TOPIC 3

SOCIO ECONOMIC
PROBLEM
2
3.1 Overview of socio economic
problem
Poverty
Inequality of
Income
Distribution
Unemployment
Pollution
No specific definition :measured by PLI
Wealth distribution (money and non money) to
the people in one country
The number of adults (16 to 64) who are
willing, able to work and actively seeking
jobs through they could not find one
Bad thing happen to environment
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3.2 Poverty
Def: Not enough income to fulfill basic needs,
measured by PLI
PLI : Poverty Line Index
HQI : Human Quality Index
PQLI : Physical Quality Life Index
HPI : Human Poor Index
HDI : Human Development Index
2009 : Household
size ( 5 ) : RM 730
Sabah : RM830 ,
Sarawak : RM800
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3.2 Poverty
Dr. Syed Hussin Ali
Dr. Kamal Salleh
Prof. Diraja Ungku
Aziz
Poverty cause by culture, personality
demography and less technology
Poverty cause by inadequacy of
income, social power, less education
and less factors of production
Characteristic : vulnerability, limited
access, limited option
Influence by monopsony and
monopoly
Absolute poverty and relative
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3.2 Poverty
Type of Poverty :
Absolute
poverty
Hard-core
poverty
Relative
poverty
Minimum
household income
for one month to
buy foods, drinks
and etc
2002 min HS 5 :
RM730( in
Peninsula)
Half of the
Minimum PLI
2002 min HS 5 :
RM375( in
Peninsula)
Link to income
inequality
between groups
Ex: Between
races, High and
middle income
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3.2 Poverty
Poverty from Islamic Perspective
Types:
Miskin
(Poverty)
Fakir
(Hard-core)
Eligible for sadaqah and zakat Islam encourage to work hard
Imam Syafie: Fakir means:
their income can covered half
daruriyat,no property, no
permanent work
Imam Syafie: Miskin means:
their income can covered
daruriyat,cannot covered
hajiyyat property less than
nisab, self efficiency
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Poverty In Malaysia
In Malaysia, poverty is more predominant amongst the Malays
and other Bumiputeras. Although the incidence of poverty of
all ethnic groups have been reduced, it is higher for the Malay
and other Bumiputeras (see figure 1).
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1970 1976 1979 1984 1990 1995 1999 2002
year
A
v
e
r
a
g
e

i
n
c
o
m
e

(
R
M
)
Bumiputera Chinese Indian
8
0
10
20
30
40
50
60
70
1970 1976 1984 1987 1990 1997
Malays Chinese Indian
Figure 1. Incidence of poverty by ethnic groups,
1970-1997
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poverty incidence has dropped from 52.4% in 1970
to 5.1% in 2002 (reduction of about 47.3% in 30
years.
Rural poverty incidence is higher, decreasing from
60% in 1970 to 11.4% in 2002.
Urban poverty is relatively lower, reducing from
22.3% in 1970 to 2% in 2002.
The number of poor households decreased from
574,000 in 1990 to 267,000 in 2002.
hardcore poor defined as households with incomes
below the poverty line income (PLI).


Poverty and Income Distribution

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Rural Poverty
Factors influence
Economic activities
Unbalance development
Rapid industrial growth
Educational standards Rate of birth increase
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Year Rural-urban Disparity Ratio
1970 1:2.14
1980 1:1.77
1990 1: 1.70
2000 1:1.81
2002 1:2.11
Rural-Urban Income Disparity Ratio
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Rural Poverty
Strategies to overcome rural poverty
Resettlement program - FELDA
In-situ development rehabilitation and consolidation of the
land, new planting technique
SMI agriculture base
Decrees the middleman role
Formal education and training
Provide the training facilities
Provide infrastructure
Improve a quality of life
Double cropping @ off-
season cropping @ mixed
farming
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Rural Poverty
Strategies to overcome rural poverty from
Islamic Perspective
Encourage people to
work hard
Government role in
social life
Zakat fardu ain Voluntary help
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Urban Poverty
Factors influence
Little access to basic
amenities
Lack of job
opportunities in rural
areas
High cost of living
Increased of basic goods
and amenities
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Urban Poverty
Strategies to overcome urban poverty
Job Opportunities
Housing
Educational Facilities
Better Town Planning
Private investment
Human Resources
Development
Bussiness incentive
Control foreign workers
Price Control
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Hard-core Poverty
The incidence of HCP declined from 3.9% in 1990 to
1.4% in 1997, but increased slightly to 1.6% in 1999,
due to the impact of the financial crisis, and declined
further to 0.5% in 2002.
The rate of decline in poverty eradication was slower
during the later years, as it gets harder to eradicate the
remaining HCP incidence.
Implies that it is difficult for the growth process to
trickle down to the hardcore poor, which explains
the persistence of HCP and that is it getting more
difficult to eradicate low levels of poverty.


