and contribute to the economy.

– Sydney Roeder

Photo: Flickr

Diversification to Reduce the Suriname Poverty Rate

Suriname Poverty RateThe Suriname poverty rate is 47 percent. It is estimated that more than 6 percent of the population suffers from multidimensional poverty, lacking good health, education and standard of living.

Malnutrition is a rampant problem. Many children are hospitalized for malnutrition and suffer lasting effects that extend into adulthood. In recent years, AIDS has also become one of the primary causes of child mortality.

The education system in Suriname is also wanting. At the same time, as many teachers are poorly trained, many students, mostly boys, leave primary school at an early age. The children that leave school are often forced to work. It is estimated that 8 percent of children between 5 and 14 engage in child labor under difficult working conditions.

As for the girls that are either discouraged from attending school or leave early, many are subjected to sexual exploitation and trafficking. Both inside and outside of prostitution, violent abuse toward children is a rampant problem.

Though the Suriname poverty rate is high, the country’s per capita income is also relatively high, standing at almost $10,000. Inequality between different geographic regions and ethnic groups accounts for the coexistence of the high national income and the high poverty rate.

The Surinamese economy relies on the extraction and exportation of minerals such as alumina, bauxite, gold and oil. While the production of such commodities employs hundreds of thousands of Surinamese and has at times accounted for almost 40 percent of government revenues, the production of these goods is limited to extraction and refinement. As a result, much of the population misses out on economies opportunities.

To lower the Suriname poverty rate, the government should utilize its mineral revenues to subsidize education, health and welfare for the disenfranchised parts of the population. Such measures will serve to increase the value of Suriname’s human capital and work toward diversifying the economy away from commodity exportation.

In addition to actions the Surinamese government can take to reduce poverty in the country, a number of international organizations are already working to improve the Surinamese economy.

The Inter-American Development Bank (IDB), for one, has dedicated millions of dollars in loans and grants under its Low Income Shelter Program (LISP) to provide housing for underprivileged Surinamese. The program has successfully housed more than 3,000 families.

Suriname’s longtime benefactor and ex-colonizer, the Netherlands has also allocated billions of dollars over the past two decades for microcredit lending and infrastructural repair. These efforts have helped facilitate entrepreneurship and stimulate Suriname’s economy from the bottom up.

If these international developmental commitments persist, there may be hope that Suriname can achieve its Multi-Year Development goals, growing small and medium enterprises by 10 percent over the next five years and lifting thousands out of poverty.

– Nathaniel Sher

Photo: Flickr

Mass Emigration Impacts Latvia Poverty Rate

Latvia Poverty RateThe Latvian population has faced many struggles, ranging from political violence to the deepest recession in the world when the financial crisis hit in 2008. In 2013, 32.7 percent of the population in Latvia was at risk of poverty, and that number is only increasing as time goes on. The Latvia poverty rate is extremely high, and it is the third-poorest country in the European Union.

In 2013, the Latvian government developed a policy of turning “welfare into workfare.” This is the practice of welfare being given only for jobs, like road-sweeping. Unfortunately for the government, this resulted primarily in depopulation. While Latvia has had massive amounts of emigration for many years, since this action it saw negative 14,262 net migration. This means that it had far more emigration than immigration.

The highest demographic exiting the country was people of working age, between 15 and 61. This has become a major concern for the Latvian government. Its workforce has decreased massively but unemployment rates are still quite high, resulting in a very high poverty rate.

That being said, there are ways to reduce the Latvia poverty rate, but they will take quite a lot of work from the Latvian government. There are some policies that were enacted before 2010 to address poverty but they were not very effective. There is a minimum wage in Latvia which was updated in 2009 and serves as a very indirect measure for reducing social inequality. Additionally, families are able to apply for social support, so long as they can prove that the income of each family member does not exceed 50 percent of the minimum wage for three months.

The government has not put more measures or economic programs in place for protecting the working class or the unemployed, and this will have to change immediately in order to both encourage repopulation and reduce poverty. There is also a great need for more information collection in the population. Little is known about how current poverty measures are benefiting the Latvian population — if at all.

While current measures are somewhat helpful, Latvia really needs more legislation that will limit the number of people in poverty and put in place measures for improving their economic status. There are currently no policies relating to lifting citizens up out of poverty which is particularly important because the poverty prevention methods really aren’t working. Latvia has quite a way to go before it can consider itself poverty free, but the dedication of the Latvian government and the commitment of other members of the European Union to aid them is a good place to start.

