This article first appeared in Forum, The Edge Malaysia Weekly on July 7, 2025 - July 13, 2025

A core principle of Malaysia’s Madani Economy framework is to “raise the floor” while expanding economic opportunities for all. But defining this “floor” requires a modernised, data-driven understanding of poverty. Malaysia has made significant progress in reducing poverty, yet outdated measurement methods continue to obscure the realities of economic hardship faced by many.

The persistence of narrow income-based metrics, particularly the focus on hardcore poverty, has led to a misleading narrative that Malaysia has “eliminated” income poverty. The reality is far more complex. To effectively design social protection and economic policies, Malaysia must refine its poverty assessment tools to reflect the multidimensional nature of deprivation.

In 2019, the late Martin Ravallion delivered a lecture at Universiti Malaya on the measurement of the “consumption floor”, highlighting the need to refine Malaysia’s poverty metrics. This echoed calls by the former United Nations Special Rapporteur, Philip Alston, who emphasised the importance of updating poverty measurements to reflect real-world economic conditions.

Malaysia’s early poverty assessments began with the Sarong Index (1965), developed by the late Royal Professor Ungku Abdul Aziz Ungku Abdul Hamid. This unconventional method estimated hardcore poverty in rural areas by counting the number of sarongs owned per household member.

Recognising the need for a standardised approach, Malaysia formalised its national poverty measure in 1977. The measure was revised significantly in 2005 and again in 2019, reflecting Malaysia’s economic growth and availability of data.

Developed by the Department of Statistics Malaysia and the Ministry of Economy, the Absolute Poverty Line Income (PLI) introduced in 2019 is rigorous and robust. The framework accounts for household composition, adjusting for family size, gender and age.

According to the 2022 Household Income and Expenditure Survey (HIES), the absolute PLI stands at RM2,589, with Malaysia’s absolute poverty rate at 6.2%. Absolute poverty measures the minimal income for households to enjoy the basic needs in life, which include food, clothing, housing, transport and other durable goods. The forthcoming HIES 2024 is expected to provide further updates to the numbers — in time for the 13th Malaysia Plan.

Yet, public discourse and aid criteria remain fixated on hardcore poverty, measured through the food poverty line (RM1,198 per month). The food poverty line is only a subset of the Absolute PLI measure, which calculates the minimum cost required to meet the basic household’s calorific needs and to not go hungry.

The mantra is, “we have eliminated hardcore poverty!”

However, the percentage of households living with income at that level has remained below 1% for over a decade. Yet, policymakers continue to highlight its eradication as a milestone today, rather than addressing broader vulnerabilities.

Out of about 7.9 million households in Malaysia, more than 474,000 families fall between the Absolute PLI and the hardcore poverty thresholds. And there are more than 822,550 families living between the Relative PLI and Absolute PLI.

The Relative PLI line refers to 50% of median household income. The threshold is used as a measurement for poverty in more high-income economies (The Organisation for Economic Co-operation and Development countries) as it captures inequality and inclusion.

All these families are deserving of our attention for welfare, social services and social protection. And persisting with the hardcore or food-based poverty metric raises an uncomfortable question: Are we suggesting that the poorest Malaysians only need enough to eat?

As the old labour slogan reminds us, “The worker must have bread, but she must have roses, too”. Survival is not enough. People deserve not just calories, but also dignity. We must count more than just what keeps people alive. We must count what makes life worth living.

Beyond national averages, poverty assessments should also incorporate different units of analysis and disaggregated findings. Vulnerable groups — including children, persons with disabilities, older persons, indigenous communities, non-nationals and the undocumented population — face distinct challenges and are also under-represented in national surveys.

Based on Unicef’s analysis of HIES 2022, the absolute poverty rate for households with children is estimated to be much higher than households without children. Therefore, we are advocating for individual-level and disaggregated analysis of the HIES data to answer these questions: How many children are poor? What kinds of vulnerabilities do they face? And what kinds of social protection and social services are most relevant to address their needs?

Essentially, you can’t fix what you won’t see, and you can’t see what you don’t count. Thus, we must enhance our data collection efforts and measurements of poverty to be inclusive of all families in Malaysia. Without these efforts, the specific vulnerabilities will go unnoticed.

Using the Alkire-Foster methodology, the Ministry of Economy established Malaysia’s Multidimensional Poverty Index (MPI) in 2015 to improve poverty measurements, which integrate 11 indicators spanning education, health, living standards and income. And I commend the government’s recent pledge to refine the MPI — potentially incorporating child-specific indicators into the index — during the Malaysia Economic Forum 2025 as a step in the right direction.

Some of the existing indicators set under MPI 2015 are disconnected from contemporary socio-economic realities in Malaysia today, in 2025. For example, under the education dimension, deprivation is defined by whether all household members aged six to 60 have completed six years of schooling.

This metric completely disregards the importance of early childhood education and foundational literacy. The benchmark is also very low, considering primary education (for children aged seven to 12) was made mandatory in 2002.

Similarly, the health dimension assesses deprivation based on proximity to health clinics, overlooking pressing concerns such as healthcare affordability, malnutrition and childhood stunting.

While data on the suggested indicators are published elsewhere, integrating these indicators into the national poverty assessment is complex and expensive. The information is only available from other national surveys (for example, the National Health and Morbidity Survey) or administrative databases (for example, income tax records).

Therefore, Unicef is collaborating with the Ministry of Economy to assess multidimensional child poverty and deprivation in Malaysia. Considering that the last publication on child poverty using nationally representative data was in 2016, such granular analysis will now provide more informed insights for policy refinement and resource allocation for children.

Beyond federal-led initiatives, Unicef has initiated collaborations with the governments of Sarawak and Sabah to develop a Child Well-Being Index, shifting the focus beyond deprivation to holistic well-being.

Measurements of well-being allow governments to monitor the comprehensive progress of human development that goes beyond the income and expenditure data. In more developed economies, data on social inclusion and life satisfaction can promote effective integrated policy designs and social interventions.

Guided by the Convention on the Rights of the Child, the index assesses child-specific dimensions such as: Are you healthy? Are you growing well? Are you learning? Are you living in a safe environment? Can you play and rest? Are you connected?

Unicef is collecting more than 30 key indicators through a single survey instrument, which covers questions such as vaccination history, dietary diversity, literacy and numeracy skills, exposure to climate risks, access to public spaces and access to technology.

To conclude, I believe that improving poverty or well-being measurements and expanding data collection, especially among the most vulnerable, are tangible steps for Malaysia to truly “raise the floor”. Leaders today must aspire to do more than count sarongs or claim victory over outdated benchmarks — we must address all dimensions of poverty and ensure that every child has the opportunity for a dignified life.

Farqani Mohd Noor is a social policy specialist at Unicef Malaysia

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