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The very poor and the poor invariably have larger average
family size compared to the non-poor (UKM & SERU).

Age and education - the very poor are older and have a
lower educational attainment as well as having a higher
proportion of family members who only completed
primary education.

House ownership - although the majority of the very poor
live in their own house, a large portion of the very poor
also live in rented premises.

Expenditure the poor spend a larger portion of their
income on food, which between 41.1% and 53.5%.
Understanding the Poor and HCP
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Strategies to overcome hard-core poverty
Amanah Saham
Bumiputra Scheme
NGOs Programmed
Increase income
Development Programmed for
the HCP
Health and nutrition
Hard-core Poverty
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3.4 Income Distribution
Introduction
Income distribution :
wealth distribution
(money and non-money)
to the people in one
country
Four Strata of income
distribution
1) Races
2) Regions
3) Urban and rural
areas
4) Income level
20
0
0.5
1
1.5
2
2.5
1970 1976 1979 1984 1990 1995 1997 1999 2002
year
r
a
t
i
o
s
Bumiputera/Chinese Bumiputera/Indian
Urban/ rural Gini ratios
Figure 3: Income Inequality Ratios, 1990-2002
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Income Distribution Analysis
Income Distribution Early Independence
1957 1970 Inequality income distributions
among races
Malay
Chinese
Indian
Urban
Rural
1957 (RM 139) 1970 (RM 177)
per-month
1957 (RM 300) 1970 (RM 399)
per-month
1957 (RM 237) 1970 (RM 310)
per-month
1957 (RM 319) 1970 (RM 432)
per-month
1957 (RM 173) 1970 (RM 202)
per-month
Factor
contributed to 13
May 1969
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Income Distribution During NEP
1971 1990
o Rapid economic growth between 1987 to 1990
o Income distribution not equal according to
racers and regions
o Income gaps between racers
Income Distribution During NDP
1990 2000
o Rapid economic growth 8% (1997-2000)
o Multi development program
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Malay
Chinese
Indian
Urban
Rural
1990 (RM 940) 1999 (RM 1984) per-month
Continue.
1990 (RM 1631) 1999 (RM 3456) per-month
1990 (RM 1209) 1999 (RM 2702) per-month
1990 (RM 1617) 1999 (RM 3103) per-month
1990 (RM 951) 1999 (RM 1718) per-month
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Factor Inequality
Differences in human skills and ownerships of asset
Differences in access to capital
Differences in educational attainment
Differences in employment Patten
Measure to Solve
Employment restructuring
Mobility of labor
Private participation
Bumiputra opportunities
Bumiputra in business
Increase productivity
Control inflection
Increase government role
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Wealth Distribution from Islamic Perspective
The way wealth distribute very important Measure
to Solve
Positive Measure
Prohibitive Measure
Law of inheritance Zakat
Prohibitive of interest Prohibitive of hoarding
of wealth
Wasteful expenditure Unhealthy business
1. Legal Measures
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Wealth Distribution from Islamic Perspective
The way wealth distribute very important Measure
to Solve
Optional charity
Charity Surplus
(Sadaqah)
2. Optional Measures
Waqaf