– Liyanga De Silva

Photo: Pixabay

Why Is Bolivia Poor?

Why is Bolivia PoorDespite Bolivia‘s heavy exportation of natural resources such as iron and natural gas that increased its economic growth during the early ’90s, the South American country is still one of the poorest countries below the equator. Thus, the question “Why is Bolivia poor?” remains.

Despite having the second most important natural gas industry in South America, its impact worldwide does not reach the top 1 percent in terms of international activities, which puts Bolivia in a situation of economic risk. On a domestic level, Bolivia’s lack of demand for resources within the country, as well as failed investments in the forestry industry, have shrunk its economic gains and profits since 2002.

Why is Bolivia poor? Bolivia’s main problem has been one that is prevalent in other countries such as Colombia, Honduras and Panamá: social inequality, which has afflicted Latin American countries for decades. However, inequality has been declining over the past decade.

Between 2008 and 2012, Bolivia’s Gini coefficient, a formula to determine a country’s level of inequality, dropped from 0.5 to a 0.45, where 0 equals perfect equality and 1 represents the highest levels of inequality. In 2014, Bolivia’s Gini coefficient decreased further to 0.13. Bolivia’s international affairs decreased its Gross Domestic Product by 6 percent during the year of 2016.

In 2016, the National Plan for Economic and Social Development (PDES) was approved. Public investments, infrastructure investments, the industrialization of natural gas and Bolivia’s 40 percent gross governmental debt are some of the areas in which the PDES will have a positive impact.

Needless to say, there is hope for Bolivia. As of now, the unemployment rate stands at 6.5 percent, one of the lower numbers in Latin America. Bolivia’s GDP has increased by 7.8 in 2017, thanks to growth in the construction sector.

UNICEF, an international NGO that focuses on children’s development around the world, has developed a partnership with Bolivia in order to implement water hygiene as well as environmental sanitation in the less developed parts of the country.

Habitat for Humanity is an organization that is also helping Bolivia, in particular by tackling slum housing and homelessness amongst Bolivian citizens. By raising money, offering volunteering and more, solutions are now a reality that are making Bolivia’s level of poverty decrease and quality of life increase at an extraordinary pace.

– Paula Gibson

Photo: Flickr

Causes of Poverty in Dominica

Causes of Poverty in DominicaKnown to be one of the most beautiful island nations in the Caribbean, Dominica is home to several lush rainforests, mountains, volcanic springs and rare plant and animal species. It is an attractive tourist destination and today much of its economy is based on tourism. However, almost 30 percent of the country lives in poverty, with three percent living in extreme poverty.

Like its neighbours, Dominica has a long history of colonization that resulted in its inclusion into the Commonwealth nations. It was also responsible for the establishment of an agricultural economy; sugarcane, coffee cultivation and timber harvests are among its main industries. After the fall of its “slave estate,” Dominica’s economic mainstay was banana production. To this day, one third of the country’s workforce is employed in the banana industry and that is one of the many causes of poverty in Dominica.

Because of its geographic location, Dominica is susceptible to annual hurricanes, which have caused its banana output to decline by almost 50 percent from 1978 to 2001. While some financial support from other countries was given to rebuild the sector, Dominica had to diversify its agricultural exports in order to rehabilitate its economy. It now exports several other fruits, flowers, soap and coffee, which have taken a long time to kick off.

Interestingly, despite being one of the poorer nations in the Caribbean, Dominica does not have a large income gap like many other countries. The majority of its 70,000 people are small peasants and there is a small, urban middle class of young working professionals. There are very few extremely wealthy Dominicans; those that belong to the current elite are generally descendants of colonial-era plantation owners. However, Dominica has recently introduced an “economic citizenship program” which allows wealthy foreigners to buy a Dominican passport for around $100,000, which may result in wealth imbalances. The program has led to an influx of foreign investment in the country, as the Dominican passport is a relatively strong one – allowing visa-free entry into over 120 countries – and has increased the country’s GDP significantly. The development of offshore financial services and construction has also mitigated some of the causes of poverty in Dominica, with the country’s economy growing by over four percent in 2006.

While the International Monetary Fund praised the Dominican government for these macroeconomic reforms and market diversification strategies, the causes of poverty in Dominica are not necessarily being addressed equitably for the entire population. However, a shift in the country’s economic platforms sets the stage for a more robust and holistic poverty alleviation program that is within reach for Dominica.

– Paroma Soni

Photo: Pixabay

Three Causes of Poverty in Barbados

Causes of Poverty in BarbadosBarbados is a tiny island in the Caribbean. Many visit Barbados to enjoy the island’s lush greenery and warm sun. However, there are still causes of poverty in Barbados that impact the residents deeply. Locals contend with poverty on different scales, with the youth of Barbados struggling to overcome poverty.

Lack of Opportunities
The job market in Barbados is somewhat narrow, constrained by stigma and discrimination. Job seekers may be discriminated against because of their age, gender, migrant status or even their area of residence.

Job seekers are also restricted by their social networks. While those looking for jobs usually look in newspapers, with 50.7 percent seeking out newspaper advertisements, word of mouth plays a large role in landing jobs for youth. Approximately 36.3 percent used word of mouth as a tool for job hunting.

The problem with using word of mouth information is that individuals are limited to seeking jobs only through their social networks. Individuals have to expand their social networks in order to land jobs through word of mouth.

Education
Financial issues prevent youths from accessing education. Unfortunately, without access to quality education, the youth of Barbados are limited in the job market.

On the other end of the spectrum, those who are highly qualified with certifications expect to find high-paying jobs. However, when these high-paying jobs are not available because of the local economy, educated youths become discouraged in their job hunt. Approximately 21 percent of voluntarily unemployed youths did not want to work because of the stark difference between their qualifications and the availability of jobs.

At Home
When youths are unable to find jobs because of limited contacts or poor education, they remain dependents in their households. This means that there are large households with fewer resources for every member in the family.

High fertility rates and large numbers of children mean that households are fairly large already, stretching families’ financial resources. A lack of financial support from children’s fathers means that household revenues are low.

When families’ financial resources are stretched, youths are not able to economically access the education or social networks they need. This perpetuates the cycle of economic instability and families continue to face poverty.

A Solution?
In 2012, the government of Barbados established a poverty intervention scheme, titled the Implementation Stabilisation Enablement and Empowerment Bridge Programme.

Trained social workers led the program for two years, acting as household facilitators and supervisors.

The ultimate goal of the program is to encourage self-reliance and more importantly, self-introspection by families. Families can then make empowering long-term plans based on their individual situations.

The government’s implementation of such a program bodes well for the predominantly socioeconomic causes of poverty in Barbados.

– Smriti Krishnan

Photo: Flickr

Could the Montenegro Poverty Rate Increase with EU Accession?

Montenegro Poverty RateMontenegro is a small Balkan country that declared independence from Serbia in 2006. Since that time, the poverty rate in Montenegro has varied rather significantly, rising as high as 11.3 percent (2006, 2012) and falling as low as 4.9 percent (2008). The most recent data available, from 2013, lists the Montenegro poverty rate at 8.6 percent.

Prior to Montenegro’s independence, the country of Serbia and Montenegro was attempting accession into the European Union. Now an independent country, Montenegro is in its own process of accession into the EU. If and when Montenegro becomes an EU member, the Montenegro poverty rate has the potential for a fairly dramatic change, due to differences in how poverty is calculated.

Montenegro currently uses an absolute poverty rate. The poverty line as reported in 2013 was €186.54 per month. This line was calculated using basic costs of life needs, consisting of food costs and non-food needs. In contrast, the EU uses a relative poverty rate calculation. The poverty line in EU member states is calculated as 60 percent of the median income.

Attempting to calculate the relative poverty rate in Montenegro to demonstrate the difference is not easy. Monstat, Montenegro’s statistical office, currently provides average income rather than median income, so determining the relative poverty rate based on median income is not immediately possible. Using markers such as the given average income and income inequality index to estimate median income suggest the poverty line would rise using a relative calculation. Using EU member poverty rates as a guideline would also seem to suggest the potential for a higher poverty rate in a relative system.

Montenegro’s foreign minister Srđan Darmanović stated earlier this year that Montenegrin accession into the EU could happen as early as 2022. Even with the relative volatility of the Montenegro poverty rate over the last decade, a sudden rise around the point of accession need not be an immediate concern if understood as a change in the calculation system.

– Erik Beck

Photo: Pixabay